Real Estate Tax Is in Jeopardy in Budget Battle : City Council: Industry and homeowner groups want the fee dropped. Some members say layoffs and cutbacks in programs and services would result if it is not approved.

Los Angeles’ record $3.9-billion budget is in jeopardy of being thrown out of balance by more than $50 million as the City Council approaches a deadline Friday for approving a final spending package, council members say.

The council has been under pressure from the real estate industry and homeowner groups to remove a proposed real estate transfer fee from the budget that would raise $52.7 million a year. Now, council members say they may not have the votes to approve the tax.

Opponents of the tax “need one more vote to turn the city budget into utter chaos,” said Council Finance Committee Chairman Zev Yaroslavsky. “I would not bet a lot of money that this tax will pass.”

Under the City Charter, the council must deliver a balanced spending plan to the mayor for his signature by June 1.

Proposed taxes on cable television and entertainment admissions have fallen after expensive and sophisticated lobbying campaigns by special interest groups.

A coalition fighting the real estate fee--which would cost about $900 on the sale of a $200,000 home--has deluged council offices with phone calls and letters and has taken out newspaper and radio ads to whip up opposition. Councilwoman Joan Milke Flores said her office received more than 600 calls in opposition in one day last week.

“We’re going to step up the program,” said Lynn Wessell, a lobbyist representing the coalition. He is planning to target council members concerned with the issue of affordable housing in an effort to pick up additional votes.

Wessell and Councilman Hal Bernson, who is leading the council opposition to the tax, are counting five votes against the measure. In addition to Bernson, council members Ernani Bernardi, Nate Holden, Joel Wachs and Flores confirmed to The Times that they are planning to vote against the measure. Councilman Richard Alatorre voted against the measure in a tentative vote two weeks ago, but now stands undecided.

A sixth “no” vote could block adoption of the tax ordinance. Eight votes are required for passage, even though the council is down to 13 members because of the death of Councilman Gilbert W. Lindsay and the election of Gloria Molina to the Board of Supervisors.

If the tax is defeated, the council will have to take its budget back to the drawing board and cut $50 million--in addition to the $100 million in spending requests already pared from the document.

That, city analysts say, would lead to layoffs of up to 1,500 additional workers, the closure of libraries and parks, and shutting down an acclaimed after-school program for latchkey children.

The proposed budget already includes the elimination of about 1,800 staff positions through attrition, the cancellation of most large capital projects and the deferral of virtually all new vehicle purchases.

These cuts are more visible to the bureaucracy than the public. Whether a police patrol car has 80,000 miles or 100,000 is noticeable to the officers who drive them every day, but not to the public, officials said. Paperwork piling up in the city clerk’s office because one of four secretarial positions has been eliminated may be annoying to the remaining workers in the department, but it is not a cause of outrage from voters.

The next level of cuts would be readily apparent to constituents, officials said.

“If (council members) think their phones are ringing now, wait until they make (the next round) of cuts,” said Yaroslavsky, who is supporting the real estate tax.

Keith Comrie, city administrative officer, said “the next level of cuts will mean layoffs and closure of facilities. I don’t know of any more capital (projects) that can come out. . . . And most departments are at their attrition limits.”

Next in line for cuts, said Comrie, are park workers, library employees and animal control workers. Eventually, the budget ax would have to fall on the Police Department, he said.

“There wasn’t $100 million worth of fat in the budget,” Comrie said. “It’s not fat when you’re browning out fire stations.” He was referring to a plan to reduce staffing at the city’s largest fire facilities.

This year’s fiscal crisis, one of the worst in city history, was spawned by a soft real estate market and slow retail sales that are projected to produce one of the smallest increases in tax revenues since the 1982 recession. At the same time, the city faces increases in key expenses, including an across-the-board 5% wage increase contained in a union contact, state-mandated improvements at the Lopez Canyon landfill and increases in health insurance, workers’ compensation and other services.

The mayor proposed cutting 400 police officer positions, an after-school recreation program for 10,000 latchkey children and funding for parks and libraries that would have forced some facilities to close for at least one day a week.

The council restored those positions and programs, but cut others, including a $1.8-million cleanup of contaminated soil, $1.2 million from the city’s garbage recycling program and $1 million from the fund for paying liability claims.

Last week, city officials learned they will receive an unexpected $14.5 million in property taxes in the coming year. Council members say that will allow them to cancel proposed taxes on cable television and admissions to entertainment events.

Opponents of the real estate transfer fee say the council must find a windfall for them, or cut a bit deeper.

Bernson and his supporters on the council are willing to vote for cuts for libraries and parks to avoid new taxes.

Yaroslavsky has asked the city administrative officer to report to the council Tuesday on what cuts would be necessary. He hopes the report will keep the majority in favor of the transfer fee together.

“We need to have the courage to stand up and say what is worth paying for,” Yaroslavsky said.