Council Asked for OK on a Car-Tax Suit

City Atty. Rocky Delgadillo told the City Council on Friday that the state had acted illegally in withholding car-tax money from local governments and that he was prepared to sue if the council gave the go-ahead.

“I’m ready for the fight,” Delgadillo told the council and Los Angeles Mayor James K. Hahn during an emergency council meeting. “I can tell you that it is my legal opinion that the state is legally required to send the money that the city is owed.”

Faced with the prospect of losing about $19 million a month in car-tax money, the council agreed to meet Tuesday in closed session to decide whether to take Gov. Arnold Schwarzenegger and the Legislature to court.

The state collects vehicle license fees, then ordinarily turns the money over to city and county governments to pay for local services such as police and fire protection, libraries and parks.

When Schwarzenegger ordered the car tax reduced by $4 billion, he promised that local governments would not lose any money. Earlier this week, however, the administration informed local officials that they would not receive payments between January and March. That policy could continue unless new legislation is enacted.

The governor’s office has said it supports reimbursing the cities with money from other sources, but said it is up to the Legislature to do so. Senate leaders said Friday that the Legislature would take the issue up in January.

If the money is not restored by the start of the fiscal year that will begin July 1, council members said, the deficit could reach $400 million, equivalent to 7% of the city’s budget. That could force them to lay off or furlough city workers next year, council members said.

“It’s the time, not just to get mad, but perhaps to get even, and send our lawyers into court to fight Arnold Schwarzenegger, and to fight off the great Sacramento swindle, Part 10,” Councilman Jack Weiss said.

Although legislators have approved a plan to put a $15-billion deficit-reduction bond on the March ballot, there is no guarantee the voters will approve it, Mayor James K. Hahn told the council. And if they do, he said there is no guarantee the state will allocate some of that money to the cities to cover funds lost when the governor rolled back the car license fee.

The mayor outlined a series of initiatives he might put on hold as a result, including expansion of the police force, creation of additional neighborhood city halls throughout Los Angeles and construction of a new zoo exhibit for golden monkeys given to Los Angeles by China.

He agreed with council members that the city might have to consider pay reductions, as well as layoffs. Hahn urged the unions representing city workers to consider voluntary furloughs as an alternative.

“Certainly, we want to do what we need to do to minimize the eventuality that we may actually have to lay off city employees,” Hahn said. Union leaders said Friday that they would vigorously fight attempts to rescind raises or lay off employees, and they released a report alleging wasteful spending throughout the city bureaucracy.

“There are not enough people cleaning the restrooms in parks, picking up the trash and filling potholes now,” said Julie Butcher, head of Service Employees International Union, Local 347, which represents about 10,000 blue-collar city workers.

Butcher gave the mayor and council a 19-page report compiled by city employees that lists dozens of ways to reduce spending and increase revenue, rather than cutting workers.