Home woes could hurt county

Following years of rosy economic forecasts, Los Angeles County supervisors were warned Tuesday that the cooling housing market could cut into property tax revenue, which funds local services including public safety, health services and foster care.

Expressing concern, board members requested that the county chief executive update them in January on the fiscal outlook for the county’s $22.4-billion budget.

“The market is slowing down right now, and we know how much [you] depend on property tax,” county Chief Executive William T Fujioka told the board. “It’s something we will have to look at.”

In the 2006-07 fiscal year, property taxes grew 8%, compared with 11% the previous fiscal year. In spite of the current national sub-prime mortgage crisis, Fujioka estimates property tax revenue will increase 8% to 9% this fiscal year, which began July 1.

Property taxes constitute a majority of the money that the county can choose to spend as it sees fit, unlike federal funds, which are designated for specific programs.

“It’s pretty precious to us,” said Debbie Lizzari, a county senior chief executive.

But Supervisor Don Knabe voiced anxiety that there was “quite a bit of difference between what the economic indicators are right now and what our presumed growth rate is. That’s obviously of some concern.”

County sales tax revenue that supports public safety was 6% below projections last fiscal year, which will cost the county about $40 million through July 2008, Lizzari said.

Fujioka will analyze the first round of property taxes received in mid-December and report his findings to the board in January in an effort to avoid the program cuts and layoffs of leaner budget years.

As home values fall, especially in recently developed northern Los Angeles County communities such as Lancaster and Palmdale, the county assessor has been fielding increasing requests from people wanting to reappraise their homes, Fujioka said.

The county’s property assessment roll topped $1 trillion for the first time last year.

Despite their concern, supervisors divvied up $365 million in unspent county money, including $164 million for capital projects and maintenance.

But as the board closed the books on last year’s budget, the supervisors also expressed frustration with the finances at the Department of Children and Family Services. The county’s foster care agency spent $8 million more than it was supposed to during the fiscal year that ended June 30, and department officials estimated they would need an additional $32.4 million to handle all clients this fiscal year.

Patricia S. Ploehn, the department’s director, acknowledged that the agency made financial errors in calculating budget costs and overstated how much money it could expect from the federal government.

She said the department did not plan to reduce services to children but said it would have to cut back on plans to expand programs aimed at keeping children in their homes and helping former foster children after they reunite with their parents.

Knabe described the gap as an “asteroid-size hole” and complained that department officials had rushed too fast to expand during the last few years. He has called for an investigation into the mistakes that led to the errors.

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