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Cities Fear State Cuts in Funds

Budget: The governor's plans leave communities short of money to fix streets and fund many programs. Officials are not surprised by news.

By Louis Sahagun, Kimi Yoshino,
Times Staff Writers

Los Angeles Times

May 19, 2001

Playground improvements, tree trimming, graffiti removal and a few more police on the beat--these are the sort of civic amenities that would be lost under Gov. Gray Davis' plan to slash $250 million in aid to cities and counties.

Davis has argued that he has no choice but to pare down the budget for the coming fiscal year, given the energy crunch, the implosion and the general downturn in the economy.

But with utility costs soaring and manufacturing jobs relocating, the discretionary funds would be sorely missed, municipal leaders said.

Rather than react with red-hot outrage, most city leaders responded to the proposed cuts with smoldering anger or resignation. This has happened before, so some cities are shoring up their budgets in anticipation of future state raids on community coffers.

"There is outrage, but it's diluted," said Los Angeles County Supervisor Zev Yaroslavsky. "Local governments have a hard time being heard in Sacramento because our competition up there has more influence than we do.

"But when streets start to crumble," he added, "local citizens call their city councils and boards of supervisors--not the governor."

Michael Gold, deputy director of the Orange County Division of the League of California Cities, would not argue with that.

"This governor in particular has not shown a real affinity for local government, for cities," Gold said. "We're just praying that they don't take anything else away."

The portion of the $250 million allotted to each city and county is based on a formula that takes into account population and contributions to ERAF, an acronym for the state fund into which redirected property taxes are deposited in each county.

Essentially, some of the property taxes that would have gone to cities and counties would instead help balance the state budget.

Los Angeles County Supervisor Mike Antonovich called Davis' strategy "just another example of the state tax-jacking our property taxes, and it has got to stop."

At first glance, the city and county losses do not seem all that significant--a sliver of most municipal budgets. With a population of nearly 4 million people and a budget of more than $4 billion, Los Angeles would miss out on $18 million. By comparison, Westlake Village, with 8,600 residents, would not get $33,919.

That's hardly enough to fund such life or death items as a fully equipped ambulance service, or a new fire station. But it could be used for quality-of-life projects, from buying parkland to enhancing senior citizens services.

Beyond that, cities and counties are growing tired of having local tax revenue funneled to the state and getting only a fraction back year after year. Take Laguna Beach, where City Manager Kenneth Frank said the city sends the state $1.6 million annually. Last year, the state returned $116,000.

Even so, every county and city has its own wish list.

In Chino, the proposed cuts mean that the city would receive about $237,000 less from the state next year than it did this year.

In a city where the total general fund budget is $24 million, $237,000 is "nothing to sneeze at," said City Manager Glen Rojas, who would have put the money into two road repair programs.

"We certainly understand why they're doing it," Rojas said. "But it doesn't make it any better when you lose the money."

In Orange County, Fullerton had hoped to receive about $520,000 for the 2001-02 fiscal year. The city would have spent that money fixing streets, gutters and sidewalks.

"It's just another insult from the state," said Fullerton City Manager James Armstrong. "We're down about $3 million in property taxes that the state took away from us. Supposedly, that money was supposed to be paid back."

In nearby Anaheim, which wants to expand its library and build a youth center, Budget Manager Jeff Stone shrugged. "We can always use [the money], but we're not really crying too loudly because the little voice said it wasn't going to come anyway," he said.

In the blue-collar Los Angeles County city of Paramount, gang activity is on the rise and graffiti is worse than it's been in a decade. Most of the $200,000 the city expected from the state was destined for overtime pay for police, parole and probation officers, lamented City Manager Pat West.

In Long Beach, which is still reeling from the loss five years ago of the Navy shipyard and its 50,000 jobs, the city aimed to pour its $2-million portion into a campaign to boost its economy--and the city's image.

"I'm not heartened at all by this news. . . . We are being forced to delay full implementation of our strategic plan," said Long Beach Mayor Beverly O'Neill.

Under the governor's budget plan, southeast Los Angeles County cities would see a host of services jeopardized, ranging from public safety programs to park improvements.

"Any cut that the governor does will affect Bell Gardens. We are a poor city here," said Anil Gandhy, the city's finance director.

In nearby Cudahy, City Manager George Perez said a $250,000 park addition for a "tot lot"--a playground for little children--would be jeopardized. Also, a $500,000 plan to improve several older city buildings would probably have to be scrubbed, he said.

Among South Bay cities, where Torrance would take the biggest hit, losing $687,870, few leaders said they had even counted on the discretionary funds.

Palos Verdes Estates City Manager Jim Hendrickson was only one of many leaders who worried that the proposed cuts are an omen of future, much bigger state slashes in local revenue.

"It's an ominous start," he said, "and we sincerely hope they [state officials] are able to right their fiscal boat."

Los Angeles County government, which depends upon the state for much of its $15-billion budget, could get through the coming year with the governor's cuts--which it never counted on getting--but is increasingly nervous about the next year, said county Chief Administrative Officer David Janssen.

To protect against further state cuts, Manhattan Beach Finance Director Bruce Moe said his city is planning to put an extra $1 million into its reserve fund.

In a state as diverse as California, some communities would suffer more than others because of the peculiarities of their size, the relative health of the local economy, and their political cachet.

In northern Los Angeles County, San Fernando's 25,000 mostly working-class Latino residents would have to wait to upgrade the main commercial district, finance a youth and senior citizens activities center at Las Palmas Park, and renovate a school auditorium.

San Fernando City Manager John Ornelas said those and other projects would have to be delayed, built in phases or with city funding.

Some will not feel the financial bite. Some portions of the Inland Empire--flush with cash following an explosive decade of growth and the creation of more than 275,000 jobs in the region, more than any other sector of California, couldn't care less.

San Bernardino County, for example, has a $16-million budget surplus this year, as well as a reserve fund that has ballooned to $27 million.

Then there is Davis' hometown of West Hollywood, where grants for law enforcement totaling $159,594 are the only state money that is at risk under the governor's plan. The rest of the city's budget is locally generated.

The cuts would most probably affect community policing efforts, such as the number of hours officers patrol, said West Hollywood City Manager Paul Arevalo.

As for Davis, Arevalo said, "We hope he has a bigger vision. We are hopeful that he will stand firm and not pass the problem from the state to the backs of small cities."

* * *

Times staff writers Andrew Blankstein, Ofelia Casillas, Steve Chawkins, Scott Gold, Anna Gorman, Rich Marosi, Soraya Sarhaddi Nelson and Nicholas Riccardi contributed to this story.

* * *

Budget Cuts

Faced with rising energy costs and a drop in tax revenue, Gov. Gray Davis on Monday unveiled a pared-down budget for the 2001-02 fiscal year that deleted $250 million earmarked for local governments. Many city officials, skeptical about the funds' availability, did not include the money in their budgets. Here's a sampling of possible impacts from the budget cuts:

Area: Anaheim

Amount cut from state budget: $1 million

Impact: Uncertain. Funds might have supported various projects, from library expansion to buying parkland to constructing a youth center.

Area: Cudahy

Amount cut from state budget: $250,000

Impact: Could jeopardize park improvement project.

Area: Laguna Beach

Amount cut from state budget: $116,000

Impact: Some park improvement projects postponed. Plans to increase street-sweeping delayed.

Area: Orange County

Amount cut from state budget: $6.9 million

Impact: Uncertain. County did not budget these funds but possible uses included jail expansion, increased health care and debt reduction.

Area: Palos Verdes Estates

Amount cut from state budget: $74,802

Impact: Minimal impact. Would have been included in city's general fund.

Area: San Fernando

Amount cut from state budget: $3.5 million

Impact: Probably will delay various projects, including street and lighting improvements and renovation of a school auditorium.

Area: West Hollywood

Amount cut from state budget: $159,594

Impact: Might reduce community policing efforts.

Area: Westminster

Amount cut from state budget: $250,000

Impact: Some park and street improvement projects postponed.

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