LOCAL ELECTIONS / MISSION VIEJO CITY COUNCIL : Candidates See Spending as Top Issue : Challengers worry that present $21-million reserve may fast disappear. Incumbents defend fiscal policies and see plenty of reason for optimism.

Campaigning on a platform of financial responsibility in government, candidates predicting fiscal doom for South County’s largest city have one big question to answer.

If Mission Viejo is on shaky economic ground, why is $21 million sitting in city reserve accounts?

Their answer: Financial prosperity in Mission Viejo is a mirage that will vanish in a few years, when bonus tax revenues given to newly incorporated cities by the state expire in 1997, say candidates Karen Irvine, Larry Smith, Neil Lonzinger and Larry Gilbert.

In their eyes, the past four years have been riddled with examples of wasteful government spending: millions of dollars allegedly blown on projects like the city animal shelter, World Cup soccer facility and four recreation centers. And beginning in 1997, state tax revenues will be slashed by 5% to 15%.

“Decisions made today affect financial well-being in the future,” said Smith, a real estate loan executive. “The money in the city reserves will be down to nothing if we continue this way.”

Seven candidates are running for three seats in the coming November election. With one critic of city spending already on the council--Councilman William S. Craycraft--the balance of power in Mission Viejo could shift to fiscal conservatives.

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Opposing them are incumbent Mayor Susan Withrow and Planning Commissioner Sherri Butterfield, who shake their head at accusations of government waste.

“I think these are scare tactics,” said Butterfield, a technical writer. “Our reserves have gone up recently, not down. There’s plenty of reason for optimism about Mission Viejo, not doom and gloom.”

According to city officials, reserves had dropped from $21 million in 1992 to $15 million last year before unanticipated sales tax revenue and some deferred maintenance boosted city coffers back up again to $21 million.

Withrow, whose background is in municipal land planning, points at the gains made by the City Council in the past four years, especially the opening of eight major retail stores whose estimated sales-tax revenue will be about $1.6 million annually.

“Truthfully, I’m proud of my record,” Withrow said. “We’ve attracted several major businesses to the city. While my wonderful opponents are accusing me of reckless spending, I think we’ve made good, strong investments that will strengthen the community.”

One of those investments was a $2.1-million animal shelter that costs about $200,000 in city subsidies to run each year--about $80,000 more than what Mission Viejo paid the county for animal services.

Karen Irvine, a political consultant, said she wouldn’t have paid millions for the shelter and, if elected, will “eliminate the dog pound and return to having the county run it.”

But Withrow said that “thousands of people in Mission Viejo have animals, and the animal shelter is a very useful part of their lives. In the near future, the shelter will be regionalized as other cities use it and share the costs” of running the facility.

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The council critics say that on average, city employee salaries have been allowed to almost double in the past five years.

“I’d take a long look at employee perks,” said Larry Gilbert, a businessman, “What I’ve uncovered shows salaries have gone (on average) from $32,000 to $62,000 over last five years.

Irwin Bornstein, city finance director, said the city looked at salaries about 18 months ago and found that Mission Viejo is no more than 5% higher than the average for Orange County cities.

Generally, the financial austerity candidates have not offered specific proposals for what they would cut from the city budget.

“I’d evaluate every major expenditure and work down to see what can be reduced,” said Neil Lonzinger, a former air freight executive.

But Butterfield and Withrow say their opponents would make major cuts in necessary city services.

“My feeling is what they’re really saying is that they’re going to make major cuts,” Butterfield said. “Most of the people who came to Mission Viejo came precisely because there are activities and facilities here that are way above average.”

Lonzinger denied that he and other candidates would start flailing away at needed city programs.

“We are not conservatives who are only going to come in and start cutting,” he said.

The remaining candidate, Tom Potocki, a board member on the El Toro Water District, has taken pains to separate himself from the political infighting.

“There’s been too much negativity, as there is in all campaigns,” he said. “Those city dollars, spent rightfully or wrongfully, are gone. We need to take care of dollars being spent in the future.”

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Potocki said the El Toro Marine Corps Air Station reuse plans and a proposed city library should be Mission Viejo’s top priorities.

“I don’t believe the county needs an international airport, especially at El Toro,” he said.

Withrow said the impending base conversion is one of the main reasons she’s running for a second term.

“The next 18 to 24 months will be critical for the reuse issue,” she said. “If developed properly, the base could be a huge benefit. Conversely, if developed haphazardly it could be our worst nightmare.”

The proposed city library is backed by all candidates. However, Gilbert said he would downsize building plans from 25,000 square feet to 18,000 square feet.

Rather than fully fund it from city reserves, “I’d continue pushing for grants and contributions,” he said.

Butterfield, who is chairwoman of the Mission Viejo Library Foundation, said 25,000 square feet is minimum for a city with a population of 86,000.

“That’s the smallest we could go and still have a city library make sense,” she said. “As planned, this would still be one of the smallest city-run libraries in the county.”