Fate of Vernon Power Utility Uncertain

By Published On: August 26, 2011

Like a carriage turning into a pumpkin, Vernon’s municipal power utility has turned from an attractive asset to a bad debt as the Legislature and Los Angeles County approach midnight in weighing whether to strip the corruption-plagued city of its charter and make it part of the huge county. The city’s electric system has $444 million of outstanding debt and last year Vernon took $8.6 million from power system revenues to help cover its general fund deficit of $33.4 million, Los Angeles County chief executive officer William Fujioka told the county’s board of supervisors in a report discussed Aug. 23. City general fund expenditures totaled $51.7 million on general fund revenue of just $18.3 million. County supervisors quickly curbed their enthusiasm about absorbing the city and its power system after hearing from Fujioka. The county would take over Vernon if legislation pending in Sacramento passes to disincorporate the city. The city is home largely to industries and has few residents. Assembly speaker John Pérez (D-Los Angeles) is author of the legislation to disincorporate the city, which lies south of downtown Los Angeles. His plan is outlined in two separate measures, AB 46 and AB 781. His legislation flew through the Assembly earlier this year after revelations of corruption among Vernon city leaders. If it ultimately passes, the Los Angeles County Sanitation Districts would take over Vernon’s power system. However, passage is in doubt. On Aug. 22 a key supporter, Senator Kevin de León (D-Los Angeles), withdrew support for the legislation and outlined an alternative plan that would leave the city in tact, but impose a series of stringent good government reform measures. De León--who represents Vernon as part of his district--said his plan would help “root out the stubborn corruption” that has plagued the city while helping to maintain the job-intensive industrial character of the city. Unions and businesses vigorously oppose the disincorporation legislation on grounds it would raise costs and threaten jobs, according to a Legislative staff report. As a municipal utility, Vernon has been able to keep electricity rates low, which has attracted and retained businesses within its borders. The debate over disincorporation follows the conviction of city leaders on voter fraud charges and conflict of interest charges involving city contracts.

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