Riverside residents will decide this fall whether to let their city keep charging them more than the cost of cooling and lighting their homes to raise money for police protection, park upkeep, street repairs and other programs.
The Riverside City Council voted 5-2 Tuesday, July 20, with councilmembers Clarissa Cervantes and Chuck Conder dissenting, to place a measure on the Nov. 2 ballot that would authorize continued use of 11.5% of the city’s electric utility revenue to help fund municipal services in the Inland Empire’s largest city.
The council decision follows a 2020 court ruling that declared the overcharging an unconstitutional tax that must be approved by city voters or cease. A May settlement in the lawsuit that gave rise to the ruling called on leaders to seek voter approval in November for continued spending of electric-utility money on non-utility purposes.
City Manager Al Zelinka said the transfer of money from the electric fund to the general fund generates about $40 million a year and accounts for 14% of Riverside’s operating budget.
“That is no insignificant amount of money,” he told the council.
The majority rejected an alternate measure proposed by the city’s Charter Review Committee, which was asked by the council earlier to study the matter.
The committee proposed a different approach — one that would authorize continuation of the transfer but set aside the prescribed 11.5% amount, which Zelinka said dates to a 1968 charter amendment. Panel members recommended capping the transfer at $38 million in 2022 and reducing it annually by $1 million over eight years.
Ben Clymer Jr., committee chair, said the panel sought to start at about the same funding level to prevent program cuts while setting in motion a plan to reduce the transfer — and the city’s reliance on it.
“With ours, it’s not just an automatic tax, it’s capped,” Clymer said. “And the question is, ‘Do you want to slowly, gradually lower some of your utility taxes without a material reduction in service?’”
Cervantes and Conder said they wanted to put both proposals on the ballot and let voters decide which one to support, if any. They voted no when the majority decided instead to place one measure on the ballot — the one that would continue the annual shift at current levels, indefinitely.
Cervantes, the newest councilmember who was sworn in July 13, said over the past six months residents of Ward 2 — including the Eastside, UC Riverside area and Canyon Crest — have told her they want to protect city services but also worry about the rising cost of living, including utilities.
Conder, who recently won reelection in Ward 4, called the transfer “a hidden tax” and “a game between two checkbooks,” and said he has long opposed it.
He said he recently wrote the city a check for $264.34 for the purpose of buying “reliable electricity and good, clean, safe water.”
“I didn’t buy air conditioners for the airport terminal or a roof for the Harada House,” Conder said, citing examples of city programs.
Conder said the transfer needs to go away eventually and the Charter Review Committee came up with a good way to ease the city’s reliance on it.
Clymer urged the council to let voters choose between keeping things as they are or embark on a new course of more fiscal discipline.
However, Chief Financial Officer/Treasurer Edward Enriquez said even a gradual reduction would make it difficult to balance the books amid rising pension and other costs.
“This does not bring budget stability,” Enriquez said.
Councilmember Ronaldo Fierro said he was against putting two proposals on the ballot.
“I would hate to confuse voters and have both ballot measures fail,” he said.
Fierro said he preferred to ask voters to vote up or down on maintaining the current practice.
“If they vote it down, they vote it down and we’ll deal with the ramifications, and they’ll be serious,” he said. “But the voters will have spoken. It’s their money. It’s their utility.”