Taxpayers Groups Sue County Over Pensions : Government: New rules are called unfair and illegal. Largest increases in retirement income will go to supervisors and top managers.

Two powerful taxpayers groups Wednesday sued Los Angeles County, seeking to repeal controversial pension rules that they maintain were adopted surreptitiously and in violation of state law.

“We don’t like what (county administrators) did and we don’t like the way they did it,” said Joel Fox, president of the Howard Jarvis Taxpayers Assn., minutes before filing the suit in Los Angeles County Superior Court.

“Taxpayers have to take some action,” said Jay Curtis, president of the Los Angeles Taxpayers Assn., as he called the behind-the-scenes adoption of pension rules “a scandal that is monstrous.”

The pension rules--which provide that fringe benefits such as car and medical insurance allowances be counted with salaries in calculating retirement pay--were adopted last year without a vote by supervisors or a study of the financial impact on the cash-strapped county. A county report released a week ago concluded that the new rules have cost taxpayers $265 million.

Though some changes eventually will benefit most county employees, the largest gains in retirement income will go to members of the Board of Supervisors and top county managers, some of whose retirement pay could jump 19% to more than $120,000 annually.

Neither county counsel DeWitt Clinton nor Chief Administrative Officer Richard B. Dixon returned phone calls seeking comment on the lawsuit. Earlier, both defended the pension changes as legal and proper.

But their position is becoming an increasingly lonely one. On Wednesday another taxpayers group, the California Taxpayers’ Assn., added its voice to the debate as it urged the Board of Supervisors to rescind the pension rules. “This back-door act by the board is a clear violation of the government code,” said Larry McCarthy, president of CalTax.

Supervisor Gloria Molina, who has unsuccessfully tried to persuade her colleagues to rescind the rules, said: “I think it’s a very valid lawsuit. It makes the same case I’ve made and it makes it well. It’s an opportunity to turn this around.”

Molina, who was not on the board when the rules were adopted, said she wants supervisors to repeal the rules when they meet Tuesday so they can avoid expensive litigation.

Supervisor Deane Dana, a spokesman said, is pleased by the suit and views it as “an impartial and legal way to get at the facts, to clear the air.”

Other supervisors did not return phones calls. But on two occasions, the board failed to support Molina’s call to repeal the rules. Instead, the board has called for two county commissions to study the controversy.

The taxpayers groups allege that the county “grossly misinterpreted” an obscure state law, said Jonathan M. Coupal, director of legal affairs for the Howard Jarvis group.

“Los Angeles is the only county in the state to make this self-serving interpretation of the law,” Fox said. “This is nothing less than a callous grab of taxpayers’ money for personal gain.”

In a slap at Los Angeles County officials last week, state lawmakers unanimously voted to overturn the law used by Los Angeles County officials to formulate the changes. The measure, sent to Gov. Pete Wilson by the Senate on a 34-0 vote, was introduced to correct the county’s erroneous interpretation of state law, said the bill’s author, Sen. Cecil N. Green (D-Norwalk).

The lawsuit also alleges that the county violated Section 7507 of the state Government Code, which requires a two-week public notice and thorough actuarial studies before changes in pension fund benefits can be adopted.

The taxpayers groups allege that there was no such notice given and county officials have acknowledged that there were no actuarial studies performed.

County officials maintain that there was a limited public discussion about the pension rule changes. A review of tapes of board meetings by The Times reveals that there were only a few sentences of discussion on the topic, which was raised by a county union representative. A similar review of the tapes by Molina’s office found the same result.