Cities, County Fear State Raid on Funds : Budgets: Possible action by legislators to cut the deficit may cripple local services and cause bankruptcy and massive layoffs.

Ventura County and its 10 cities stand to lose millions of dollars in anticipated revenue if California legislators raid local government funding to help narrow a projected $11-billion state deficit.

Ventura County has already instructed department heads to cut budgets up to 5%, a mandate that follows a hiring freeze, layoffs and three earlier rounds of cuts over the last three years.

In the cities, state raids on funds usually reserved for them and special districts could trigger massive layoffs, cripple programs and services and even result in bankruptcy, city officials said.

If two traditional funding sources to the cities--vehicle license fees and property taxes--are usurped as legislators are now considering, cuts could dig as deep as 27% into some city general funds.

In Fillmore, city officials said such a cut would devastate their budget. Police protection makes up 60% of the general fund, and the city’s volunteer Fire Department equipment and materials account for another 10%. The projected 27% cut from the state would leave only 3% for other city operations.

“We just can’t do that,” Councilman Roger Campbell said. “I think bankruptcy is a real possibility.”

Fillmore City Manager Roy Payne said little would be left of the city services other than police and fire. Sewer and water services are funded by separate sources, but some of those services could also be under scrutiny for attachment by the state as well.

“It is unfathomable that the state would consider cutting that deep,” he said. No money would be left, he said, to clean the streets or pay employees at City Hall.

The nationwide recession has sent sales tax and other state revenues plummeting, forcing state legislators to look to sources traditionally reserved for cities and counties as a means to bridge the state’s projected budget gap.

Although law requires the state to pass vehicle license fees collected in local jurisdictions along to the cities and the counties, the law does not specify how much must go to cities and how much to the counties, officials said.

One of the plans under scrutiny is to take the license fee revenue from the cities and transfer it to the counties. Those funds in turn would replace some of the funding that the state would withhold from the counties.

Yet counties statewide are also bracing for tremendous cuts in areas such as health, welfare and court funding, said Bert Bigler, the county’s budget manager.

Although the state requires the counties to provide indigent populations with health care and welfare, it can change the ratio at which it reimburses the counties, he said. The same can be true for funding of the criminal justice system, he said.

“The proposals out there have percentage cuts that range all over the board,” Bigler said. “So there is no way to calculate exact amounts.”

In the meantime, he said, the county is preparing alternative budgets that reflect at least two levels of funding cuts, and is struggling with a projected $5-million budget deficit that would be exacerbated by further state cuts.

Like the county, many of the cities in Ventura County are already battling budget deficits.

Although license and property tax funds are of primary concern, city officials are also worried that the state may siphon special districts’ funds such as those that operate sewer services, cemeteries, recreation programs and street lighting.

In addition, the state may also be looking at taking a portion of sales tax revenues, said Mike Sedell, Simi Valley deputy city manager, who traveled to Sacramento this week to lobby against deep funding cuts to cities.

“All city subventions are being discussed right now,” he said. “What we don’t know is what the bottom line is.”

Simi Valley officials are struggling to balance a proposed $28.3-million general fund that already includes a $2.8-million shortfall--before additional cutbacks from the state are imposed. Simi Valley had been counting on $2.4 million in property taxes, $3.8 million in vehicle license fees and $7.2 million in sales tax revenue, for a total of $13.4 million.

As much as a third of the income in their proposed budget is subject to seizure by state lawmakers anxious to balance their own budget, Sedell said. That could amount to a cut of $7 million to $10 million, he said.

Oxnard city officials said they are struggling with a $5-million projected shortfall in revenues for the 1992-93 budget. Another $7-million cut in vehicle license fees and property taxes would “gut the city’s operations,” Mayor Nao Takasugi said.

“It would almost mean going into bankruptcy because we just couldn’t make up that kind of shortfall,” he said. The city has already discussed cutting staff and services, he said.

In Thousand Oaks, Finance Director Robert Biery said the city normally would expect to receive about $20 million in revenues from the state, more than half of the city’s $33.8-million general fund budget.

If Thousand Oaks is hit with the cuts being discussed, the city would have to balance its budget by laying off workers, which it did last year, Biery said.

“But until we see something specific, there’s nothing for us to react to,” he said.

In Ventura, officials said the state’s money problems could force them to scrap their $214-million 1992-94 budget--which was painstakingly passed last week after council members agreed to slice spending by 6% and lay off 10 city workers.

“We are talking about some significant revenue reductions,” said Terry Adelman, Ventura’s finance director. “If we end up with a major hit, we’ll have to go back to the drawing board with our budget.”

Adelman said the city could lose at least $4.4 million in state funding--nearly 9% of Ventura’s $50.8-million annual operating budget.

In Ojai, the city could lose more than $400,000 in revenue from a $3.42-million general fund, City Manager Andrew Belknap said. Because one-third of the city budget is invested in law enforcement, which is already funded at the bare minimum, the cuts would have to come from other city programs, he said.

“If we experienced the sort of drastic cuts the state might be forced to make, it would reduce the general fund by 12% to 13% across the board,” Belknap said. “We’d have to make cuts across the board to match it.”

Areas likely to be hit hard include the city’s recreation program, city-subsidized public transportation and assistance to senior citizens programs, Belknap said. “They’re really pulling the rug out from under us.”

City officials in Moorpark said cuts from the state would trigger reductions in police services as well as other city programs.

“The one area that could cause sheer devastation to us is the vehicle license fees,” Councilman Scott Montgomery said.

In Port Hueneme, losing vehicle license and property tax fees could cut as much as 14.5% from the city’s general fund, a loss that officials characterized as devastating.

“The city, like almost every other city in California, is going to be reduced to providing just minimal services,” City Manager Richard Velthoen said.

Velthoen said the Dorill B. Wright Cultural Center, which hosts plays and other civic events, would be among the most vulnerable targets for closure. The center costs the city $175,000 annually, city officials said.

“Any program that relates to fulfilling social or cultural needs that really make the quality of life in a city special, those are the things that are going to be looked at,” Velthoen said.

Santa Paula City Manager Norman Wilkinson said that if the city lost its vehicle licensing and property tax funds it would slice about $1.2 million, or nearly 20%, off the city’s budget.

That would trigger layoffs of city employees, cuts in police services, and reductions in maintenance at city parks and parking lots, he said.

“A 20% reduction would obviously hit every department,” Wilkinson said.

He said the latest bad news from Sacramento, no matter how devastating, has a familiar sound. “The cities have been tightening their belts since Proposition 13 passed in 1978.”

Times staff writers Tina Daunt, Phil Sneiderman and Psyche Pascual and correspondents Larry Speer, Kay Saillant and Maia Davis contributed to this story.

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State Funding and Local City Budgets

The recession and a projected $11-billion state budget deficit have prompted state legislators to consider raiding at least two city funding sources. Below are projected revenues for two funds for the 1992-1993 fiscal year, which also reflect the amount the cities stand to lose.

Cities Vehicle License Fees Property Taxes Camarillo $1,923,075 0 Fillmore 431,393 $101,616 Moorpark 906,098 0 Ojai 268,338 140,514 Oxnard 5,072,760 1,694,655 Port Hueneme 689,535 265,367 Santa Paula 895,703 297,871 Simi Valley 3,527,370 0 Thousand Oaks 3,693,690 0 Ventura 3,267,495 1,086,942

Source: The League of California Cities