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Councilman Carroll Admits In TV Interview: Council Has Legal Authority To Use General Fund To Rebate Gas Bills

Carroll is cool to this option but says the issue deserves Council study.

(March 5, 2001) -- In a televised interview, 4th district Councilman Dennis Carroll has admitted that the City Council does have the legal power to provide LB consumers with rebates for disproportionate amounts on their gas bills, using General Fund money.

Councilman Carrol's statement confirms the substance of an analysis/perspective piece, first posted on February 22, that cited specific portions of the City Charter to support the rebates.

The telecast interview, conducted February 26 on "Inside Long Beach" on LB Charter Cable 3, did not mention but host Mike Murchison asked his guests, Councilman Carroll and LB Gas Dept. Director Chris Garner about the point:

Murchison: ...The Gas Dept. since, I don't know how many years ago, has been giving "surplus monies", and please explain what that is, back to the General Fund. There's been a lot of clamor our there to say look, if the Gas Dept. has a surplus, and they're turning it back over to the General Fund, why can't they refund a portion of that proportionally given the gas bills that the residents are paying now, businesses are paying now.

Garner: The City Charter, actually, it started back in about 1933 with the earthquake when the Gas Dept. took funds and contributed it to the city's General Fund to help out with the earthquake relief, but the City Charter is very clear. What we do is we take our revenue into the Gas Dept., pay our expenses, gas purchases, employees and so on, and then pipeline charges, and then anything left over at the end of the year, the City Manager has the prerogative to take that money and transfer it to the General Fund, proivided we have significant fund balance in case of emergencies.

Murchison: But the City Manager by law could recommend to the Council to refund that back in some capacity.

Garner: Certainly.

Murchison: Councilmember, how to you feel about that?

Councilman Carroll: ...[T]hat possibility exists and we could dip into the General Fund if we wanted to that. Again, it refers me back to the Governor's circumstance, if he was not sitting on a state surplus, what would he do with the electricity crisis. That's the question we're really asking ourselves. Do we want to go into the General Fund and begin to subsidize the gas bills. It has not been formulated as official policy at this point, Mike, and everything's on the table.

Frustrated with the Councilman's non-responsive answer [he didn't say how he felt about providing rebates from the General Fund], publisher Bill Pearl phoned the live-call in program and re-asked the question:

Pearl: ...I'm calling specifically to commend you for the excellent question you posed to your guests. Mr. Garner answered it, gave a responsive answer, Mr. Carroll did not, so I'd like to re-ask it again. How do you feel, Councilman, about rebating a portion of those bills, which the Council has the legal authority to do, and which your viewers can see on our website at Could you give a responsive answer, yes or no, do you support that, Councilman?

Carroll: Hi, Bill. Well the answer is, I think, that, among other possible solutions, should be studied by the Council. What you're really asking is do we want to use the General Fund to subsidize the gas prices, similar to what the Governor is doing with electricity. The question then becomes, what goods and services are you willing to take away from the taxpayers in order to do that. So you're really asking a policy question that I really can't answer myself.

We're back to the same argument we had on the utility tax. The one side says, well, cut the City Manager's salary and all that kind of thing, the other side says, well, reduce public safety, libraries, and all that kind of thing.

So, it's a good question. Clearly, we have the legal authority to do it. The question is, do we want to do it. It is my hope within the next few weeks we won't have to do it, because the natural supply and demand and of gas will reduce and we'll be able to go back to the kind of prices we saw before and give us a chance to have a longer-term fix.

A day after the interview, as reported on, the City Manager advised the Council that staff had successfully concluded negotiations with CA State Lands Commission staff to lower (including retroactive to November) the price LB pays for tidelands gas. The new arrangement, which followed Sacramento testimony at the State Lands Commission by LB Mayor Beverly O'Neill, Mr. Garner and Deputy City Attorney Carol Shaw, requires final Commission approval.

On March 2, reported that City Hall had slashed its March natural gas commodity charge for consumers to .69 cents per therm, a dramatic drop from $1.43 per therm in February, using a combination of better market prices and savings from the new State Lands Commission deal for tidelands gas. City Hall is using the tidelands gas savings, in effect, to subsidize and lower the March commodity charge for weary LB consumers.

Despite the significant impact of this step, LB consumers remain out of pocket (hundreds of dollars per household, thousands for businesses) for disproportionate charges in December, January and February. As of this posting, it's unclear what additional measures the Council and city staff may devise to rebate those out of pocket costs to consumers.

Using General Fund revenue to provide rebates for three months of disproportionate charges would almost certainly require significant budget and spending changes, which would require Council action.

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