Garcetti’s budget, with tax trims and service hikes, gets council’s OK

The Los Angeles City Council approved Mayor Eric Garcetti’s $8.1-billion budget Wednesday, offering modest service increases while taking the first step toward carrying out his four-year plan for cutting business taxes.

Council members voted to draft an ordinance that would scale back the city’s top tax rate by $45 million by 2018, delivering a 16% reduction for such businesses as architects, engineering firms and healthcare companies. The tax proposal will face more scrutiny from lawmakers in coming months before it receives a final vote.

Garcetti, who took office last year, had made business tax cuts a major goal of his new administration. But faced with a $242-million budget shortfall, he scaled back his ambitions, keeping the first reduction from going into effect until January 2016.

The mayor’s go-slow strategy has drawn complaints from Lloyd Greif, chairman of the city’s Business Tax Advisory Committee, who said businesses will not stay in Los Angeles or expand unless more is done to address its tax rate. Garcetti’s plan, he said, “doesn’t go far enough, nor fast enough.”

Wednesday’s decisions pave the way for a procedural budget vote next week.

The mayor’s financial plan, unveiled last month, called for additional library hours, building inspectors and sidewalk repairs. Lawmakers reworked the plan since then, putting in additional money for traffic signals, street medians and the Fire Department.

Councilman Bob Blumenfield, who represents part of the west San Fernando Valley, said the city will deliver “very modest” increases in services in the coming year.

“This is not a growth budget,” he said. “This is more of a transitional budget. It’s ... putting our fiscal house in order.”

Still, one lawmaker portrayed this year’s deliberations as a welcome contrast to the dire budget talks of 2010, when a financial crisis led city leaders to push thousands of employees off the payroll.

“We’re on our way back,” said Councilman Paul Krekorian, who heads the council’s Budget and Finance Committee. “And we’re on our way back to starting to restore services back to where our constituents deserve them to be.”

The plan adds $22 million to the Fire Department budget, providing additional money for personnel and equipment. City officials said a portion of that money would allow for hiring roughly 200 firefighters next year, up from the roughly 140 hires budgeted this year. The department fell far short of this year’s hiring target after Garcetti suspended the recruitment program amid concerns about nepotism.

Assistant City Administrative Officer Ben Ceja said the funding would provide a net increase of roughly 80 firefighters at the LAFD once attrition is factored in. However, firefighters’ union President Frank Lima voiced doubts that the department would see a significant net increase because many of its recruits do not ultimately graduate.

“It’s a wash,” Lima said. “All next year is going to do is make sure we don’t get any further in the hole than we are.”

Throughout Wednesday’s deliberations, lawmakers did not bring up the biggest budget question facing City Hall this year: whether to put a half-cent sales tax for road and sidewalk repairs on the November ballot. The deadline for that decision comes this summer.

Whether the budget will stay balanced is far from clear. Garcetti and the council are still in salary negotiations with most of the city’s employee unions and are assuming that no raises will be provided. Meanwhile, some on the council fear too little has been allocated for police overtime.

The city’s financial plan sets aside $30 million for overtime at the Los Angeles Police Department, a fraction of the amount recommended by City Administrative Officer Miguel Santana. Councilman Jose Huizar said he fears that the LAPD will hand lawmakers a “huge bill” for overtime partway through the year.

“It’s just one of those things we’re going to have to carefully monitor,” Santana told the council.

Over the last five years, the city’s elected officials dramatically expanded the LAPD’s practice of postponing payment for police overtime years into the future. That left the department with about $115 million in unpaid hours, a figure that is expected to grow in coming years. That’s because officers can receive payment for the unpaid hours when they retire, when their salary — and their hourly wage — is significantly higher.

“This isn’t simply kicking the can down the road,” Councilman Mitchell Englander said. “It’s kicking the snowball down the road. As it gets further out, it gets bigger. It grows exponentially. And it’s something we’ve got to get our arms around and deal with.”

david.zahniser@latimes.com

emily.alpert@latimes.com