Voters to Get Choice: Tax Hike or Sharp Cut in Services : Fiscal crisis: Rancho Palos Verdes will be forced to shut down most of city government if revenues are not increased, one councilman says.

The fiscal crisis in Rancho Palos Verdes is so severe city officials plan to go to the voters in April with this grim proposition: Either raise taxes or shut down most of the city government.

Faced with a $2.4-million shortfall in its $7-million budget for the 1992-93 fiscal year, this city of 42,000 has already sharply cut services and is considering laying off another 10% of its work force. That would leave the city with only 35 full-time employees, officials said.

However, even with the added cuts, the City Council has unanimously agreed there won’t be enough money to meet current expenses and still keep the city running unless taxes are raised. Just what kind of a tax increase will be proposed is still up in the air, but the discussions so far center on a real estate parcel tax, a tax on utility bills or some combination of the two.

City officials say a $150-a-year parcel tax would eliminate the $2.4-million deficit but would not pay for much-needed maintenance and repair projects. A 2% utility tax would raise about $1 million annually, they said. Any new tax is likely to include a “sunset clause” that would limit the number of years the tax would be imposed.

If voters reject a tax increase, City Manager Paul Bussey said the city’s badly run-down streets, curbs, gutters and storm drains would go unrepaired, environmental protection services would be reduced or eliminated and park maintenance and recreation programs would be cut way back.

The money situation is so tight, the city decided to save $3,000 by canceling a police car assigned to patrol for drunk drivers over the Christmas holidays. The council contracts police work to the county Sheriff’s Department, but it is considering hiring a cheaper private security service to respond to nonviolent crime such as burglaries, officials said.

“We have to look at taking more severe cuts to show the people we are serious,” said newly elected Councilwoman Susan Brooks.

Basic services that the city contracts for, such as trash collection, would not be affected by the budget shortfall, officials said.

Rancho Palos Verdes, the largest city on the affluent Palos Verdes Peninsula, is an upscale bedroom community that has historically shunned commercial development. Taxes have always been low and so has municipal spending. Last year, general fund expenditures in this city ran $179 per person, compared to $592 in Manhattan Beach and $763 in Torrance, records show.

In 1988, Rancho Palos Verdes residents narrowly rejected an advisory measure asking whether a 5% utility tax should be continued. With 13,352 ballots cast, the measure was defeated by 500 votes. The council subsequently dropped the tax.

The council must file its tax increase ballot measure with county election officials by Jan. 17 to get the measure on the April ballot.

The council plans to formally adopt the ballot measure on Tuesday, officials said. Then the matter will be up to the voters.

If voters reject the tax increase, Councilman Steven Kuykendall said the city would be forced to shut down most government services by June 30, the end of the current fiscal year.

City Manager Bussey’s evaluation was only a little less gloomy. Without a tax increase, the city’s already reduced level of services would have to be cut even further, he said.

To save money, the city may close the gift shop at the Point Vincente Interpretive Center and cancel the summer aquatic program and the Fourth of July Country Fair. There is talk of shutting City Hall down one or two afternoons a week and eliminating the telephone switchboard operator there.

Earlier this year the city laid off 10 of its 50 employees and cut some police services.

Like a lot of cities, Rancho Palos Verdes was hit hard by Proposition 13 taxing limits and the current recession. In addition, the city suffered a major financial setback when it had to use reserve funds to cover a $2-million accounting error.

When it became obvious last fall that the city faced a 34% shortfall in its $7-million budget next year, officials started making deep cuts. The layoffs and reduction of some services saved nearly $1 million. While that slowed the flow of red ink, it wasn’t enough to staunch the fiscal crisis.

In a Sept. 13 memo, Bussey prepared a bare bones proposal that cut $242,000 from the parks and recreation budget, eliminated $737,000 from the Public Works Department and dropped plans to spend $150,000 to repair landslide damage in the Portuguese Bend area.

The financial crisis became the focal point of the November municipal elections. During the often acrimonious campaign, the previous council took no action to meet the worsening crisis while the political debate raged.

During the hard-fought campaign, Kuykendall, Brooks and incumbent John McTaggart all pledged not to raise taxes without voter approval.