4 Peninsula Cities Facing Budget Woes, Blame State : Austerity: Anguished officials expect to see multimillion-dollar deficits and heavy cuts in programs and services.

It’s budget time again for the four cities on the Palos Verdes Peninsula, which for anguished local officials means multimillion-dollar deficits and heavy cuts in programs and services.

Officials attribute the budget problems partly to the recession and continued layoffs in aerospace and other industries. But they assign the heaviest share of blame to the state, which is expected to help offset its own huge deficit by withholding billions of dollars of property tax money normally earmarked for cities and counties.

The loss of these state appropriations alone will amount to at least $1 million for the four cities on the peninsula--Rolling Hills Estates, Rancho Palos Verdes, Palos Verdes Estates and Rolling Hills--city officials say. And the figure, they say, could be far higher.

That means more staff layoffs and service cutbacks in the four cities, which imposed austerity steps last year to deal with similar budget pressures.

“We lost $130,000 (in state money) last year and had to cut way back,” Rolling Hills Estates City Manager Doug Prichard said. “There’s no fluff left to cut.”

Underlying the looming cash shortage for peninsula cities is the estimated $7.5-billion state budget deficit for fiscal 1993-94. To balance the budget, Gov. Pete Wilson and the Legislature will probably withhold billions of property tax dollars that would normally have come back to the cities. Local officials estimate that the shortfall will total $2.5 billion--a 21% cutback for cities and counties.

These funds are local property taxes that are collected by Los Angeles County and sent on to the state for redistribution. Under the arcane tax laws passed in the wake of Proposition 13, the 1978 property tax reform measure, cities get back only a tiny percentage of this money.

As the state budget deficit has soared, the cities’ small share has been further reduced, year by year.

In Rolling Hills Estates, the state cuts are expected to amount to at least $200,000, Prichard said. That comes on top of an $84,000 shortfall this year because sales tax revenues are down, he said.

“The cumulative impact of all of this is that we’re either going to have to cut staff, cut programs or find alternative sources of revenue,” Prichard added. The council has already voted to reduce staff levels by not replacing a planner and maintenance person who recently quit.

With some variations, the stories are the same in the other peninsula cities.

“We stand to lose another $150,000 at least and the loss could go as high as $500,000,” said Paul Bussey, city manager of Rancho Palos Verdes. Bussey projects a $2-million shortfall in next year’s budget, and the city plans to eliminate most of its park and recreation program.

In Palos Verdes Estates, City Manager James Hendrickson said his city could lose as much as $900,000 in “the worst-case scenario.” The smallest loss estimate was $550,000, which would still mean deep cuts in police services.

“We’re going to have to trim a quarter of a million dollars or more from the police budget. That could mean a reduction in the force,” Hendrickson said.

Rolling Hills, the smallest city on the peninsula, will lose about $50,000 in state funding, city officials estimated.

Officials in all four cities said these figures are only estimates because neither the governor nor the Legislature has come up with specifics about the cuts. The only thing the municipal officials are sure of is that there will be less money.

“The state tells us to raise taxes, but we live in a real world. Unemployment is high, people are suffering--you don’t just raise taxes. That’s not the answer,” Hendrickson said.

What is the answer? He shrugged and said: “More cuts.”