Hawthorne Begins to Chip Away at $10-Million Deficit : Budget: A new sewer fee and reduced disposal service are only the beginning, officials say. City workers brace for possible layoffs.

The Hawthorne City Council is making good on its promise to do whatever it takes to solve the city’s fiscal crisis.

At a marathon meeting Monday night, the council approved a new sewer fee--expected to raise $250,000 annually--and eliminated the city’s twice-a-year bulk garbage pickup program, which will save $90,000.

In addition, the council began discussion of increasing or adding business taxes, including a commercial occupancy tax that could cost some of the city’s biggest businesses hundreds of thousands of dollars a year.

But officials put off a decision on the tax measure until they could meet with local business leaders sometime next week.

The service cut and fee hike are only the beginning of what City Hall officials say will be the long and painful process of putting the city on the road to financial stability. Hawthorne is reeling from a $10.5-million deficit caused by years of overspending, bad business deals and questionable accounting methods. City bills, some more than six months overdue, total more than $5 million.

“Business as usual is not an option at this point,” said City Manager Todd W. Argow, who has created a 24-point plan of cost-cutting options that include selling City Hall and leasing it back, eliminating the Fire Department, cutting employee salaries, eliminating school crossing guards (who are paid for by the Police Department) and closing the city’s swimming pool.

Argow says he hopes the two measures passed by the council Monday will help persuade county officials to release a $1-million property tax advance needed by the city to help pay its employees.

The Los Angeles County Board of Supervisors unanimously approved the advance last week, but Chief Administrator Sally Reed has withheld the money until Hawthorne officials present a “plan for bringing (city) expenses and revenues in balance and a long-term plan to cure the financial crisis of the city,” according to a county spokeswoman.

Argow said his 24-point plan has been submitted to county officials. On Wednesday, a spokeswoman for the county said the officials are reviewing the plan and have yet to decide whether it adequately addresses the city’s problems.

The county advance, if received before the spring, would mean that the city will not get its regular April infusion of property tax money. Argow admits he does not know what specific things the city will do to meet cash obligations come April, but Mayor Larry Guidi has said that by then he anticipates the city will be in much better fiscal shape.

“At that time we should be over the hump,” Guidi said. “By then, we should be seeing the increased revenue from all the items we’re addressing in the plan.”

Hawthorne city employees are worried less about April than about the prospect of going without a paycheck in February. City Finance Director Julia A. James has confirmed that, as of now, the payroll is not covered into next month.

“This is totally unacceptable,” said Ross Moilan, president of the Hawthorne Municipal Employees Assn.

The situation could get worse, with many employees bracing for rumored layoffs or furloughs. At a staff meeting Tuesday, sources say, Argow called for department heads to determine what staff positions could be cut while keeping vital services in operation.

Asked about rumored staff reductions or furloughs, Argow responded, “We will do only what is fiscally responsible.”

Tuesday’s staff meeting was followed by an emergency meeting of the employee association that night. Although no decisions were made at that meeting, association officials say they will be joining city police and fire employee groups to lobby top administrators against employee cuts.

In the meantime, bills continue to accumulate.

City officials say they have worked out a deal with one of their largest vendors, the California Public Employees Retirement System. Although the city is in arrears by $1.5 million and late in payments dating to July, 1994, to the system, PERS officials gave the city oral approval earlier this month to take until July, 1995, to pay outstanding bills, James said.

But the city has yet to strike a deal with the West Basin Municipal Water District, which supplies up to 70% of the city’s water. The city has not paid its bills since “September or October” and owes the water district $640,000, said District Assistant Manager Virginia Grebbien.

“This is very distressing and disturbing,” Grebbien said. But more troublesome, she said, is that Hawthorne residents have been paying their water bills to the city, but the money has not been forwarded to the water district.

Attorneys for the water district, at a closed-door meeting Monday night, advised the district to find out what has happened to water revenue.

Argow on Wednesday said that water revenues had, in fact, been used to pay other city bills. But he added that such “commingling” of city funds has been stopped.

The use of restricted funds to pay other city debts will be the subject of an anticipated special council meeting Friday night. City officials have also tentatively scheduled two special council meetings for Monday and Wednesday.