Tax Impasse Blocks Passage of City Budget : Government: Council will meet today for another try at the $3.9-billion package.

A deadlocked Los Angeles City Council on Tuesday failed to adopt the proposed $3.9-billion annual budget, as council members remained divided over tax issues just days before the June 1 deadline for balancing the fiscal plan.

Council President John Ferraro said the council will try again today to muster the necessary eight votes to pass the budget, which lost on a 7-4 vote on Tuesday.

The council earlier had tentatively approved the components of the budget, but the budget lost key support during the past three weeks as opposition mounted over tax increases.

If the council cannot agree on a spending measure, Mayor Tom Bradley’s fiscal proposal--including cuts of 400 police officers, closure of parks and libraries and cancellation of an acclaimed after-school program for latchkey children--would automatically go into effect on July 1, city officials said.

Bradley’s budget would also reinstate a controversial 10% tax on cable television that the council had tentatively voted to withdraw.

“If (the budget) doesn’t pass Wednesday, then we have Friday,” Ferraro said. “And if it doesn’t pass Friday, then we have the mayor’s budget.”

As for calling a special Saturday session to make an 11th-hour appeal to members, Ferraro said, “If we’re deadlocked Friday, chances are we’ll be deadlocked Saturday.”

Councilman Zev Yaroslavsky, chairman of the council’s budget-writing committee, called the four dissenters “hypocrites, who spend their careers calling for more police officers and then vote against it when push comes to shove.”

Councilman Hal Bernson, who voted against the budget package, said there was nothing hypocritical about his action because he has consistently opposed the taxes that are proposed to balance the budget. Bernson said he plans to vote against a proposed real estate transfer tax that would raise $52.7 million.

Bernson said he wants the budget balanced by cuts in departmental budgets instead, but has yet to propose any specific cuts.

Councilman Nate Holden--who joined Bernson and Council members Ernani Bernardi and Robert Farrell in voting against the budget measure--said he wants more time to explore alternatives to the controversial transfer tax.

The small coalition that defeated the budget was composed of council members who want to defeat all taxes and those who favored imposing a city income tax.

Bernardi and Farrell argued Tuesday in support of a 1% city income tax that would raise about $200 million annually.

“We have an opportunity to move to another revenue source that is long overdue in this city,” Farrell said, adding that people who live outside the city but work in Los Angeles should be forced to pay taxes to the city. Commuters, he said, “generally make no contribution to the overhead needed to maintain the (city) infrastructure,” he said. “I think we should tax that revenue source.”

That tax proposal failed to gain any support beyond the co-authors and was sent to the Finance and Revenue Committee for future review.

Another tax proposal, a 10% levy on admissions to entertainment events, was also defeated Tuesday after having been tentatively approved by the council three weeks ago.

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 and state-mandated improvements at the Lopez Canyon landfill.

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 is attempting to restore those positions and programs, but needed the estimated $52.7 million from the transfer tax to balance the package.

It is possible, council members said, that a spending package could be approved today, and that the final showdown will come Friday when the supporting tax measures will have to be voted on. Council members Joan Milke Flores and Joel Wachs were absent for Tuesday’s vote, and two seats on the 15-member council are vacant.

If the tax is defeated, additional spending cuts would be necessary. The council already has proposed cutting more than $100 million in spending requests.

The next round of cuts, according to a report by the city administrative officer made public Tuesday, would force the layoff of 500 workers as of July 1, reduce library branch hours from 41 to 32 hours a week and eliminate 360 unfilled police officer positions.

“Nobody wants these taxes, but the alternative is to let the city go to hell,” Ferraro said. “It’s easy to say we shouldn’t impose this tax or that tax, but the problem is we have to do it.”