Panel Gives Mayor’s Budget Good Reception : Finances: But council members want more information on plan to use $200 million in DWP funds.

The Los Angeles City Council’s first shot at Mayor Richard Riordan’s inaugural budget was a gentle one, with a council committee praising the mayor’s inventive financing to hire more police, but questioning whether it can be sustained in future years.

Council members Zev Yaroslavsky and Ruth Galanter, sitting as the council’s Budget and Finance Committee, said they are particularly concerned about an unprecedented transfer of nearly $200 million from the city Department of Water and Power to the municipal treasury.

The lawmakers said they will press officials from the city utility to see whether they can sustain the transfer, about $75 million more than in past years, once onetime sales of assets such as fuel oil, property and surplus supplies have been exhausted.

“I just want to know if we can continue it,” Galanter told Riordan--who was making the first appearance by a mayor in memory before the council’s budget committee.

“This is a radical departure from the way business has been done in the past,” Yaroslavsky said. “If they can defend it, it will pass. If they can’t, we’ll look for other revenues.”

The expanded DWP transfer is a linchpin of the $4.3-billion Riordan budget that will be debated by the council for the next month. It provides about one-fifth of the money the mayor has proposed to balance the budget and to hire more police.

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The first full day of budget hearings revealed no unexpected political or practical problems for the Riordan proposal, which would take effect in the fiscal year beginning July 1.

Riordan and his aides said the proposed onetime windfall from the sale of DWP oil and other assets can be continued in future years. “Next year, it won’t be selling fuel but a reduction in overhead and other costs,” Riordan said.

Deputy Mayor Mike Keeley suggested, for example, that the utility’s fuel tanks can be leased to produce a continuing source of income. Overtime pay for DWP workers has already been cut to produce more savings. Other sources of cash will be rooted out in the coming year, the mayor’s aides said.

Galanter and Yaroslavsky said they support the efforts, as long as the city utility’s managers can guarantee that they will not drive up utility rates. That could cost the city electric customers as the state Public Utilities Commission is preparing to place public and private electric companies in competition.

‘If we blow all our efficiencies on transferring money over here to the City Hall, we could undermine our long-term interest in holding on to customers and supporting the utility,” Yaroslavsky said.

The Budget and Finance Committee chairman also hinted that he may fight Riordan on another front: the mayor’s call for the continuation of an increase in charges used to maintain garbage trucks.

The sanitation equipment charge jumped two years ago from $36 to $72 annually for homeowners and from $18 to $36 for apartment dwellers, and would continue at the higher rate under the Riordan plan.

Yaroslavsky noted that Riordan called for discontinuance of another tax--this one a surcharge on business revenues--that was imposed at the same time as the refuse fee. The councilman said the sanitation fee should also drop, if possible, because it was imposed at the same time as the business surcharge so that business people and residents “shared the burden” in balancing the budget.

Riordan said he is open to negotiations but that cutting the business tax sends a more important message in attempting to sustain commerce in Los Angeles. “We have already taxed ourselves out of competition with others,” Riordan said.