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Tax Tabled Till Deficit Numbers Are Firmer : Finances: The council, facing a $2-million shortfall, wants to see how much more can be saved through cuts and whether the state will slash its contribution before it imposes a utility levy.

April 01, 1993|KEN ELLINGWOOD | TIMES STAFF WRITER

WEST HOLLYWOOD — No new taxes--not yet, anyway.

The West Hollywood City Council on Tuesday put off talk of raising taxes to solve a projected $2-million deficit, although it managed to close less than half that gap through spending cuts for next year.

The council, which was scheduled to open hearings on a first-ever utility tax, decided after making a string of budget cuts to wait until it has a more solid shortfall figure in hand.

"If we had to pass a budget tomorrow, I think we'd have to look at some way to get more revenue," Councilwoman Abbe Land said after the budget hearing. But, she cautioned, "I don't want to say there will be a tax if there doesn't have to be a tax."

For now, officials are hoping to close the gap projected for next year by trimming costs--and keeping their fingers crossed that the state leaves the local treasury alone as it solves its own financial woes. The city has projected a loss of more than $1 million in state-allocated tax revenues next year, compounding similar losses this year of about $530,000.

In an auditorium lined with anti-tax placards, the council managed to slash $750,000 through small across-the-board cuts in social services and law enforcement, plus other reductions. That leaves the city about $1.2 million shy of a balanced budget, if current projections hold true. But the cuts also mean that any utility tax would be smaller than feared.

"There has to be some tax," said Councilman Paul Koretz, after watching colleagues reject several major cuts he proposed. "I don't think it will be a 7 1/2% utility tax that was talked about." He predicted that a utility levy would be about half that amount.

A 3%-to-5% tax on gas, telephone and electricity bills would yield an estimated $1 million to $1.7 million annually, according to city projections. A hike of half a percentage point in the city's hotel tax, also under consideration, would bring in about $200,000.

City Manager Paul Brotzman said Tuesday's cutbacks would enable the council to delay hearings on new taxes until it passes a budget in June. By that time, city staffers may have found new savings, and the state's picture may be clearer. The council had planned to open the 45-day hearing process at the end of Tuesday's session, once it knew how big a deficit remained after making cutbacks.

The crowd at the meeting was a Who's Who of social-service agencies working under contract to the city--from AIDS groups to a senior citizen center--all pleading for survival, even if it meant new taxes. Suited residents of the West Hollywood Homeless Organization shelter testified that the program was turning their lives around, while suited business representatives argued that the city's frequently criticized marketing corporation works too.

"You've packed the hall with your providers," tax foe Budd Kops complained to the council.

Council members agreed to a 4% across-the-board cut in contracted social services, which currently total about $2.1 million, and in funding for the shelter for the homeless. The cutbacks are significant because the extensive network of social services, a source of pride in progressive West Hollywood, has escaped budget cuts in the past.

The council also ordered Brotzman to find a way to cut $200,000 in next year's contract with the Los Angeles County Sheriff's Department, which is the city's police force. This year's contract costs about $8.4 million. Brotzman said the city might save by using fewer two-deputy cars or hiring a civilian to take traffic reports.

The council spared the West Hollywood Marketing Corp. from deep cuts. The group, funded through a 1% hotel levy plus $170,000 from city coffers, has come under frequent attack from critics who say it is ineffective in attracting business and jobs. Backers argue that it's a valuable weapon in competing with other cities for tourists and businesses.

By delaying a decision on taxes, city officials have more time to lobby state lawmakers not to raid the local till as a way to make up an anticipated $8-billion budget shortfall. Brotzman urged residents at Tuesday's session to write to legislators and Gov. Pete Wilson and provided lists of names and addresses.

West Hollywood officials fear losses of up to $1.2 million, a figure equal to the remaining deficit, if state officials try to close their shortfall by shifting property tax revenues from cities to schools, as happened last year. Local officials are pinning the blame for the current debacle squarely on the state.

"On our own, we balanced the budget," Land said. "Then the state comes in, and that's the thing that keeps messing us up."

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