City Council Faces Money Squeeze, OKs Tax Increases : Budget: Package will include a 10% levy on parking fees. Business taxes and trash collection charges also will rise.

Facing what officials call the tightest financial squeeze in years, the Los Angeles City Council agreed Wednesday to impose a package of tax increases that will tap the pocketbooks of millions of residents, commuters and business owners.

Among the tax hikes, which were proposed by Mayor Tom Bradley, will be a first-ever 10% levy on parking, as well as boosts in business taxes and trash fees.

Council members also agreed to across-the-board cuts in salary expenses that went even deeper than Bradley’s $3.6-billion 1990-91 budget. They took the action in response to reports from financial analysts who said that the mayor’s plan, coupled with sluggish revenue increases, could trigger a $100-million deficit and a severe financial crisis next year.

Whether layoffs would occur was not immediately clear, but Bradley said his budget would lead to reductions in after-school programs, tree trimming, library book purchases and summer swimming programs, as well as higher fees at golf courses and the city zoo.

Some council members expressed optimism Wednesday that departments could absorb the 6% reduction in their salary requests--2% more than Bradley proposed--without serious disruption.

Under the council proposal, three large agencies that supply critical services--police, fire and sanitation--were held to only a 1% cut in salary accounts. Thus far, money remains in the budget for 400 new police officers and 115 new paramedics.

Councilman Zev Yaroslavsky, who chairs the Finance and Revenue Committee, said the actions constituted a “balanced diet” for city government “that will prevent us from having to go on a starvation liquid protein diet” next year.

“We’re spending beyond our means and that has to come to a stop,” Yaroslavsky said.

His comments were echoed by other council members, most of whom agreed with the grim financial assessment and budget-cutting proposals drawn up in recent weeks by the budget committee.

But Councilman Ernani Bernardi, who voted against the across-the-board cuts in salary requests, charged that the budget-cutting talk was “malarkey.” He said that even with the council actions, most departments are “still receiving substantial increases.”

The tax increases, which will go back to the council for final approval, would raise an estimated $59.3 million in new revenue. The parking tax would add a 10% fee to the cost of most parking in the city and generate $22.5 million in new revenue. In addition, the city business tax on gross receipts would increase 10%, and a special levy to pay for trash trucks would double from $1.50 per month per household to $3.

The tax increases were approved on lopsided votes on the first full day of detailed council hearings on the mayor’s budget, which despite the warnings of fiscal problems is up $417.2 million, or 13%. Further wrangling over additional cuts--and funding for various officials’ pet projects--is expected to continue at least through the week before a final budget is approved.

During a public hearing Wednesday morning, reaction to the new and increased taxes was largely negative.

Gill Barnett, president of a firm that operates garages around the city, said people are “confused and upset” about the proposed 10% parking tax and that the city has made little effort to explain the tax to the public. He said he believes that the mayor and the council are moving too quickly on the matter.

“I think the public would be outraged if they knew this tax is going to go into place,” Barnett said.

Some council members said they hoped questions about the fairness of the parking tax would be addressed before the final ordinance is approved. The tax is based on the amount paid by the motorist.

Critics point out that many downtown city employees, executives and professionals have parking that is subsidized by their employers--and their tax would be far less than, say, workers who must pay the full cost of their own parking.

“It falls disproportionately heavy on (some) workers,” said Councilman Robert Farrell, who voted against the tax.

Other officials acknowledged that there may be inequities, but said the benefits of raising revenues and encouraging use of public transit and car-pooling were the paramount considerations.

In other action, the council voted to use $250,000 in federal poverty funds to pay for an expanded AIDS education program. The money includes $50,000 for distribution of needle-cleaning kits and condoms to intravenous drug users, who are at high risk of contracting AIDS.

The AIDS funds were not part of Bradley’s original budget proposal, but the mayor later forwarded a departmental request to the council along with his endorsement of the request.