The fate of the economic viability of neighborhood councils had mixed results after a Los Angeles City Council committee recommended placing accumulated savings that had been stored away from previous allotments into an unallocated balance account, infuriating members of some Westside neighborhood councils.

On Tuesday, February 16th, the Education and Neighborhoods Committee proposed putting neighborhood council “rollover” funds into accounts where councils could claim them for community projects provided they have the requests in their council minutes.

“I will stand on the toes of each council member until they understand our position,” said Mark Redick, president of the Del Rey Neighborhood Council. “We are completely in opposition to this proposal.”

Taking away the so-called “rollover funds” has been a point of contention among the advisory councils. Del Rey has accumulated $90,000 in rollover savings, and the Mar Vista and Westchester-Playa councils have also saved in excess of $25,000.

Redick called the proposal “a smokescreen” to take the local boards’ funds away so the city can close its budget gap.

“This represents a honey pot for profligate spenders at City Hall,” Redick stated.

Sharon Commins, first vice president of the Mar Vista Community Council, said the recommendation by Miguel Santana, the city’s chief administrative officer, only serves to punish local boards who have been good stewards with their financial subsidies.

“I believe (Santana’s) take on neighborhood council budgets is punitive to those councils that have been frugal with the people’s money,” she said. “It is penny-wise and pound foolish.”

City Councilman Bill Rosendahl, who is not on the council’s education committee, has publicly stated that he opposes the elimination of the rollover funds.

“These grassroots councils have been prudent and fiscally responsible with their money,” he said. “To penalize them for exercising sound fiscal policy is very, very unfair.”

The committtee did reject a proposal by Santana to reduce the annual budgets of the local councils by 50 percent.

The allotment that neighborhood councils, which were created in 1999 under the Los Angeles City Charter, receive from the city was also on the table. Last year, the local councils had their $50,000 subsidies trimmed to $45,000.

“That was a partial victory,” Redick said, “but it’s not over yet.”

Increasingly heated rhetoric has been a staple of budget negotiations over the last several weeks. Mayor Antonio Villariagosa and the council have sparred over his authority to command layoffs, and representatives of neighborhood councils have joined in the fray, calling attention to the city’s attempt to balance its budget on the backs of the grassroots councils.

That, along with recent requests asking city lawmakers to relinquish a large portion of funds they have accumulated is playing out against the backdrop of the city’s struggle to get a handle on its $212 million budget deficit.

The Los Angeles Times reported on February 10th that an audit by City Controller Wendy Greuel found that members of the council have accumulated in excess of $40 million over the last 12 years from the sale of municipal properties. These “real property trust funds” can be used at a council member’s discretion.

Faced with a looming $212 million deficit, Greuel, a former councilwoman from the San Fernando Valley, asked the council to relinquish its discretionary funds.

“It simply does not make sense that properties are acquired using money from the general fund, yet when they are sold they go directly to particular districts and don’t benefit the entire city,” the controller said.

Greuel’s request marked the second time this month that a City Hall officeholder has asked the council to use its own finances to help city officials close the budget shortfall. Villaraigosa, who has asked the council to approve laying off 1,000 municipal employees, requested a $40 million loan from the discretionary accounts to restock the city’s reserve fund the day before the controller’s audit was made public.

The mayor upped the ante on February 11th when he updated his layoff request to 2,000 employees. Various council members have openly opposed his layoff numbers, calling them extreme. One councilman, Richard Alarcon, said recently on a public affairs program that the cuts and layoffs should be “surgical, not radical.”

Steve Donell, treasurer of the Neighborhood Council of Westchester-Playa, was unable to attend the committee hearing but said he felt uneasy about the unallocated balance account proposal.

“It sounds like a transitional step to simply take all the money away from neighborhood councils,” said Donell, a co-president of the Los Angeles/Orange County Chapter of the California Receivers Forum. “Without formal funding, many aspects of the neighborhood councils will be lost or disrupted — community improvement projects, advertising, promotion etc.

“However, on the other hand,” Donell added, “we have to face the fiscal crisis in a realistic fashion.”

Commins believes that lawmakers should look at the broader consequences of slashing local councils’ budgets and the political fallout that may ensue over the council’s decision.

“I think the real question here is, will cutting the neighborhood councils’ ability to fund local projects, which generate economic activity, resonate with voters in June and November when all these proposals for new taxes and/or fees are brought forward on the ballot?” Commins asked.

Rosendahl said that he would continue to do all that he can to protect the neighborhood council funding and look into the rollover proposal.

“I will fight with every breath in my body,” he promised.

The councilman, like Donell, recognizes that the city government is facing very difficult budget choices over the next few months.

“Almost everything is on the block,” Rosendahl acknowledged. “These are some of the darkest days in the city’s history.”

The City Council will review the education and neighborhoods committee’s proposal for rollover funds at its next meeting.

Redick believes that the ongoing attempts to reduce funding for neighborhood councils through the rollover funds or cutting their budgets, is a precursor to darker things.

“We may be seeing the beginning of the destruction of the neighborhood council system,” he asserted.