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Los Angeles announces DWP budget cuts

City officials in Los Angeles announce more than $400 million in budget cuts to the Department of Water and Power. They say the cuts won't affect service and don't involve rate hikes — at least yet.

April 06, 2011|By Patrick J. McDonnell, Los Angeles Times

Los Angeles officials on Tuesday unveiled more than $400 million in cuts for the Department of Water and Power but vowed no service reductions and said the giant utility was not now seeking a rate increase.

"This will enable us to maintain our customer-service quality as it is today," said Ron Nichols, general manager of the DWP, which provides water and power service to more than 4 million city residents and businesses.

The cuts include elimination of funding for the popular holiday lights extravaganza at Griffith Park.

The DWP, like all city entities, is under severe budget pressure. The utility, which generates revenue from the sale of water and power, faces rising fuel expenses, the costs of legal mandates to reduce greenhouse-gas emissions and other pollution, labor costs for more than 9,000 employees and the price tag of replacing aging infrastructure and updating technology.

The DWP's $4-billion annual budget is separate, however, from the city's general revenue fund, which pays for police, fire and other basic services. The general fund faces an estimated $350-million shortfall in the coming fiscal year. Officials are contemplating additional furloughs, layoffs, service cuts and other potential remedies.

The DWP's budget cuts — including a hiring freeze, reductions in nonessential travel and training, and the elimination of take-home vehicles for executives — will focus on the administrative side and not result in slashed services for customers, officials said.

"We're keeping the level of people we need in the customer-service side of things," said Nichols, who took the helm of the nation's largest municipally owned utility in January. "We're making certain we're keeping our people in the field."

The department remains committed to renewable energy sources and its goal to become "the largest clean utility in the country," said Mayor Antonio Villaraigosa, who appeared with Nichols at a City Hall news conference.

The utility is not seeking a rate increase at this point, said Nichols, but he would not rule out such an action later this year.

Among the items eliminated, officials said, was funding for the Holiday Light Festival, the annual light show in Griffith Park between Thanksgiving and New Year's. The DWP has funded the event for 14 of the last 15 years. Also to be cut are two smaller holiday light festivals, in Leimert Park and on the 1st Street Bridge. These cuts will save the DWP $1 million annually, said Joseph Ramallo, a DWP spokesman.

Other DWP savings, Nichols said, are projected in improved collections, reductions in the purchase of trucks, computers and furniture, and abolishing corporate travel credit cards. Additional economies are anticipated from canceling plans to buy property and refinancing existing bonds. No layoffs were announced, but staff levels are expected to be reduced by 500 during the next three years through attrition, Ramallo said.

The reductions will start immediately, Nichols said, and should result in total savings of $460 million in the next three years.

DWP executives have informed union officials about the cuts, Nichols said, which do not affect existing contract terms for unionized workers. Villaraigosa, who has pushed cuts in retiree benefits for other city employees, said pension reform for DWP workers was not part of Tuesday's budget-cutting package.

Brian D'Arcy, head of Local 18 of the International Brotherhood of Electrical Workers, which represents most DWP employees, said in a statement that any proposal "needs to ensure that we maintain reliable delivery of water and power, customer service, needed repairs to infrastructure, and our transition to renewable sources of power."

patrick.mcdonnell@latimes.com

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