In Disputed Report, Reed Finds No County Surplus

Los Angeles County either has millions of dollars in surplus funds, or not. That much is certain.

In 35 pages of memos, tables and appendixes delivered to the Board of Supervisors Wednesday, Chief Administrative Officer Sally Reed offers a roller-coaster ride through the complex debits and credits of the $14-billion budget.

And when the ride ends, Reed maintains, it leaves weary travelers right where they started, at ground zero.

Many county officials have been anticipating tens of millions of dollars in excess funds; Reed says there aren’t any. The county’s books are balanced and every penny is spoken for.

As accountants reconciled the books on last year and finalized the spending plan for this year, they discovered both windfalls and unexpected cracks in the financial landscape that swallowed up those windfalls. The swing was more than $200 million in each direction.

“This doesn’t give the board any money to spend,” Reed said in an interview.

The disappearing surplus could mean there will be no relief for the sheriff and district attorney, who are facing huge costs of enforcing the “three strikes and you’re out” law. It also could mean that the Board of Supervisors will be stuck with a new and unpopular library tax.

But as the saying goes, accounting is an art and not a science. And county officials are expected to begin using Reed’s numbers to paint varied pictures of the county’s financial health.

Under some interpretations, the county could have $50 million or more to play with.

A spokesman for Supervisor Gloria Molina said her aides figure at least $52 million is available and the supervisor is mapping plans to spend it first on the sheriff’s and district attorney’s offices and then libraries.

Supervisor Mike Antonovich said he’s identified $16 million in surplus funds and said he will recommend the money be given to the libraries.

Even Reed acknowledged that as much as $70 million could be considered surplus funds and available for a new round of spending, though she is recommending against it.

Accountants who were closing the books on the 1993-94 budget found that county departments spent $11.8 million less than expected. Then, the financial analysts found that $111 million more in taxes--primarily property taxes--were pouring in. An additional $32.6 million in new and unanticipated revenue sources were discovered and $70 million in new savings will be realized from a new pension financing scheme.

That all left the county ahead by about $225.4 million.

But $51.9 million in expected revenues from a variety of arcane programs failed to materialize, leaving the county ahead by $173.5 million. The problem is, the 1994-95 budget hammered out in July started with a deficit of about $175 million.

Throw in a few last-minute adjustments along the way, and by Reed’s accounting the ledgers come into balance.