As the latest offer by the Jets to build a football stadium over the rail yards on the West Side was put under the MTA’s microscope yesterday, the City Council began an effort that could result in part of the funding for the stadium being cut off.

After months of attacking Mayor Bloomberg for committing $300 million of city money to the Jets’ stadium dream, the council held a hearing on a bill that would kill the mayor’s financing plan for the project.

The legislation, which was proposed last month by Speaker Gifford Miller, is expected to by approved by the 51-member body next month. Passing it will set the stage for an election-year lawsuit that could further complicate the battle to develop the 13-acre industrial site, which sits between 30th and 33rd streets and 11th Avenue and the West Side Highway.

At issue is whether Mr. Bloomberg can use the so-called PILOT money the city collects from developers to help the Jets pay for the 75,000-seat domed arena. The arena would double as an expansion to the neighboring Jacob K. Javits Center and be used for events during the 2012 Olympics should the city be granted the Games.

Mr. Bloomberg’s Law Department has announced that it is perfectly legal for the administration to spend “payments in lieu of taxes” without approval from the council. Yesterday, the city’s budget director, Mark Paige, told a council committee that the payments are used to invest in construction projects and spur economic growth.

In an argument that he has been in the making for the last few weeks, Mr. Miller, one of four Democrats campaigning to replace the mayor, said the administration’s plan to spend the money “flagrantly violates” the principles of a representative democracy.

One member of the Bloomberg camp, who did not want to be identified, said the hearing was not a “quest for information” but rather a way for Mr. Miller to keep the issue alive politically as he tries to increase his poll numbers. Mr. Miller has denied that his ambition for the mayor’s job has driven his stadium opposition.

During a second hearing at City Hall yesterday, the council examined the annual $11.6 million tax exemption provided to Cablevision, a leading stadium opponent and an arch-nemesis to the Jets and to Mr. Bloomberg.

Like the legislation that would block Mr. Bloomberg from using PILOT money, the resolution to call on Albany to end the tax exemption Cablevision has enjoyed since 1982 has the support of council members on both sides of the stadium issue. Mr. Bloomberg is on the record as saying that the company should give up an exemption originally granted to keep the two sports teams that play at the Garden, the Knicks and Rangers, from leaving the city.

However, those who want to the stadium built were the most aggressive at yesterday’s hearing, making the case that Cablevision has an unfair monopoly. During a hearing packed with pro-stadium construction workers and anti-stadium community activists, council members grilled a lawyer for Cablevision, which owns Madison Square Garden and views the new stadium as a threat that could siphon away rock concerts and other events.

Council Member Helen Sears, who proposed the resolution last year, said it was time for Cablevision to “dig into their pockets” to take some responsibility as residents.

One of her colleagues, the council’s Republican minority leader, James Oddo, said he has supported the elimination of the exemption and even in the past has proposed similar legislation, but that heated political climate surrounding the stadium takes away credibility from the council’s stance. Any action on the exemption would have to come at the state level.