State Budget Means More Cuts for Area Cities, Agencies : Finances: As local officials struggle to deal with huge losses in property tax revenues and development funds, many predict that the worst is yet to come.

With the long wait for a state budget finally over, cities, schools and health care agencies across the South Bay scrambled to learn how much money they were losing--and whether they will face still more cuts in public services.

In many cities, officials said they had braced for the new cuts by paring their budgets to the bone, but the new state budget could mean still further cuts and painful decisions on laying off employees and cutting public services.

In Hermosa Beach, City Manager Frederick Ferrin described the budget outlook as “gruesome . . . It’s a really crushing blow.” Other cities were hit less severely but were still left looking for ways to curtail expenses and avoid raising taxes.

“The South Bay economy as well as Los Angeles and the state has been down,” said LeRoy J. Jackson, the Torrance city manager and president of the South Bay City Managers Assn. “Most cities have addressed very difficult, tight budgets. In many cases it will require a reopening of the existing budget and additional cutbacks.”

And there was an overriding feeling that the worst is yet to come.

“What is disturbing is the trend because next year the state may want to cut more,” said Lorraine A. Oten, director of finance in Carson, which is in the second year of a hiring freeze and has offered early retirement to some employees. “We’re running out of things to do.”

The $57-billion budget, signed by Gov. Pete Wilson early Wednesday after a 63-day stalemate with the Legislature, reduced aid to cities, counties and other local governments by $1.3 billion.

The League of California Cities offered a rough projection that cities would lose $205 million in property tax revenue and $200 million in community redevelopment funds. Meanwhile, the school spending bill adopted as part of the budget maintains per-pupil allocations at their current level, but borrows $973 million against future revenues, thereby reducing spending on education in the next two years.

“It probably keeps us in place for this year and, considering all of the other alternatives being discussed, we could have done worse,” said Bill Chavez, director of governmental relations for the Los Angeles County Office of Education. “But we need to underscore the fact that staying even is problematic for schools.”

As expected, some South Bay governments and agencies fared better than others, with Torrance and Inglewood expecting to face dire consequences and the peninsula cities relaxing a bit with projections indicating they didn’t fare so poorly.

Torrance officials, who had grappled with lower-than-anticipated sales tax projections, now have a budget deficit on their hands. The League of California Cities estimated that Torrance would lose $1.23 million in property tax revenue.

“It’s a million-dollar loss of income--it smarts,” said Jackson, the city manager. “You cannot do business with less money and not have an effect.”

Jackson said Torrance officials must either raise revenues or cut services, supplies or personnel to balance the $105-million operating budget.

In addition, some Torrance Redevelopment Agency projects might also be put on hold because the state took away an estimated $454,000 in tax increment funds. Jackson said it is still unclear what kinds of redevelopment projects are likely to be affected.

In Inglewood, Assistant City Manager Norman Y. Cravens said the city must confront its “worst possible scenario.” The city could lose $1.5 million in property taxes and redevelopment money to the state, according to the League of California Cities.

The state cuts come on top of sales tax losses resulting from the recession and last spring’s riots. Last year, Inglewood sales tax revenues fell about $900,000 below budget projections and are not expected to rebound greatly this year.

In all, Cravens said, the city might have to cut as much as $5 million from its $60-million budget this year.

In Carson, city officials said they believe the $152,000 estimated loss in property tax revenue can be absorbed in the $30-million operating budget without a loss in services or layoffs. The city has had a two-year hiring freeze and has reduced several positions through early retirement incentives and attrition to save money, City Administrator Larry Olson said.

But officials there fret over the League of Cities estimate that Carson’s community redevelopment agency could lose $1.3 million.

“That’s a substantial amount and it would surely hurt,” Olson said, adding that officials were studying how it might affect redevelopment projects and whether other revenue could offset the cut.

Tiny Hermosa Beach, where the city manager called the financial prospects “gruesome,” could lose $330,000 in property tax revenues. That would be a tough loss considering the city pared more than $1 million in city services earlier this year to come up with what city officials described as an austere operating budget of $10.5 million.

Still, some local government bodies said they fared better than they thought they would after receiving information from Sacramento on Wednesday.

Better off than most South Bay cities is Redondo Beach, which has undergone a drastic cost-cutting program in the past 18 months in which about 50 jobs were eliminated and overhead was reduced by nearly $3 million.

The city is expected to lose about $1 million a year in property tax revenues and about $500,000 in state redevelopment funds. But officials cushioned the city’s $34-million operating budget against the blow by postponing $850,000 in salary increases, City Manager William E. (Bill) Kirchhoff said.

The four cities on the Palos Verdes Peninsula also came through the budget crisis in relatively good shape, officials there said. Instead of taking losses in the millions, the state budget cuts cost them a total of $324,000.

Harder hit was the Palos Verdes Library District, which must give up $410,000 in local property taxes--10% of its total $4.1-million budget. The district could lose another $1 million or more, depending on how the Los Angeles County Board of Supervisors reacts to the state budget cuts, library officials said.

If the county cost-cutting is severe, it could mean closing library branches and reducing services and staffing, officials said.

The other shoe has dropped for health care providers as well. Health care officials said the state’s austere spending plan might weaken the medical network serving low-income residents of the South Bay.

They pointed to a tentative plan to save $1.17 million by closing the Torrance Health Center, at 2300 W. Carson St. in Torrance. The center is among 16 centers serving the county’s poor that would shut down under a proposal being considered by the county because of reduced state health care funding.

Meanwhile, Harbor/UCLA Medical Center near Torrance might be forced to cut about 25% of its funding for outpatient services, said Irving Cohen, director of administration and finance for the Los Angeles County Department of Health Services. Information about what specific hospital services could be affected was not available Wednesday.

South Bay education officials, meanwhile, said Wednesday that they were relieved by early indications that they would receive as much state money this year as they did the year before. But they expressed anxiety about how they will make ends meet in subsequent years, when they will be required to pay back state appropriations described this year as loans.

As it is, funding shortfalls have forced schools throughout the South Bay to lay off librarians, vocal music teachers and counselors, to put off purchases of instructional supplies and equipment and to increase class sizes. And it is clear that without adequate funding, problems now faced by local schools will only multiply.

“Since I’ve been on the board, we’ve made $7.5 million of cuts,” said Torrance Unified School District Trustee President Ann Gallagher. “You get to the point where there is nothing more to cut.”

In the 6,000-student Lennox School District, where 94% of the youngsters start school speaking a language other than English, 54 teaching assistants were told they could not return to work until school officials knew how much they would lose this year in state funding.

“They haven’t been in the classrooms yet and that had a major impact,” said Asst. Supt. of Business Bruce McDaniel.

He also expressed fear about cuts to some funding programs that target low-income and minority students. “Our worst-case scenario would be if they took (those) dollars and used them to maintain funding at next year’s level,” he said. “That would have a very negative impact on our programs.”

In the high-achieving Palos Verdes Peninsula Unified School District, school officials balanced their 1992-93 budget by cutting library staff and academic counselors at intermediate schools. They also increased class sizes from 30 students per teacher to 31 students per teacher.

School officials anticipate they could come in for even worse cuts during the next two years. “Really, what I’m most concerned about is next year’s budget and the year after that,” said Supt. Michael Caston of the Palos Verdes Peninsula Unified School District.

But planning for the hard times ahead, Caston and other school officials say, is difficult given the unpredictability of the state budgeting process. As a result, many are looking toward private education foundations to fill the gaps.

“We’re going to be looking to any alternative funding base,” said Angela Jones, business manager of the Hermosa Beach City School District. “Everything is so much out of our control. I’ve told our board and community members that it seems like we’re going to have to get local control” to prevent future funding crises.

Staff writers Lorna Fernandes, Michele Fuetsch, Anthony Millican and Ronald B. Taylor and correspondent Martin Miller contributed to this report.

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