L.A. council agrees to give up $12 million to replenish city’s emergency reserve

The Los Angeles City Council voted Thursday to give up $12 million that would normally pay for special projects in members’ districts and instead use it to replenish the city’s emergency reserve.

The city’s credit rating has been downgraded in recent days in part because officials plan to tap those reserves to counter the city’s $212-million budget shortfall.

With the city facing 4,000 job cuts, Mayor Antonio Villaraigosa asked members in early February to lend the reserve as much as $40 million from discretionary accounts that they have used for projects such as crosswalk artwork, pocket parks, graffiti removal and, on occasion, to enhance their staff salary accounts.

But money in a few accounts can only be used for certain projects because of past lawsuits. One of the “community amenities trust funds,” for example, must be spent within a few miles of the Sunshine Canyon Landfill to mitigate the effects of the dump.

Other discretionary trusts may be less restrictive -- and it may be possible to transfer money from those accounts if the council agrees to change the laws creating them. Council members said Thursday that they would continue working with budget analysts to try to identify additional discretionary money to help patch this year’s gap.

“I think we all felt an obligation to step forward and shake loose what we can,” Councilwoman Jan Perry said after the 10-0 vote.

Matt Szabo, Villaraigosa’s deputy chief of staff, said the move was “a good start and reflects the seriousness with which the council is now addressing the budget crisis.”

Each of the 15 council members will decide from which of their discretionary accounts to draw money to reach their $800,000 share of the total. Although it may come from a variety of trusts, city officials expect the bulk of the cash to come from one discretionary fund replenished with tax revenue from redevelopment areas. The money is generally earmarked for economic development in the council districts where those redevelopment projects are located.

In a separate action, the council approved a request by Councilman Tony Cardenas to transfer $142,500 to his council office salary account from his district’s share of a “street furniture” account, which draws on revenue from advertisements on bus shelters.

That vote immediately drew a veto threat from the mayor’s office. “The mayor was crystal clear that he would veto any transfer from a special council-controlled fund into their salary accounts,” Szabo said. “I can’t understand why the council would want to waste another day debating a mayoral veto of slush fund spending instead of working to balance the budget.”

Councilman Bernard C. Parks, chairman of the Budget and Finance Committee, was the only member to vote against Cardenas’ motion.

Although a number of council members have transferred money from the street furniture fund into their salary accounts this year, Parks said that gives the public the wrong impression about why the accounts were created. “That’s when the community and others begin to call it . . . the slush fund,” Parks said. “. . . . These funds are for direct infusion into community projects.”

Cardenas’ spokeswoman said the money would help pay salaries of three deputies who attend to street work and illegal dumping problems and two aides working on speed bump and other transportation issues in his San Fernando Valley district.

maeve.reston@latimes.com