Anger Rises After County Finds Windfall : Budget: Some politicians and community members say the $125-million surplus compromises the government’s integrity. Officials say they did not know about the money until after cutbacks were decided.

A bizarre little scene was played out recently in the seat of Los Angeles County government: There, at a sparsely attended public meeting, was a powerful, outspoken elected official haranguing the top administrator about money: not misspent money, not too little money, but too much money in county coffers.

Where did it come from and when did you know about it? Supervisor Gloria Molina wanted to know.

Chief Administrative Officer Harry L. Hufford looked nonplussed.

The few die-hards taking in last week’s spectacle began to chuckle.

But the exchange was hardly a laughing matter. The questions were prompted by the revelation that the county, suffering from what was widely ballyhooed as its worst fiscal crisis ever, was in fact $125 million richer than anyone had figured.

And after a summer of extreme discontent--at least 500 people laid off, severe service cutbacks and near-emasculation of the county’s welfare program--the answers are of utter importance.

Community members who agonized over cuts for welfare recipients and library services are questioning whether all the pain was really necessary.

“It’s really outrageous to find out about this money now,” said Lisa Meade, an attorney who is representing general relief recipients who have sued the county to block welfare cuts.

Dr. Reed V. Tuckson, president of the Charles R. Drew University of Medicine and Science, who offered searing testimony during budget deliberations about the public health threat if county health clinics closed, echoed her comments.

“I’m extremely disappointed and very concerned that the health and survival of needy citizens could have been imperiled because of decisions made based on faulty data,” he said.

Molina said the timing of the money discovery “compromises (the county’s) integrity” and may have long-term “negative consequences.”

“While we were cutting general relief, while we were cutting the libraries and clinics, nobody could have told us this money might be available?” she asked.

In effect, no, Hufford and county auditor-controller Alan T. Sasaki replied. They explained that the money was not discovered until late August--after county departments had submitted their final financial tallies, and several weeks after budget deliberations.

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The surplus money, found mostly in the General Fund, Fire Protection District and Flood Control District, grew out of unexpectedly effective penny-pinching measures, the officials said.

Much of the surplus will be used to meet a $215-million budget gap that was to be filled by trimming labor costs, they said. And even with the surplus, county finances are hardly rosy.

“This is a one-time amount of money we’ve identified and we’re going to continue to have to freeze spending until we find long-term solutions to our problems,” Supervisor Yvonne Brathwaite Burke said.

But Molina and others argue that better accounting and financial forecasting should have turned up the surplus. The amount--$125 million is small potatoes in the context of the county’s $13.5-billion budget--is not the concern.

What many fear is that the county’s credibility with the public and its legislative supporters may have suffered severe damage, especially after the county literally went begging with hat in hand to Sacramento for more money.

The county ended up winning approval of two key pieces of legislation, both awaiting signature by Gov. Pete Wilson, that would spare library services and health clinics for the poor.

The concern is that the mere fact of the surplus feeds into the county’s image as a greedy behemoth that is inevitably caught crying wolf.

State Sen. David A. Roberti, (D-Van Nuys), who sponsored the library legislation, said he was staggered by news of the surplus.

“I don’t know of anything that would damage the county’s credibility more than this,” he said. “I would expect them to go over their budget with a fine-toothed comb before coming to the Legislature. It just points up the fact that the county still doesn’t have a handle on its (financial) matters.”

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Of most concern to Roberti, Molina and others is that the surplus could jeopardize the pending library and health clinic legislation and even voters’ approval of an extension of the half-cent sales tax, an item on the November ballot that county officials are counting on to provide money for public safety services.

“I hope this doesn’t change governor’s signature on the legislation because we really do need it,” Molina said.

But she also argued that had the Board of Supervisors known earlier of the size of the surplus, they might have made different budget choices.

When the board adopted its final budget this summer, it was nearly $600 million short of the funding needed to maintain services at 1992-93 levels. County officials blamed much of the deficit on the state’s decision to shift $300 million in property taxes from county services to schools.

Nearly every department was forced to cut back, with 43 of the county’s 81 libraries scheduled to close, 20 health clinics and four comprehensive health centers scheduled to be closed, and the jobs of 2,000 employees on the block. If the health bill becomes law, about 1,500 jobs would be spared, but about 500 employees have already been laid off.

Many county workers say news of the surplus confirms their argument that layoffs should have been delayed until the county’s financial picture was certain.

“The layoffs were premature; they should have waited until the last minute,” said Pat Libby, community library manager at the Norwood Library in El Monte. About 340 full-time and part-time library workers lost their jobs. Libby said she hopes that the community support that built up for the libraries will not subside.

“It is very much a concern that while the library really is short of money, it exists within a county system that seems to be able to pop up with all sorts of money,” she said. “This found money thing is very troublesome--people just don’t like it.”

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County administrators announced the surplus after completing negotiations for new contracts with 14 county employee unions, leading Libby and others to speculate about the timing and whether workers’ concessions might have been avoided. In a recently concluded deal with the unions, the county backed away from a demand that workers take an 8.25% pay cut but won several concessions, including deferral of overtime pay and salaries.

Dan Savage, a representative of the Service Employees International Union Local 660, said he believes the county played fairly and did not try to hoodwink the unions.

“I don’t think there’s anything nefarious about the release of the figures,” he said. “Some of the assumptions they made were shaky enough without throwing in $125 million.”

And even as vociferous a critic of Los Angeles County as powerful Assembly Speaker Willie Brown (D-San Francisco) declined an opportunity to fault it on the issue of the suddenly found money. His assistant, Rick Simpson, said: “We would consider it fantastic if we could calculate the state budget to within $125 million. I don’t know if it’s appropriate to expect that degree of accuracy from counties.”

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Still, it is the county’s history that may be haunting it now. Roberti said he plans to ask county officials to make a departmental accounting of where the money savings came from and when county administrators were aware of it.

“We know the county is still in a deficit situation and this wouldn’t have been a problem at all if the county had been up front with the Legislature,” Roberti said. “They say they didn’t find out about it till late August but with the county’s track record, who knows?”