Threat of Suit Delays County Tax : Finances: Supervisors hope for an agreement with MCA to head off a court battle over a 2% levy on amusement parks. The funds would go to mental health programs.


Threatened with a lawsuit by MCA Inc., owner of Universal Studios Hollywood, the Los Angeles County Board of Supervisors on Tuesday postponed to Jan. 8 its vote on a 2% tax on amusement park receipts to generate money for county mental health programs.

But the board approved ordinances for unincorporated areas of the county, increasing the hotel and motel occupancy tax from 10% to 12% and imposing a 5% tax on users of gas, electric and telephone utilities. Both take effect Jan. 1. The utility tax is expected to generate $14.3 million by the end of the fiscal year, and the occupancy tax would contribute another $300,000.

The supervisors hope to negotiate an agreement with MCA that will head off a lengthy court battle over the amusement tax. But if that does not work, board Chairman Mike Antonovich said he has a substitute tax measure on the agenda for Jan. 8.

The substitute tax would claim 10% of the gross revenues of landfills in the unincorporated areas, and would raise about $5 million by June 30, the end of the fiscal year.


Even if one of these taxes is approved, some programs still would require consolidation, but no patients would be abandonned, mental health officials said. Without the new taxes and other measures to divert money to mental health, 27,000 of the county mental health system’s 58,000 patients would have been dropped.

The amusement tax would generate about $4 million, and would apply to Universal Studios and Magic Mountain, the only amusement parks in the county’s unincorporated areas. The county’s taxing authority extends only to those areas. Cities already impose many of these taxes.

Citing MCA’s threat to challenge the tax ordinance in court, the supervisors put off their vote until the next board meeting. At that time, they also will consider the substitute landfill tax.

Board Chairman Antonovich, sponsor of all the tax ordinances, said he hoped to gain MCA’s cooperation by tacking a clause onto the amusement tax that would eliminate it by July 1, 1991. Antonovich said he hoped that such a clause might persuade MCA to lend its muscle to lobbying the state for the county’s full share of mental health funding.

Last summer, Gov. George Deukmejian cut $71 million in state mental health aid to counties, precipitating the crisis in Los Angeles County’s mental health system.

MCA President Sidney J. Sheinberg declined to comment on the supervisors’ move, and a company spokeswoman responsible for theme park matters failed to return numerous calls to her office.

The company, which includes Universal Pictures, has been in the news recently because of its agreement to be purchased by Japan’s Matsushita Electric Industrial Co. for $6.59 billion.

While it is unlikely that the Matsushita sale influenced MCA’s decision to threaten court action against the supervisors, the company has a reputation for litigiousness. Sheinberg has been widely credited with once saying that he viewed corporate litigation as a “profit center.”


Even if all the taxes are approved, the mental health department still will be about $2 million short of what it needs to maintain current programs. The taxes plus countywide belt-tightening measures and money transfers approved two weeks ago would raise about $23 million; the department said it needed $25 million.

So Mental Health Director Roberto Quiroz has come up with a plan of program curtailments and consolidations to address the shortfall. On Tuesday, he sought the supervisors’ permission to begin imposing the measures, but the board delayed action on them for 30 days to give the department, mental health advocates and clinic administrators more time to analyze the program changes. Several people, including Richard Van Horn, chief executive officer of the County Mental Health Assn., complained that the department’s plan was made available only last Friday.

The plan would close six clinics run by the department, four staff office buildings and three programs run by private facilities under contract to the Department of Mental Health. About 3,320 patients would have to transfer to other programs. The department, meanwhile, could save close to $1 million on rent and other overhead costs, Quiroz said.

County-run treatment facilities that Quiroz wants to close include the Metropolitan State Hospital at Norwalk, Compton Mental Health Center, Crescenta Valley Mental Health Center, San Fernando Mental Health Center, San Pedro Mental Health Center and South Bay Mental Health Center in Hawthorne.


Also slated for elimination are three outpatient mental health programs for children and adolescents run by private facilities under contract to the county. They are located at Childrens Hospital of Los Angeles, St. John’s Hospital in Long Beach and at Stirling Academy in Reseda.

Times staff writer Alan Citron contributed to this story