Pasadena Prevails in Lawsuit that Challenged Voter-Approved Transfer of Electric Rate Revenues

PASADENA, Calif.—The City of Pasadena has prevailed in a class action lawsuit that challenged the annual transfer from the power fund to the City’s General Fund. On Feb. 24, a Los Angeles County Superior Court judge granted Pasadena's motion to have the case dismissed.

If the City were unsuccessful in the lawsuit, it faced the loss of approximately $18 million annually in General Fund monies. The General Fund is the City's primary operating fund, and provides a number of essential services to Pasadena residents and businesses.

The lawsuit was originally filed in 2017, alleging the use of electric rates to fund the transfer to the General Fund violates the California Constitution. Pasadena voters had established and confirmed City Charter provisions allowing the General Fund transfer a total of seven times, dating back to 1934.

In March 2020, the City was unsuccessful in obtaining a dismissal of the lawsuit, where the City had argued that Pasadena voters had approved the Charter-authorized transfer a total of seven times. As such, in July 2020, the City Council placed the Charter provisions for the transfer on the ballot for the eighth time. In November 2020, nearly 84% of Pasadena voters resoundingly approved Measure P, confirming that voters clearly approve of having a portion of their electric rates fund the $18 million annual transfer to the General Fund.

With Pasadena voter approval of Measure P, and a Jan. 29 published (precedential) appellate decision approving of Sacramento's utility fund transfer, Pasadena sought reconsideration in its case. The court’s decision yesterday reverses its March 2020 decision against Pasadena. The decision recognizes that Measure P and the court decision on Sacramento's transfer both require "new and different orders granting [Pasadena's] motion for summary judgment."

"I am pleased that justice prevailed. The transfer continues to be approved by Pasadena residents, and for good reason. Pasadena has proven that our residents have confidence in receiving high quality essential services, and that residents want to ensure that our General Fund and tax dollars are protected from class action lawsuits," said Pasadena Mayor Victor M. Gordo.

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