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Mayor Quietly Weighing Increase in DWP Rates : Budget: Riordan has raised the possibility in private, sources say, but has not confirmed that he will seek a fee hike to raise funds for the LAPD.


Scrambling to find money to hire more police and to increase officers' pay, Los Angeles Mayor Richard Riordan has quietly floated a proposal to raise municipal water and power rates, several city officials said.

The officials said Riordan has raised the possibility of higher utility rates in telephone conversations and closed-door meetings, but he has not made a public proposal.

In an interview Thursday, Riordan was vague about his stand on raising charges for Department of Water and Power service.

"There are a lot of things out there and until you analyze it from a lot of angles you don't know whether to be in favor of it or against it," Riordan said.

Advocating an increase in utility rates could be politically risky for the mayor--particularly with customers already grumbling about a recent rate restructuring that resulted in higher bills for many suburban customers.

Some officials at City Hall said an increase could also be interpreted as violating the spirit of Riordan's campaign promise to hire more police without increasing taxes.

Councilwoman Laura Chick said Riordan broached the idea of increasing DWP revenues and rates during a telephone conversation with her this week. Although she declined to criticize Riordan personally, Chick said she is unwilling to support higher fees to bolster the city's sagging treasury.

"I think elected officials have to be respectful of the public's intelligence," Chick said of rate increases in general. "Increasing the rates they pay to the DWP is a tax and I'm pledged not to increase the taxes people pay until we clean up our economic act."

Another city official, who asked not to be identified, said Riordan appears to be fixated on the idea of getting more money from the water and power agency. "He thinks the rates are low for the utility, compared to Southern California Edison. And he is saying that DWP rates should approach Edison rates," the official said.

Electric rates for DWP customers are 15% to 20% lower than rates for customers of Edison, which is privately owned. Even with the lower rates, though, the city-owned DWP has been profitable enough to contribute 5% of its gross revenue, or about $105 million this year, to the city's general fund.

Riordan told the Greater Los Angeles Chamber of Commerce on Thursday: "We are going to have to get more money from the DWP."

He said some of that money might come from reducing contributions to the utility's "overfunded" pension reserves or by cutting what he described as an overabundance of department managers.

In the speech, he did not mention the possibility of increasing rates, although Deputy Mayor Michael Keeley confirmed later in the day that the increase is under consideration.

"Raising rates is an option, although clearly the least attractive," Keeley said. "The mayor would prefer to reduce costs at the Department of Water and Power, using the savings for improved public safety."

The pressure on the mayor to find new sources of funds has been intense. The city faces a projected deficit of $200 million next year. Several unions are demanding pay raises. On Tuesday, about 2,000 police union members marched on City Hall, demanding that Riordan return the support they showed him in the June election. And the mayor has promised to find the money to add 3,000 police officers to the 7,600-member force.

"He kind of owes the Police Protective League and maybe he isn't thinking of all the ramifications" of a utility rate increase, said another official, who has heard Riordan raise the idea.

Several officials said the idea would stand little chance of garnering the eight City Council votes needed for approval--especially with a 4.75% electric rate increase already on the table to meet the utility's regular operating expenses.

During his campaign, Riordan promised to use money from Los Angeles International Airport to put more police on the street without imposing new taxes on Los Angeles residents.

But the use of airport money is being vehemently opposed by airlines, which have refused to pay higher landing fees recently imposed by the city. Federal law also blocks the use of airport revenues for non-aviation purposes. It may be years before those barriers can be removed.

Although money from the DWP is not subject to those restrictions, "it hits a little closer to home because almost every taxpayer gets a utility bill," said a city official who asked not to be identified.

Several Riordan Administration officials insisted that the prospect of DWP rate increases should not be overblown, but other city officials who have spoken to the mayor say they are afraid he is seriously considering the possibility.

Those familiar with the debate, however, said the difference in views may just be an example of Riordan's adjustment to public office.

In the private sector, where he was a lawyer and venture capitalist who arranged large corporate takeovers, Riordan could speculate freely and without repercussions about how to fund his deals.

But in his nearly three months as mayor, any of his thoughts, voiced publicly or privately, are likely to be instantly interpreted as new city policy.

"He seems to look at it as a businessman," said one City Hall veteran who is learning to adjust to the Riordan style.

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