Mayor Calls for Major Overhaul of City Hall : Reform: In State of City address, Riordan cites ‘worst fiscal crisis in city’s modern history.’ He vows no tax hike.

In his first State of the City address, Mayor Richard Riordan on Monday called for a top-to-bottom overhaul of City Hall, saying residents should be prepared for a searing and soul-searching debate on Los Angeles’ future as he attempts to depart from the policies of old.

“This is the worst fiscal crisis in the city’s modern history,” Riordan told a packed City Council chamber. “We will have tough choices, painful choices, choices that will impact our daily lives.”

The speech, delayed because of the Northridge earthquake, did not detail specifics of the austerity budget Riordan will propose next month. But the mayor reiterated many of his familiar refrains--privatization, consolidation and squeezing more money from city departments.

At the same time, Riordan sounded an upbeat note and promised not to raise taxes or neglect the city’s parks, libraries and infrastructure while he amasses funds to put more police officers on the street.

Driving his proposals, Riordan said, will be the report released last month by his special advisory committee for fiscal reform. The group of business leaders concluded that as much as $1 billion in new revenues and cost savings could be obtained from city operations over the next five years if officials attack waste and inefficiency in City Hall.

The State of the City speech, although an annual city tradition, was sometimes skipped during former Mayor Tom Bradley’s long tenure. Riordan’s aides have been preparing the text of his speech for months, viewing it as an opportunity to set the tone for the rough-and-tumble debates expected once Riordan lays out his first budget on April 20.

‘This is the mayor’s management philosophy,” said David Novak, Riordan’s communications director. “We’ve heard a number of these proposals before. Today we hear them all in one place.”

So well-scripted was the presentation that the mayor’s TelePrompter even told him when to sip from his glass of water. Still, Riordan frequently deviated from the text that scrolled up before him, inserting his own remarks amid the prepared ones.

Seeking to cut red tape, Riordan called for a survey to gauge whether city employees are providing adequate service to residents. He also proposed management reviews to better judge the performances of the city’s top brass.

“Give people the power to make decisions, to make mistakes, to correct them and they will amaze you with what they accomplish,” the former businessman said. “We must fix the system.”

Attracting and keeping businesses in the region is another priority, Riordan said, proposing that officials issue permits by fax, carry 24-hour beepers and streamline regulations.

Without offering specifics, Riordan repeated his desire to tap into funds at the semiautonomous departments overseeing the airport, harbor and utilities. He also vowed to continue his controversial efforts to reform employee pension funds.

When the remarks were over, members of the City Council, the body that will decide the outcome of Riordan’s initiatives, offered varying degrees of support and skepticism.

Some members praised Riordan’s call for reform in city government, while others expressed dissatisfaction with the speech’s lack of specifics and suggested that the mayor was holding back on the details of his controversial plans.

“This was the most substantive and meaningful State of the City address in the 23 years I’ve been on the City Council,” Councilman Joel Wachs said.

But Councilman Richard Alarcon countered: “It didn’t go into the nuts and bolts. There are a lot of questions that we still must answer.” Specifically, Alarcon said he wished the mayor had provided more details of his plan to privatize city operations.

The union representing the city’s rank-and-file police officers complained that the mayor squandered an opportunity to show his commitment to settling negotiations over salary and work conditions.

“We are very disappointed that the mayor mentioned nothing about a new contract for police officers,” said Geoffrey Garfield, a former Riordan aide who is a spokesman for the Police Protective League. “This has to be a No. 1 priority. To talk about crime and not mention the contract is really to ignore a major problem the city is facing.”

Contract talks continued Monday and the police union said it was holding off temporarily on its threat to send a video to tourism officials that knocks Los Angeles as a haven for crime.

Many of Riordan’s initiatives, from his privatization proposals to his call for a review of city workers’ compensation packages, are liable to rile the city’s labor unions.

County Federation of Labor leader Jim Wood listened stone-faced, scribbling notes, as Riordan pledged to push ahead on a series of controversial fronts--privatizing some public services, streamlining Civil Service work rules and re-examining employee compensation and benefits.

Wood said the debate of the mayor’s cost-cutting proposals would soon shift to the City Council, where labor has a number of political allies. “That’s the place this needs to be debated out,” he said.

Later in the day, Riordan said in a meeting with Times reporters and editors that he plans to meet with labor leaders in the coming weeks to ensure that they are part of the process. Riordan also said he does not expect to further scale back city services, a process that has gone on for years. Instead, he said he will seek to make what remains more efficient.

By more aggressively collecting debts owed to the city and contracting with private operators to offer some services, Riordan said government can more closely approximate the efficiencies of private business.

Although Riordan said he expects some of his proposals to be opposed in the 15-member council, where members protect their parochial concerns, he added in his State of the City speech that he hopes “reasonable people can disagree without being disagreeable.”

“We will be reasonable and responsible employers as we restructure the city’s work force,” the mayor said. “Our responsibility is to make city dollars work as hard as the people who earned them in the first place.”

Times staff writer Rich Connell contributed to this story.