Hahn’s Bid to Tap Fund Criticized

Mayor James K. Hahn’s proposal to use $5.8 million from a business tax trust fund to balance the budget is running into stiff opposition from both the City Council and a powerful business group.

Council members Wendy Greuel and Bernard C. Parks proposed Friday that the money be restored, saying the city had promised that the funds would be used to reform Los Angeles’ antiquated system of business taxes.

In addition, an influential business group, the Valley Industry and Commerce Assn., wrote the mayor Friday, saying he had violated its trust in him.

“Your new budget tells businesses in the city or those considering locating here that promises made in Los Angeles are not promises kept,” association members wrote Hahn. “That is not an effective economic development strategy that we can embrace.”

The fund was created in 2000, and council members say it is supposed to be used to directly benefit the city’s business taxpayers. But faced with a $300-million deficit amid efforts to balance the city’s $5.3-billion budget, the mayor’s office said it believed use of the trust fund to hire tax auditors and set up a new computer system for the finance office was legal.

“This action will in fact move the ball forward on business-tax reform,” mayoral spokesman Yusef K. Robb said. “These new auditors

Council members also asked the city attorney’s office to weigh in on whether the mayor’s plan for the money was legal.

“There are serious legal questions about the proposal to drain the fund’s tax release dollars,” City Atty. Rocky Delgadillo said in a statement. Delgadillo plans to issue an official opinion on the matter soon.