County Faces $250 Million in Deficits--Hankla

Unless the state agrees to divert a much greater share of property taxes to local governments, Los Angeles County could face deficits of up to $250 million over the next two years, the county’s chief fiscal officer warned Monday.

Even with more state help in funding such programs as the courts, however, the county faces rough times ahead, Chief Administrative Officer James C. Hankla said in an analysis of Gov. George Deukmejian’s recently proposed state budget.

In a “worst-case” financial scenario, Hankla said that the county’s $53.9-million surplus projected for the end of this fiscal year on June 30 could be wiped out by the end of the next fiscal year in 1987. The new burdens, he explained, would result mainly from federal revenue-sharing cutbacks and would be aggravated by increased costs of county programs.

Thousands of layoffs as well as service cutbacks in a variety of county-run programs could result if the worst happened, he added. The specter of the large cuts looms as a result partly of Reagan Administration and congressional attempts to reduce the federal deficit.

Hankla recommended that all county department managers trim their next-year budget requests by 4.6%, a savings of about $150 million.

Hankla’s bleak forecast reflected the annual budget-balancing dilemma that local governments have experienced since voters passed the property tax-limiting Proposition 13 in 1978. Consequently, state government assumed from counties and cities almost complete control over the allocation of local property taxes.

Hankla held out little hope, however, that state lawmakers would divert enough money to the county to eliminate local shortfalls in this election year.

“Given the size of the county’s projected deficit for 1986-87 ($180.2 million), and the political climate in Sacramento, we should not anticipate an increase in state aid sufficient to offset the majority of the deficit,” Hankla said. In addition to next year’s projected shortfall, Hankla forecast a $75.9-million deficit the following year.

Hankla said the supervisors should back state legislation that would:

- Provide state funding of trial courts. Under new law, the state is authorized to spend state money for the operation of trial courts, but only if the Legislature and the governor can agree on the level of funding. Deukmejian has said he could support such funding only if several court reforms were first enacted. State assumption of court funding could mean as much as $163 million to the county, Hankla said.

- Eliminate local matching funds for state-mandated health and welfare programs. Matching fund requirements initially were dropped after Proposition 13, Hankla said, adding that, because the county might lose as much as $66.7 million in federal revenue sharing, the state should once again eliminate them.

- Authorize a one-time payment from the state of nearly $115 million that Hankla said is owed the county as its share of motor vehicle license fees, as well as reimbursements for unemployment insurance, vocational rehabilitation and health programs.