Bill Aims to Fix Legislative ‘Goof’ by Restoring Funds to Small Cities

Seeking to reverse what has been called a legislative “goof,” a South Bay state senator is pushing a bill to restore at least $700,000 to the budgets of El Segundo and about 19 other small cities in Los Angeles County.

As part of the overall state budget compromise hammered out last summer, the Legislature--perhaps inadvertently--took away the money earmarked for smaller cities that levy relatively low property taxes.

Now, Sen. Robert Beverly (R-Manhattan Beach) is seeking to restore the funds for these cities to use for police, fire protection and other vital services.

Under the Beverly bill, El Segundo would be the big winner in Los Angeles County, getting an estimated $506,000. At least two other South Bay cities--Rolling Hills and Rancho Palos Verdes--would also be affected. But officials in these cities, when contacted last week, could not immediately estimate the financial impact of Beverly’s proposal.

Beverly, whose district encompasses El Segundo and the Palos Verdes Peninsula, voiced optimism that his bill would be enacted into law as long as it does not get “bogged down with other bills” dealing with local government finance issues.

But with a potential $10-billion state budget deficit looming, several sources warn that lawmakers might be reluctant to help out the small cities at the same time the Legislature is faced with the prospect of slashing welfare, education and other programs.

At issue in the Beverly bill is whether the Legislature, despite mounting financial woes, will live up to a bargain reached nearly three years ago with the smaller cities.

In 1988, the Legislature approved a funding package designed to address the way trial courts are financed. It provided more than $200 million in extra state money to counties, financed 109 new judgeships and provided additional funding to cities that levy little or no property tax.

As part of the political maneuvering that surrounded the funding package, the Legislature linked the unrelated issues of trial court funding and aid to smaller cities. Specifically, the Legislature directed counties receiving the trial court funds to gradually shift some property tax revenues to the smaller cities.

But last summer, faced with a $3.6-billion state budget deficit, the Legislature tinkered with this complex formula, reducing by 10% payments to counties for trial court costs. In turn, lawmakers sought to decrease the amount of property tax revenues being shifted from counties to smaller cities.

Ultimately, a wording mix-up resulted in a more significant cut in the cities’ property tax than was envisioned, according to supporters of Beverly’s bill to restore the funds.

The supporters of Beverly’s bill blame the mix-up on the last-minute, hectic way in which the budget was cobbled together. An accord on the spending plan, which was a record 28 days late, was complicated by continuing ill will between Democrats and Republicans, and was resolved only after Republican Gov. George Deukmejian agreed to a host of tax-increase and spending-reduction bills.

In a rare admission, a Senate committee analysis of Beverly’s bill acknowledges that the budget measure contained several errors because it was “conceived in desperation and drafted without the usual legislative review.”

“No one intended for that (the funding cut for smaller cities) to take place,” said Joe Gonsalves, a former Norwalk area assemblyman who is a lobbyist for Lakewood and several other cities with low property tax rates.

Kenneth J. Emanuels, a lobbyist for the city of El Segundo, described the cut as “just one of those things that happen . . . when people do things fast.”

Ron Cano, El Segundo’s city manager, said that over the past few years, the Legislature has taken his city on a financial roller-coaster ride. First, he said, the city was elated in 1988 to receive an infusion of new property tax revenues. Then, last summer, he said, “We were surprised . . . to find out it’s not being implemented and in fact it’s being rolled back.”

Statewide, about 70 cities could get money pumped into their treasuries if the Beverly measure becomes law, according to legislative aides. There are no estimates available on the statewide financial effect of Beverly’s bill.

The Los Angeles County Board of Supervisors, which would have to give up the property tax revenues, has not taken a position on the Beverly bill.

However, Daniel J. Wall, a lobbyist for the County Supervisors Assn. of California, said his group will oppose the Beverly measure unless it is revised to also correct some other mistakes in last year’s budget bill, including provisions that took other funds away from counties.

Wall also predicted that the Beverly proposal measure could face “a lot of difficulty” because of the looming budget deficit.

A Senate aide familiar with the issue said the Beverly bill faces an uphill fight because of the state’s mounting financial problems. “Every dollar counts, and we can’t give any more away, and we’re $10 billion in the hole,” said the aide, who asked not to be identified.

The source also questioned whether the provision taking money away from low-property tax cities really was an error. He said that in the fast-paced and intense negotiations that paved the way for the budget compromise, “usually someone’s ox gets gored.”