Fiscal Woes End Hopes for a Happy New Year : Budget: Already facing a $400,000 deficit, city officials say the double whammy of a slow economy and state cutbacks might mean even more slashing of programs.

You could have been whiplashed from the mood change at Monday’s council meeting when cheery talk about West Hollywood’s holiday decorations downshifted into gloomy news about the city’s finances.

After council members took turns warmly praising the Christmas displays, finance officials who were already projecting a $400,000 deficit for this fiscal year told the City Council to brace for a continued double whammy: probable new state budget cutbacks for cities and no sign of an economic recovery to restore the city’s sales and hotel taxes. As part of the first-quarter report, finance officials also told the council that city parking fines and business-tax collections are hundreds of thousands of dollars behind expectations.

The council agreed to devote a February meeting to deciding whether to cut programs from the $36.5-million budget or hunt for new revenues. By then, officials will have mid-year figures. Although some collections are expected to go up, it was clear Monday that serious fiscal problems aren’t going away.

The current deficit can be traced to the loss of $500,000 in property taxes that resulted from the passage of a state budget in September that robbed municipalities of more than $200 million in state-controlled revenues. West Hollywood officials warned residents to expect even more cutbacks in the current fiscal year, which ends June 30, 1993.

“We will be hit again this year through state actions,” said Councilwoman Abbe Land, a member of the council’s finance subcommittee.

To make matters worse, collections of the city’s new business-license tax are at least $200,000 behind expectations, partly because most businesses haven’t filed returns. The council on Monday approved a new staff member for the city’s finance department to help chase down delinquent businesses, which could face a fine of 15% a month up to a maximum of 50% of the tax owed. Paul Arevalo, the city’s finance officer, said that only about 1,600 of the city’s 4,000 businesses have filed returns. He estimated that about 800 of the remaining businesses are probably exempt from the local levy.

The controversial tax, based on revenue and expected to earn $1 million a year, was approved in 1990 in the face of threats that businesses would not pay.

“Your chickens have come home to roost,” said Michael Radcliffe, president of the West Hollywood Community Alliance, an East End business group that opposed the tax.

The stubbornly anemic economy may sap another $400,000 in local sales taxes by fiscal year’s end through the loss of business, the subcommittee reported.

The city saw a $240,000 drop in parking-ticket collections when it hired a private firm to enforce parking as a cost-cutting move. The job had been done by the Los Angeles County Sheriff’s Department. Officials said much of the shortfall occurred because the department wrote fewer tickets before the changeover last summer. City Manager Paul Brotzman said he expected future collections to be on target now that the company is operating fully.

The unhappy budget assessment reinforces June predictions that the city budget wouldn’t survive the year intact. At that time, the council had already chopped about $2 million from its previous budget.