State OKs Audits of L.A. Legal Bills, DWP Transfers

A powerful state legislative committee agreed Thursday to conduct audits of the city of Los Angeles’ skyrocketing bills for private attorneys and its transfer of surplus funds from the Department of Water and Power to the city general fund.

However, the state audit of the legal expenses won’t begin until January and may not happen at all if City Controller Laura Chick acts first.

The audits were authorized by the state Joint Legislative Audit Committee, whose vice chairman, Sen. Richard Alarcon (D-Sun Valley), is a candidate to unseat Mayor James K. Hahn in the March election.

Members of the state Assembly and Senate who sit on the committee said that a review by the state auditor is warranted because it did not appear city officials are giving the matters adequate attention.

“We would have just as soon [the city] do the audit, but they were asked repeatedly to do it and they would not make a commitment to do it in a timely fashion,” said Assemblywoman Wilma Chan (D-Oakland), the committee chairwoman.

The action comes after The Times reported that the city spent $18.9 million last year to hire 71 law firms for legal assistance, twice what it paid out five years ago. In addition, 50 of the law firms that received city contracts and their attorneys contributed hundreds of thousands of dollars to City Atty. Rocky Delgadillo and Hahn during that same period.

Chick has said she plans to audit the use of outside attorneys sometime during the first six months of 2005, but Alarcon and the committee had asked for the audit to be done before the end of this year.

Even so, the committee agreed Thursday to halt the state audit on legal bills if Chick completes an audit by Jan. 1. If the audit is done later, it probably would not be completed before the March election.

Deputy Mayor Julie Wong dismissed the legislative committee’s action as politically motivated.

Hahn suggested that the state audits represent “waste and duplication” given that Los Angeles officials are looking at the issues.

“The legislators in California would do better to spend their time auditing state departments and figure out why the state government has been doing so poorly, running up these huge deficits,” Hahn said at a news conference at DWP headquarters on security issues.

State Auditor Elaine M. Howle estimated that it would cost $431,000 and 5,700 hours of work to conduct the two audits, although there is a chance she will not have to do the review of city payments to law firms.

While the legislative committee voted 12 to 0 in favor of the DWP transfer audit, the panel split 8 to 3 to authorize the audit of the attorney billings.

Some legislators argued that the financial controversies should be dealt with by the city, not the state.

Chan disagreed.

“We generally don’t get involved in cities all the time, but some of the allegations involving the transfer of funds and attorney overspending seem serious enough, and Los Angeles does receive a lot of state funding,” Chan said.

The audit of the DWP will seek to determine whether the city acted legally by transferring $238 million in surplus funds from the DWP to the city general fund at the same time it raised water rates by 11%. Alarcon questioned whether the rate increase and transfer represented an illegal tax that should have been subject to a vote of the public.

The audit will also seek to determine what the money was spent on and how the department approves contracts.

Federal and county grand juries have already subpoenaed records on DWP contracts as part of criminal investigations.

Henry Martinez, the acting general manager of the DWP, said the agency has been transferring surplus funds to the city general fund since the early 1900s in recognition that the municipal utility was set up and paid for by the city and its taxpayers.

Alarcon originally sought to have the audit also look at DWP’s contract with the public relations firm Fleishman-Hillard Inc., but he agreed to exclude that from the review because Chick and Delgadillo are already investigating billings under that contract.