County Fears Costly Delays as Budget-Cutting Foes File Lawsuits : Finances: Legal challenges are made by union opposing layoffs and taxpayers protesting the transfer of funds earmarked for vital programs. More are expected.

By JOSH MEYER

June 30, 1995 12 AM PT

TIMES STAFF WRITER

Los Angeles County was hit with two lawsuits Thursday, and county officials said they are bracing for similar legal actions aimed at thwarting efforts to close a $1.2-billion budget gap with program cuts and layoffs.

One lawsuit, filed by the Los Angeles County Chicano Employees Assn., seeks an immediate halt to proposed layoffs of thousands of county employees because of an alleged technical violation of the state’s open meeting laws. A Superior Court judge was expected to rule on that by late today. But it was a civil lawsuit filed by several taxpayers, county officials said, that could have far more serious consequences because of the vast amounts of money involved.

That suit, also filed in Superior Court, alleges that the Board of Supervisors illegally took $992.6 million from restricted funds to cover the county’s unprecedented deficit. In the process, they are depriving needy children, drug addicts, alcoholics and the sick and indigent of much-needed funds that the state and federal government had earmarked for them, the lawsuit says.

Other county unions, private advocacy groups and Sheriff Sherman Block have threatened to sue the county, too. Service Employees International Union Local 660, the largest county union with 40,000 employees, has said it will file suit today to immediately stop thousands of layoffs. Those notices are expected to go out in the next few days.

All told, county officials warned, such lawsuits could hamstring their efforts to quickly deal with their worst budget crisis ever, at a time when they can least afford such delays.

“Any delay will have profound adverse implications on every aspect of county government,” said Supervisor Zev Yaroslavsky. He said each lawsuit is worrisome in itself, and that several together are potentially catastrophic.

“If the courts intervene and prevent us from moving, they force us to maintain the status quo that got us into this mess--a bloated bureaucracy with horrendous costs,” said Yaroslavsky, the City Council’s budget czar before taking office in December. “We have got to have flexibility to manage our financial affairs . . . or there will be profound consequences.”

In the past, when the supervisors have voted for layoffs of even a few dozen union workers, they have been sued. In one recent case, a judge agreed that the county could lay off about 60 county employees, but only after a monthlong delay and after the county promised to make better efforts to transfer employees before laying them off.

In recent years, the state has established minimum required levels of service the county must provide in certain programs such as health and law enforcement. Those requirements could invite even more lawsuits by those who say cuts will push services below acceptable levels, county officials said.

But putting such matters in the hands of judges could prevent--or at least delay--the Board of Supervisors from initiating dramatic cutbacks needed to balance its budget. As a result, such suits could inch the nation’s most populous county closer toward a fiscal abyss, county officials said.

The county’s top executive, Chief Administrative Officer Sally Reed, said that even a month’s delay--a common occurrence when lawsuits are filed--would cost the county $70 million. She also said lawsuit-related delays could create a vicious circle harmful to the county’s liquidity, or ability to use cash reserves for spending on employee payroll, county services and other expenses.

“You are spending money at a rate not consistent with the money you are bringing in,” Reed said. “That creates a deeper deficit, which would require more cuts, causing more delays, causing more cuts. It is a very dangerous situation in terms of taking the actions necessary to stabilize this major corporation.”

Leaders of the Chicano employees union told Superior Court Judge Robert H. O’Brien that he should stop the layoffs until the board meets again because of violations of the state Brown Act, or open meetings law.

Union lawyer Rees Lloyd said the supervisors ignored members who had signed up to speak before the vote on a measure relating to approval of $257 million in department-wide cuts. Senior Deputy County Counsel Elizabeth Cortez told the judge that the county opposed the request for a temporary restraining order, saying the supervisors have not finished deliberating on the budget and that union members will have plenty of occasions to speak.

“The layoff notices are going out this week,” union leader Gilbert Moreno said after the hearing. “Any public input next week is rendered meaningless.”

In the taxpayer case, lawyer Richard I. Fine sued the county over what he said was an illegal raid on trust funds specifically set aside for special programs. “The county is taking money from special [trust] funds,” Fine said. “All of those people suffer, because the money won’t be there for them.”

Even if the county pays such “borrowed” funds back, as it has in the past, Fine said the lawsuit was filed to ensure that all the money is replaced immediately and that the county be enjoined from repeating such actions.

Yaroslavsky said he too has expressed concern over such “borrowing,” but that he did not know if any of the various trust funds prevented county officials from using the money as temporary stopgap funding sources. One main reason the county is borrowing $1.3 billion is to pay back about $600 million in trust fund money, he said.

“I don’t think it is ideal, but I think it is perfectly legal,” Reed said. She added that many counties used the practice, but said: “I don’t think that it has ever been challenged.”

Fine, in an interview, said the borrowing is clearly illegal and that he expects to prevail.

“I think it’s a winner,” Fine said. “Otherwise we wouldn’t have brought the suit.”

Fine also criticized county officials for trying to blame those filing lawsuits for their fiscal woes. “When they stop illegally taking money,” he said, “the lawsuits will stop.”