Mayoral Field Finds No Easy Fix to Budget

It is arguably the darkest cloud on the municipal horizon, a budget deficit that could climb as high as $550 million, and, so far, none of the leading Los Angeles mayoral candidates is offering a clear path out of the gloom.

Most of the proposals that have been put forward--leasing Los Angeles International Airport, relying on surplus Harbor Department funds, putting trash collection out for private bids--face huge practical and political roadblocks. Some experts on municipal finance argue that several candidates’ most ambitious plans for raising revenue would require changing state and federal laws--a slow process that at best offers little hope of short-term relief.

Councilman Zev Yaroslavsky, head of the city’s Budget and Finance Committee, dismisses most of what he has heard from the candidates as grandiose schemes that fail to address the difficult choices that await the next mayor.

“He’s either going to raise the hell out of taxes or cut the hell out of the city or a combination of both,” Yaroslavsky said Friday. “What the next mayor ought to be telling the people of this city is: ‘If I can’t get the airport money, if I can’t get the rubbish collection franchise and if I can’t get all these pie-in-the-sky ideas implemented, here’s what I will do to meet my legal obligation to balance the budget.’ . . . There really are very few options.”

The new mayor will miss the initial phase of this year’s budget wrangling over a $180-million shortfall; retiring Mayor Tom Bradley’s deadline for handing down his version of the 1993-94 $4-billion budget is April 20, primary Election Day. But whoever succeeds him will have to contend with the possibility that the state will add up to $350 million to the city’s shortfall by withholding additional property tax revenue.

Talking about cutting services and raising taxes is not a high priority for candidates frantically courting voters less than a month from the primary. But at forums and talk shows this week, the candidates increasingly were being forced to confront the issue.

Their responses ranged from detailed proposals by lawyer-investor Richard Riordan to lease the airport, privatize trash collection and consolidate departments to Councilman Michael Woo’s reluctance to say exactly what he would lease, cut, sell or tax.

During a radio debate this week, Woo said: “We’re going to have to consider new fees and new taxes. . . . I’m not prepared to say which places I would cut right now. I would protect police, fire and paramedic services. . . . Everything else is on the table.”

On the same program, Assemblyman Richard Katz called for a continuation of the state half-cent sales tax, which he said would yield about $150 million for the city. But the extension is opposed by Gov. Pete Wilson and would require approval by the Legislature. Katz also favors raising airport landing fees, which he said would net the city $100 million.

According to Riordan, leasing Los Angeles International Airport for 30 years would net the city $700 million, including an upfront payment of $250 million--enough to offset a huge chunk of the budget deficit and hire 3,000 more police officers without raising taxes.

But Yaroslavsky is skeptical of Riordan’s figures and doubts that leasing the airport and raising landing fees can be achieved in time to help the city.

The city’s chief administrative officer, Keith Comrie, said that even if the city leased the airport, it could be barred by law from transferring the lease payments to the general fund.

Riordan also would contract out the city’s trash collection for an estimated savings of $40 million.

A number of Riordan’s budgetary recommendations come from the private Reason Foundation. Reason Foundation President Robert W. Poole cited politics as the main reason why the City Council, up to now, has refused to put trash collection out to bid.

Comrie said a poll taken several years ago found that San Fernando Valley homeowners did not want the city to farm out garbage collection because they feared that service might deteriorate. And Comrie pointed out that the 1,000-plus garbage collecting jobs are held primarily by minorities. Any proposal that would do away with those jobs, he said, “could raise a significant policy issue.”

Other approaches include Councilman Joel Wachs’ call for a tax on airline jet fuel, which he said would raise $70 million, and a crackdown on no-bid personal service contracts at the Department of Sanitation, which he said would save $42 million annually.

Educator Julian Nava has proposed enacting a citywide payroll tax as a way of capturing revenue from people who work but do not live in the city.

Councilman Ernani Bernardi would put an end to downtown redevelopment and redirect the property tax revenue that the Community Redevelopment Agency has used to subsidize building projects in the central city.

Woo and Wachs advocate extending the city’s business levy on banks and savings and loans, which are now exempt. That would yield $40 million in annual revenue, but the tax could not be imposed without action by the Legislature.

Businessman Nick Patsaouras would reduce the budget of the mayor’s staff by 30%. Lawyer Stan Sanders would impose a five-cent tax on video games.

Former Deputy Mayor Tom Houston would impose a residential trash collection fee ranging from $25 a year on small homes to $100 on larger ones.

Former Deputy Mayor Linda Griego would concentrate on improving the local business climate as the best way of generating more revenue for the city.

A number of budget-cutting ideas offered by the candidates--such as eliminating the Board of Public Works, cutting the mayor and council’s budgets, tapping the city’s $30-million parking fund, diverting the Harbor Department’s $40-million annual surplus and consolidating departments--are on the table at City Hall.

But Yaroslavsky cautioned that those ideas collectively will not add up to enough savings to solve the budget crunch.

“After we have downsized the city, after we have continued the hiring freeze for a third consecutive year, after we’ve lost 2,500 employees through attrition, after we’ve deferred capital programs . . . ripped off the CRA for another $25 to $40 million . . . depleted the parking meter fund . . . how does (the new mayor) get $150 million or more?”