Assembly Speaker John Perez introduced legislation AB 46 that requires municipalities with fewer than 150 residents to be unincorporated.
Councilwoman Janice Hahn had sponsored a motion for L.A. to annex Vernon, but she agreed to her proposal after Perez vowed to tweak his bill to ensure that no jobs would be lost in Vernon once the government is dissolved.
Vernon is the only city in California that fits that description. Perez claims Vernon officials lack transparency and accountability.
He noted the city's last mayor was in office for 50 years, stepped down after being accused of voter fraud, but now collects an annual pension of nearly $510,000. He said the city does not have an independent electorate, because officials "handpick" the residents of the city, and intimidate outsiders wanting to move in.
Representatives of labor unions, Vernon workers and businesses rallied outside City Hall in opposition to the measure.
City News Service contributed to this report.