Council Claims Unused Improvement Funds

As much as $1.5 million budgeted for neighborhood improvement projects throughout Los Angeles could end up going to pay raises and new hires for City Council staffs under an action taken by city officials Wednesday.

The council voted unanimously and without discussion Wednesday to transfer unspent money from two accounts for community improvements and services to a council staff salaries account on June 30, the end of the fiscal year. As of Wednesday, the two accounts had $1.5 million in uncommitted funds, although some of that may be spent in the final three weeks, according to City Clerk Mike Carey.

The move, which the council also made last year, drew condemnation Wednesday from taxpayer advocates, who questioned how the council can have so much unspent money when it has argued there are insufficient funds to expand the police force by 320 officers next year.

“During these tough times ... everything should be done to build up the reserve fund so they can pay for public safety,” said Joel Fox, president emeritus of the Howard Jarvis Taxpayers Assn.

Two years ago, council members gave themselves $4 million annually to spend on pet projects in their districts, including tree planting and graffiti cleanup. The Times reported last month, however, that 40% of past funds have been transferred into council salary accounts where they can be used to hire aides and increase staff salaries. Council members said the use of funds to beef up staff helps them better serve their constituents. (The money cannot be used for pay raises for council members.)

“I know there are some offices that have staffing needs that can only be met with this action being approved today,” said Councilman Nick Pacheco, chairman of the council’s Budget and Finance Committee. Pacheco said he generally spends all his funds on local services so there is none left for additional council staff expenses.

Mayor James K. Hahn referred to the community improvement and service funds as the council’s “little slush funds.”

Ernie Dynda, president of United Organizations of Taxpayers, said the practice represents sloppy budgeting.

“Just to put $4 million in a slush fund and play games with it later is not the way to budget,” said Dynda, a former councilman in Agoura Hills.

The transfer was part of a large package of budget adjustments approved by the council Wednesday that included a rollback of police permit fees for massage technicians, pawnbrokers, dance halls and a dozen other types of businesses. The council also agreed to pay $425,000 in refunds to about 2,000 permit-holders who paid the higher fees in the last year.

The city had increased fees by as much as 1,200%, drawing protests and threats of lawsuits from many taxpayers. The council decided to roll back the fees to the previous levels pending a study to determine what the appropriate fee levels should be to cover staff costs.

For example, the annual pawnbroker permit will revert from $2,000 to the $124 that it was at two years ago.

Times staff writer Peter Nicholas contributed to this report.