State Supreme Court Affirms REU Payments To General Fund

The California Supreme Court has ruled in favor of the City of Redding in a suit brought by an anti-tax group. Since 1988, Redding Electric Utility has made what are called “payments in lieu of taxes”, or “pilot” payments to Redding’s general fund. The amount is equal to one percent of the utility’s total assets, representing what a privately-owned utility, such as PG&E, would pay in property taxes. In November of 2010, California voters approved Proposition 26, requiring voter approval for new taxes. The lawsuit was filed on behalf of ratepayers who signed on to the suit under the banner of “Fee Fighter L.L.C.”. The attorney behind the suit, Walt McNeill, claimed that the “pilot” is a tax requiring voter approval, while the city claimed it’s not new, and not really a tax, and therefore exempt from Prop 26. On Monday, the state’s high court ruled unanimously that it is indeed legal for REU to transfer 6 Million Dollars each year to the general fund.


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