Prompt Transfer of DWP Fees Urged

Los Angeles City Controller Rick Tuttle recommended Monday that the Department of Water and Power suspend its practice of retaining the interest from some fees and taxes it collects and, instead, transfer that money more promptly to the city’s general fund.

Last year, the city’s utility department transferred nearly $574 million to the city’s general fund, but the department kept the $1.4 million in interest that those funds accrued, an audit by the controller found. The DWP transferred money to the general fund monthly, but the audit recommended that funds be transferred daily so that interest would be accrued in the city’s general fund rather than in DWP accounts.

“In our opinion, the DWP fairly transferred amounts to the city that the DWP collected on behalf of the city. . . . However, the city lost the opportunity to earn” interest on that money, the audit said.

DWP general manager David Freeman, who took over the department a couple of months ago, said the bigger issue is that the DWP is collecting sewer fees for the city.

“It’s bad enough to take the heat for the gas bill and the electric bill without having to take the heat for the sewer bill,” Freeman said. “I have a suggestion for them: If they really want to collect their own money and faster, they ought to do it themselves.”

Still, Freeman said the department has no problem with the controller’s report and that he will work to turn over funds in a more timely manner.

The DWP collects three major sources of revenue for the city: sewer service charges, utility users’ taxes and sanitation equipment charges. Of the $574 million collected, about $322 million came from sewer service charges.

Currently, the DWP transfers these funds to the city on a monthly basis based on procedures established by the city administrative officer.

The controller’s audit, which looked at the 1996-97 fiscal year, found that the city could have accrued more than $1.4 million if the funds had been directed daily to the city’s general fund.

In letters to Freeman and Mayor Richard Riordan, Tuttle urged that a change in the transfer process be made immediately.

The audit comes just weeks after the controller’s office completed a financial review of the city’s parking management office, which also found that the city could benefit financially if procedures were changed. In that review, the controller found that the city was short about $200 million because the parking office was lax in collecting parking ticket fines.

In these recent audits, the controller’s office is attempting to persuade the mayor and city department heads to change their practices so they can bring in more money for the city.

Riordan has asked all city departments to cut their budgets by at least 6%, and the city’s reserve funds are low. As department heads grapple with ways to cut their budgets, the controller’s office says officials need to examine all their practices to determine how the city’s cash flow can be enhanced.

The DWP has 30 days to respond to the controller’s audit and recommendation.