The Los Angeles City Council gave preliminary approval Tuesday to putting a half-percent sales tax increase on the March ballot, saying it would give leaders breathing room to deal with the city's budget problems.
The measure, which received a 10-4 vote, will need to return next week for a final vote under council procedure because it was not unanimously approved.
"We still have a lot of work to do," Council President Herb Wesson said. "But this lets us take a step back to look at what we can do ... to stabilize this city.
"We cannot tax our way out of these problems, but we can't cut our way out either," Wesson said.
L.A.'s sales tax is currently 8.75 percent. When the statewide Proposition 30 sales tax increase takes effect on Jan. 1, the tax will be 9 percent. If the city proposal is approved in March, Los Angeles shoppers would pay 9.5 percent sales tax.
City Administrative Officer Miguel Santana estimated the tax would bring in more than $215 million a year, nearly enough to cover this coming year's expected shortfall.
Santana said the city has made major cuts over the past several years, including slashing the city workforce to levels last seen when Tom Bradley was mayor in the 1970s and 1980s, consolidating city departments, increasing workers' contributions to their pensions, and cutting benefits for newly hired workers.
The City Council chose to move forward with the proposed sales tax and shelve
Wesson insisted that dropping the documentary transfer tax proposal was not the result of lobbying by the real estate industry, but rather practical politics.
"I am a pragmatic man," Wesson said. "I saw polls that the best it could do would be in the low 40s."
Mayor Antonio Villaraigosa had no comment on the council action, even though on Monday he suggested he would withhold his support for the tax hike unless the City Council commits to other cost-saving measures.
Villaraigosa can approve, abstain or veto putting the measure on the March 5 ballot.
In a letter to the City Council, the mayor said he wants assurances the money will be used for public safety. He also wants the council to move ahead with layoffs of civilian workers in the Police Department and plans for public private partnerships in operating the Los Angeles Zoo and the Convention Center.
Santana said because 75 percent of the city's budget goes for public safety, most of the new revenue would be spent on the Police and Fire departments.
Wesson said he believes there can be new management in place for the Convention Center, but that the zoo is a different matter.
City Attorney Carmen Trutanich has issued a legal opinion questioning if a private operator can oversee city workers at the zoo. Wesson said he is studying proposals to bring in additional revenue from the facility.
Three of the votes against the sales tax ballot measure came from two council members running for mayor - Eric Garcetti and Jan Perry - and Councilman Dennis Zine, who is running for controller.
All three said they believe there are other actions the city should take to save money before asking voters for new taxes.
Councilman Mitch Englander, who was the fourth `No' vote, said he believes the city needs to move ahead with the zoo and Convention Center privatization, as well as seek private operators for the city's golf courses and parking lots before seeking more taxes.
Zine agreed and said his constituents have let him know they cannot afford any more taxes.
"We have businesses closing down and people telling me they cannot pay any more in taxes," Zine said. "I think we still have room in the city budget to find more savings."
A spokesman for former Mayor Richard Riordan, who is collecting signatures for a measure to change the city's pension system, said the tax is not to maintain city services - but to pay for the city pension system.
"If the city were to adopt Dick Riordan's pension reform plan, there'd be no need for tax increases like these," spokesman John Schwada said.
Stuart Waldman, president of the Valley Industry and Commerce Association, which has been pushing to end the city's business tax, said his group believes the city needs to study the potential impact of a sales tax increase.
"One of our biggest concerns is that Los Angeles is still competitive with other cities," Waldman said. "We would want to look at what the sales tax is for other cities.
"And this is at odds with what we have been pushing for in eliminating the business taxes."
Waldman said he believes the city can do a better job in generating other revenues, whether it is from billboards or trash haulers.
The City Council also discussed looming layoffs at Tuesday's meeting. In his budget update, last month Santana called for the elimination of 50 city attorney positions to help close the $16.6 million deficit in the current fiscal year.
In a possible reprieve, the council moved Tuesday to explore alternatives to laying off the city attorneys. Negotiations between the city and the city attorneys' union, which has sued the city over furloughs, will start after Thanksgiving.
"We would prefer not to have fewer city attorneys," said Councilman Paul Krekorian, who chairs the Budget and Finance Committee.
Meanwhile, the city is also exploring ways to avoid the 112 city layoffs set to occur on Jan. 1. In this year's budget, the council voted to lay off about 200 city workers. Due to attrition, the number has fallen to about 112 employees, Santana said.
Staff writer Dakota Smith contributed to this report.