County Administrator Finds Reform Elusive : Government: Hired six months ago with a mandate to control budgets, Sally Reed has suffered a string of setbacks.

She was hired on her record as a no-nonsense fiscal conservative, someone who could finally impose restraints on a Los Angeles County government that at times seems out of control.

County operations needed a dose of bitter medicine, and the Board of Supervisors decided Sally Reed was the one to administer it.

What a difference six months make. Reed, tapped to be the county’s chief administrative officer, has suffered a string of setbacks to her ambitious goals of controlling spending and remaking county government.

Most recently, the board abandoned Reed in her effort to curb spending by Dist. Atty. Gil Garcetti when members agreed to increase his budget by $3.8 million. A few weeks ago, the board took the rare action of drafting a set of budget guidelines for Reed to follow, which preempts some of the strategies she favored and disputes her fundamental assertion that the county is $900 million in the hole.

Reed, who served as Santa Clara County’s top manager for 12 years, said she knew coming in that it would be difficult to gain the support of a board that can be unpredictable in its alliances. But during a break from her budget preparations recently, Reed voiced frustration at her failure to win the votes of some supervisors.

“I did think the board would support the policies we put forward--and then only deviate from them if they absolutely had to,” she said. “Many of their positions are different than where I want to be.”

Supervisor Deane Dana, who has emerged as Reed’s strongest ally, voiced concern about the situation.

“It’s very, very sad and I’m very worried,” Dana said.

He contends that Reed was given a mandate to straighten out the county’s troubled finances, “but for some reason the majority of the board is not backing her up now. When you hire someone to do a job, you’ve got to follow through and let them do it. She must be very frustrated.”

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Many observers at the Hall of Administration are perplexed by the turn of events and wonder why a candidate chosen with so much hope and fanfare only a few months ago can’t seem to muster a three-vote majority to support key objectives. Depending on whom you talk to, Reed is the victim of a fickle board or of her own political naivete.

“I think she’s definitely a smart, savvy person; she’s not doing anything that she didn’t do up in Santa Clara County,” said Dan Savage, a spokesman for one of the county’s largest unions, who has been watching Reed’s budget actions and her relations with the board with keen interest. “But I think she had more leeway in policy matters in Santa Clara County. The board has definitely sent a shot across the bow that they intend to maintain control.”

From the outset, Reed offered a vision and framework that would vastly alter the operations of county government. She quickly calculated that the county was running a $900-million deficit and asked department heads to submit budgets that were pared by an average of 36%.

She was not shy about charting an agenda: She would steer the county away from practices such as borrowing money and amassing a huge debt; she would begin to build up a contingency reserve; she would redirect the county’s energies away from its reliance on the state to bail it out of its budget woes.

But some board members clearly were not ready to follow her lead.

* In February, the board adopted Reed’s package of conservative budgeting principles, in which it agreed not to spend money it doesn’t have, but only after Reed assured the board that it would not actually have to abide by the rules for several years.

* In March, Reed asked the board to adopt a hard-and-fast hiring freeze, in preparation for anticipated layoffs in the next budget year. But before the supervisors even voted on her proposal, they granted several departments exemptions and finally adopted a weaker plan that would allow thousands of jobs to be filled.

* Fresh from the job freeze battle, Reed asked the supervisors to stop signing long-term leases until the budget is adopted. But a majority voted to approve leases on new mental health department office space in the San Fernando Valley.

* Then, in an effort to have the new budget ready to go July 1, Reed recommended moving up budget deliberations by a month. That way, she reasoned, necessary cuts could be implemented as quickly as possible. The supervisors, however, voted to stick with their traditional timetable of July deliberations, after the beginning of the fiscal year and after the state budget is completed.

* Last month, the board sent its clearest signal yet that it is reluctant to follow Reed’s budget lead when Supervisor Ed Edelman, supported by Supervisors Gloria Molina and Yvonne Brathwaite Burke, drafted a new set of budget guidelines. They asked department heads to come up with ways to generate new revenue.

* Two weeks ago, the board rendered its setback on Garcetti and also ignored Reed’s recommendation to rethink a billion-dollar overhaul and expansion of Los Angeles County-USC Medical Center, approving an environmental impact report for the project.

Edelman has taken the lead in opposing many of Reed’s early policies.

He said he is disappointed that Reed has not been more “fiscally creative” in dealing with the budget. He said he does not think she has adequately explored ways to generate new revenue.

Disagreeing with Dana, Edelman contended that the only mandate given to Reed was to “follow the policies of the board, as directed by the board.”

The chief administrative officer serves at the pleasure of the board but typically has been given broad powers to manage the county’s $13-billion annual budget and 84,000-employee work force.

Reed joined the county last October on the heels of one of its greatest financial crises. Facing a $1.6-billion budget gap, the board last year was confronted with threats of employee walkouts and was forced to severely curtail health and social welfare programs and lay off several hundred workers.

Reed was expected shore up confidence in county government both inside and outside the Hall of Administration, while filling the void left by the forced resignation of former CAO Richard B. Dixon, who departed amid rising criticism over spending practices.

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Reed said that some board members and others may have gotten the wrong impression that she is only interested in cutting programs.

“It’s not that I enjoy seeing programs reduced. I think county government has a mandate to do things far beyond what we have the budget for,” Reed said.

But she added: “The problem I’ve always had is that I believe, in the end, we have to live with what we have.”

One former senior county administrator said Reed has to learn the Golden Rule of county government: You can’t do it your way, you’ve got to do it the board’s way.