State Budget Cure Will Cause Cities to Feel More Pain : Finances: Nine municipalities assess the effects of Sacramento’s revenue shifts. The only good news is that it could have been worse.

From Manhattan Beach to Carson to Inglewood, city officials across the South Bay are reeling this week from the implications of California’s proposed $52.1-billion state budget, which would take hundreds of millions of property tax dollars away from city governments.

The impact of the cuts in state money could be felt in dozens of different ways. In Inglewood, city workers in the Employment Development Department may soon have themselves as clients, if that office is eliminated as expected. Also in Inglewood, a police captain may have to become a police lieutenant as cutbacks force reductions in high-ranking positions and a continued freeze on promotions.

In Hermosa Beach, it appears the Fire Department will have to make do with a 1969 pickup truck instead of buying a new one, and city workers with psychological problems face cutbacks in their psychiatric insurance benefits.

In Hawthorne, city workers may have to start hoping that their older colleagues will retire and thus spare the younger ones from getting pink slips. In the Palos Verdes Library District, it’s going to be harder to check out a book, as hopes dim that the district will be able to keep two of its branches open or expand its shortened central library hours.

And so on throughout the South Bay. To municipal officials already straining to fill a one-gallon can of responsibilities with only three-quarts of money, the budget shortfalls, which are still subject to change, are potentially staggering: Based on figures bandied about early this week, Redondo Beach could lose between $800,000 and $2 million, Hermosa Beach could take a hit of up to $650,000, and Torrance expects to lose more than $1 million.

Hawthorne City Manager James H. Mitsch, whose city could lose as much as $1 million, probably spoke for most of his South Bay colleagues when he said, “This is devastating to us.”

The only good news is that it could have been worse.

“It’s a hard hit, and nobody likes it,” said Sheri Erlewine of the League of California Cities. “But it’s probably the best deal we can get right now. They’re taking $288 million away from cities, but you have to remember that in January we thought we were going to lose $1 billion. So it could have been much, much worse.”

The cause of the local government misery was a decision to shift $2.6 billion in property tax revenues from local governments to schools, thus dramatically reducing the amount of state money that could be doled out to local governments. Most of that shift takes money away from county governments, but cities also took their lumps in the deal.

The blow was softened somewhat by the Legislature’s decision to offset some of that loss by extending, for at least six months, a “temporary” half-cent sales tax, part of which may be used to help out cities. And in November, voters will be asked to make the tax permanent.

The following is a look at the state budget’s impact on nine South Bay cities:

CARSON

Officials drafted their $31-million budget with the expectation that the city would lose about $800,000 in property tax revenue from the state. Deputy City Administrator Scot Yotsuya said officials think their estimate will hold, though they won’t know for sure until the final version of the state budget is prepared.

Although Carson does not plan to lay off workers or eliminate services, the city will continue its hiring freeze, leaving 16 positions unfilled this year, and will scale back recreation and community programs.

In the past four years, some 100 positions have been left open because of the hiring freeze. The city has held the line in spending and revenues, with only minor increases over last year. But that means fewer people to answer telephones, staff parks and put on civic functions, Yotsuya said.

“We’ve been down to the bare bones for a while,” Yotsuya said. “In the future we may have to consider elimination of services and program.”

As for the state shifting revenue from the cities, Yotsuya said: “It should not have happened.”

GARDENA

In fiscally healthy Gardena, City Manager Kenneth W. Landau said the city’s two-year budget, drafted last year, was designed to absorb the loss of revenue.

No reduction in city services or employees is planned and hiring will continue, Landau said. He said the city has benefited from writing conservative two-year budgets for the past six years.

Revenues have exceeded expectations, Landau said. Gardena’s general fund budget for 1992-93 was $28.8 million, compared to the $29.1 million planned for 1993-94.

HAWTHORNE

Hawthorne City Manager James H. Mitsch said he figures the state’s spending plan might put the city about $1 million in the hole.

Mitsch said his main concern is maintaining police and fire department services at their current levels.

“So we are looking at things like consolidating departments to become more efficient, and cutting back wherever possible,” he said.

HERMOSA BEACH

Hermosa Beach adopted a $10.2- million budget this week that reflected an estimated $650,000 in state cutbacks. That figure could be significantly less under the budget that passed the state Assembly and Senate earlier this week, but city officials continue to plan for the worse.

“I sort of left no stone unturned,” City Manager Frederick R. Ferrin said of his approach to cutting the city’s budget.

At least 20 city positions were eliminated, including the public safety director position, which oversaw the police and fire departments, and two police commander posts.

Now, police operations are overseen by a police chief whose salary is less than that of the former public safety director. And in place of a fire chief, the city named one of the Fire Department’s three senior fire captains to serve as titular fire chief.

The city also decided not to replace a 1969 pickup truck that fire officials use to transfer materials.

City employees also lost some benefits for psychological coverage, and the city increased its self-insurance deductible to $250,000, which translates into a savings of about $85,000 a year.

Recreation fees were increased while overtime, travel and office supplies were cut back or eliminated.

INGLEWOOD

Inglewood, which has to lay people off next week because of severe budget problems, could lose about $650,000 to the property tax shift. But even that is not quite as much as officials were expecting when they put the budget together early this spring. At that time, said City Manager Paul D. Eckles, he thought the city would lose $1.1 million in revenues.

By June 10, as the state refined its plans, Eckles told the City Council that the city probably would get $450,000 more than originally thought. The vote this week in Sacramento proved Eckles correct.

“We’re not happy about this at all,” Eckles said. He still has to recommend to the council that it vote next week to lay off as many as 11 full-time employees and seven part-time workers.

MANHATTAN BEACH

Manhattan Beach City Manager Bill Smith said he prepared this year’s $32-million city budget on a “worst-case scenario.” Calculating that the city would lose $1.37 million, city officials decided to put off about $600,000 in capital improvements, including plans to remodel the city garage and a water improvement project.

The city also opted to end its stopgap funding of the Manhattan Heights Library, a county facility that had been scheduled for closure last year, and to raise developer fees.

RANCHO PALOS VERDES

The Rancho Palos Verdes City Council passed a $7-million operating budget in May, anticipating a loss of about $400,000 to the state. Under the latest budget proposal, the city would instead lose about $145,000, said Pam Antil, assistant city manager.

“While we don’t want to lose anything at all, it’s still better than $400,000,” she said. With changes still being made in Sacramento, she said it was too early to tell if the City Council would restore programs.

“We’ve learned it’s not over until the governor has signed on the dotted line,” she said. “We could think we’re losing $145,000 in (the latest budget agreement), and then learn next week it’s going to be $500,000.”

In February, the city cut recreation programs to balance its 1992-93 budget. It didn’t have to make additional drastic cuts to its 1993-94 budget because of the trimming that already had been done.

“The council already made cuts other cities are making this year,” Antil said.

REDONDO BEACH

The state’s property tax transfer could translate into a loss of anywhere between $800,000 and $2 million in funding to Redondo Beach, city officials said. Although that represented a major chunk of the city’s $34.4-million operating budget, city officials were able to avoid major cuts by dipping into the redevelopment fund for about $750,000.

To further offset the loss, city officials combined the city’s parks and pier departments. They also opted not to fill about a dozen vacant positions, bringing to 62 the total number of positions lost through attrition in the past two years.

“We were kind of in a lucky position with the redevelopment agency,” Assistant City Manager Ken Simmons said. “If that wasn’t there, we would have gone through some major problems.”

But, he said, city officials are worried about next year.

“Last year we had an $850,000 loss from the state, but luckily we were renegotiating our gas franchise so we could make it up that way,” Simmons said. “But we’re running out of these little tricks. If the state comes back next year and wants a million dollars, we’re not sure how long we can come up with those ideas.”

TORRANCE

Torrance had been bracing for an estimated loss of $1.5 million in property tax revenues to the state. The city now expects that loss to grow to $2.6 million, although it hopes to receive $800,000 from a state transportation fund to partially offset the shortfall.

That means Torrance may have to whittle nearly $300,000 from its budget later this year. Torrance officials, who passed the 1993-94 city budget Tuesday night as news of the state budget was trickling in from Sacramento, say the cuts have not been determined.

The city already has struggled to close a projected $5.3-million deficit for 1993-94 by eliminating 13 vacant city posts and adding new fees for city services. City Manager LeRoy J. Jackson expressed disappointment on Wednesday that the state budget appears to require Torrance to make additional cuts.

“We hoped for something better than that,” Jackson said.

Staff writers Randal C. Archibold, Carol Chastang, Michele Fuetsch, Ted Johnson, Kim Kowsky and Deborah Schoch contributed to this report.