Legislation News
UC Opposes AB 2951
july 25, 2006
The University of California is opposed to AB 2951 (Goldberg), and has initiated advocacy efforts to help defeat the bill. If passed, AB 2951 would allow California’s municipal utilities to unilaterally increase capital facilities fees assessed state and public educational agencies with no burden to prove the need for or the amount of those capital fees and with no regulatory oversight.
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The measure would result in additional costs in the hundreds of millions to California’s public schools, colleges, universities, and state agencies. Enactment of AB 2951 is akin to providing California’s municipal utilities with a blank check and unfettered access to the State’s General Fund resources.
While the Legislature annually strives to ensure that state agencies, schools, colleges, and universities have sufficient funding to fulfill their responsibilities, AB 2951 would circumvent the Legislature’s budget decisions by allowing California’s municipal utilities to draw capital amounts as they deem necessary from state and public educational agencies. Given a similar legislative proposal in 2004 (AB 3036), the Department of General Services estimated that the proposal would result in additional state costs in the “hundreds of millions of dollars annually.”
AB 2951 is anti-education and will hurt all segments of California public education – both K-12 and higher education. It removes monies from California’s classrooms and permits the transfer of millions of dollars into the unregulated hands of the state’s municipal utilities. It is estimated the bill’s enactment would cost the Los Angeles Unified School District alone nearly $10 million annually – funds that would not be available for teachers or classroom instruction. If AB 2951 passes, UC estimates that it would face additional municipal utility charges of at least $8.5 million annually, while CSU estimates its annual costs would increase by nearly $4 million.
Capital facility fees are already a matter of litigation. The State Attorney General and the Los Angeles Unified School District have filed suit against the City of Los Angeles and its Department of Water and Power (LADWP). The suit alleges the LADWP overbilled its government customers more than $150 million in illegal capital facility charges. In addition, since FY 2001-02, the LADWP has transferred in excess of $650 million to the City of Los Angeles.
Many municipal utilities already hold fiscal reserves which exceed the amount needed for their effective operation. For example, a June 2004 Bureau of State Audit report found that five of eight municipal water districts visited by the Bureau had trouble defending to their ratepayers and taxpayers the need for some portion of their accumulated reserves.
The California Supreme Court has historically held that it is inappropriate, inefficient, and unconstitutional for one government entity to assess a tax upon another. AB 2951 could easily be construed as providing California’s public utilities with the authority to assess a tax upon another state government entity in the form of new capital charges for facilities which do not serve them.
AB 2951 unilaterally advantages public utilities and leaves state and educational agencies with no means to protect themselves against arbitrary and excessive capital fees imposed by California’s public utilities.
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