La Palma Pulls Its Belt Still Tighter as Shortfalls Persist

From outside appearances, this bedroom community would seem to be blessed.

Its 16,000 residents have the fourth-highest per capita income among Orange County cities. Property taxes are below the county average. And nowhere within the 1 3/4 square miles that are La Palma does it take the Police Department more than five minutes to dispatch an officer.

But beneath this attractive veneer is a municipality in big trouble.

Its expenses have far exceeded its revenues for some time now, and emergency reserves are nearly depleted.

A utility tax measure on the November ballot failed. And La Palma, unlike rapidly developing South County communities, can’t look to new property tax revenue. La Palma has long since been built out.

Consequently, officials have making cuts in the city’s $4-million 1989-90 budget, taking such measures as laying off the $50,000-a-year public works director earlier this year and eliminating a landscaping program. Those actions helped, but the city still has a way to go, and officials are looking for other ways to save money.

Assistant City Manager Pamela Gibson said the situation is so grim that she doubts the city would even be able to pay overtime should there be a natural disaster. The reserve, city records show, has been whittled from $350,000 four years ago to $70,000 today.

“It is,” Gibson said, “a potentially serious situation.”

City Manager Paul D. Bussey said he does not anticipate any more layoffs of the city’s 57 employees in the immediate future, although, he said, the staff may be reduced through attrition.

Other money-saving actions the city has taken, Bussey said, include a reduction in services. Roads and greenbelts along streets and medians, for example, are not being properly maintained. In addition, he said, a longstanding request by the Police Department for a new record-keeping system has been shelved. La Palma police officers’ pay is slipping behind that of other local law enforcement agencies. The starting pay for an officer in La Palma, for instance, is $300 less per month than for one in neighboring Buena Park.

Mayor Orbrey Duke said the city will consider raising license fees for various recreation activities, but he emphasized that no decisions have been made about those yet.

“I don’t foresee any panic or anything,” Duke said. “We’re a long way from being broke.”

La Palma’s troubles began in 1978 with the passage of Proposition 13, the measure that cut property taxes. The terms of the proposition deprive municipalities of the power to increase property taxes without a public vote, and many cities turned to other sources of revenue such as sales taxes.

In La Palma’s case, however, Bussey said, the limited number of businesses meant that relatively little could be raised this way.

The area was an agricultural community when it incorporated as Dairyland in 1955. It experienced a steady increase in population and business growth over the next 20 years--it was renamed La Palma in 1965--becoming virtually built out by the mid-’70s.

With little room in which to maneuver, Bussey said, city officials “started scrambling” to entice some big commercial developments to the few vacant properties left in the city. Their efforts paid off with Centerpointe, a 40-acre business park under construction just off the Riverside Freeway. Although Centerpointe will be a help, by itself it will not be enough to make up the budget shortfalls. Nor did city officials intend that it would.

Earlier this year, after finding that expenses for 1989-1990 surpassed projected revenues by more than $500,000, the City Council appointed a nine-member advisory committee to study the city’s financial condition.

After several months of work, the committee concluded that the city’s only hope besides cutting services drastically would be to impose a 4% utility users tax. A similar utility tax has been levied in more than 80 other California cities, including Huntington Beach, Buena Park, Westminster, Santa Ana, Placentia and Seal Beach, the committee said in a report.

The tax would be levied on telephone, electricity, gas and cable television, and it would put an estimated $400,000 into the city’s coffers. The cost to individual ratepayers was estimated at $8 per month, and that amount would be spread out among the four utilities.

On Aug. 1, the City Council voted unanimously to place the measure on the Nov. 7 ballot. A citizens’ Committee for Measure Q was formed, and the proposal met no public opposition until the last few days before the vote.

Then Copley-Colony Cablevision, which provides cable service to 2,700 La Palma subscribers, sent out hundreds of flyers decrying the proposed tax.

Copley-Colony, which is based in Cypress, opposed the tax on the grounds that it would drive away customers, general manager Peter Eliason said.

The Committee for Measure Q sent out a flyer of its own. In it, Carl C. Eriksen, a real estate agent who was a committee chairman, warned that if the tax was not approved, “the resultant deterioration of services and quality of life in La Palma will surely cause our community to be a less desirable place to raise a family or conduct a business.”

But voters defeated Measure Q 65% to 35%.

One of its naysayers, Gaspare Scichilone, 64, a retired aircraft mechanic, said that with other proposed state and county taxes on the ballot, there were just too many taxes.

“My personal feeling is that it was wrong timing all the way around,” Scichilone said. “Taxes were hitting us from all sides.”

Eriksen maintains that Measure Q’s defeat can be attributed to the lack of an immediate threat.

“It’s like the police refusing to come out because no crime has been committed yet,” Eriksen said.

Now, as the city looks for ways to cut its expenses further, some residents worry that the quality of life there could suffer. Bussey said the city is considering suspending neighborhood cleanup programs such as graffiti removal. Eriksen, though, is concerned that eliminating that program could damage home values, which now range from $265,000 to $400,000.

Duane Schuster, president of the La Palma Neighborhood Watch program, which supported the tax, said he is worried that police protection will suffer. Outlays for the Police Department account for half the city budget.

“What I’m scared of is not that we will lose our Police Department completely, but that we won’t keep the good officers we’ve got,” Schuster said.

David Barr, operations commander of the 23-officer Police Department, agreed that loss of experienced officers could be a result of the current fiscal uncertainty.

“The rumor on the street is that some of our people are contemplating working elsewhere,” Barr said. “We’ve done our best to assure them that, to the best of our ability, no one is going to lose employment. (But) any time you have a budgetary problem, personnel start to worry about the future.”

Many local residents praise the police for rapid response times and personal attention.

“I’ve called them I don’t know how many times, and they’ve always been Johnny-on-the-spot for us,” said resident Marlene Kelley, 52, who said that she becomes frightened when she hears strange noises outside. “They’ve even talked to me on the phone to calm me down.”

Despite the toughness of things now, Bussey expresses confidence in the city’s ability to pull through. He said that, by looking carefully, the city has been able to find ways to save money, citing as an example the decision to buy its own telephone system rather than lease one.

“We will just have to start reaching down the sides of the couch and looking for coins,” Bussey said.

LA PALMA AT A GLANCE Incorporated: Oct. 26, 1955, as Dairyland

First election: April, 1956, 76 voters out of 500 population

Renamed: LaPalma in February, 1965. A master plan and zoning ordinance passed in 1964 to gradually phase out the dairy industry.

Size: 1.76 square miles

Population: 16,106

Median age: 27.9

Dwelling units: 4,825

Persons per dwelling unit: 3.3

Registered voters: 7,591

Miles of streets: 33.9

Miles of sewer: 33

History: In 1784, became part of the Manuel Perez Nieto land grant, one of two Spanish land grants that were all or partially in Orange County. In 1834, divided into five sections by Nieto’s heirs. Rancho Los Coyotes, granted to Juan Jose Nieto, was later sold to Massachusetts businessman Abel Stearns and eventually developed into farming tracts.