California Municipal Law Blog
General Fund

Under Proposition 26, Cities are Limited When Transferring Utility Receipts Into General Fund

by on February 4, 2015

posted in Propositions 13/26/218, Public Utilities,

Under a court ruling issued in January of this year, cities must be careful when transferring money from utility accounts into the general fund. The City of Redding owns an electrical utility.  Because it is publicly owned, it is exempt from the one percent ad valorem tax imposed on privately-owned California utilities.  The City requires the utility department to pay the city’s general fund a one percent “Payment In Lieu Of Taxes,” or “PILOT” fee, for the city’s general use. In Citizens for Fair REU Rates v. City of Redding, the state Court of Appeal held that the PILOT ... Continue Reading

tags: General Fund, PILOT Fee, Proposition 26,