Miscalculation Creates Budget Bombshell for County, Cities : Spending: Local governments have been told they must turn over more funds to state.

It was bad enough for counties and cities when the state squeezed them like so many tubes of toothpaste to spread more of their property tax revenues to the public schools.

Now the state is saying that Los Angeles County and its cities did not contribute as much money as expected in the last two years and owe the state additional tax revenues for public education.

Within the next two years, the county must pay $85 million, county libraries must pay $837,000, Pomona must pay $934,000, West Covina must pay $239,000 and Covina must pay $195,000. Half will have to be repaid by May.

Many city officials learned about the cost at a Nov. 2 meeting with the county auditor-controller’s staff and have to scramble to revise the city budgets and possibly cut services to make up for the loss.

“I was astounded, as were most of the people at the meeting,” said Mary Bradley, Pasadena’s finance director. The city will use a $1.6-million stabilization fund to pay $278,000 each year for the next two years and cover the loss of an additional $500,000 annually, she said.

State officials said they found it hard to believe that local agencies were unaware of the legislation. “This was a hot topic of debate. . . . This should have come as no surprise to local government officials. . . . There had been about a year of discussions,” said Steve Olsen, deputy director of the state Finance Department. “Los Angeles County knew what they had done.”

While drawing up the 1992-93 budget, the state Legislature created a fund for schools and passed legislation ordering counties to shift property tax revenues from local governments to the schools fund. For the 1993-94 budget, legislators increased the amount to be shifted into the fund.

But state officials said 12 counties, including Los Angeles County, calculated the shift differently than the state did, and in both years did not move enough money from local agencies to schools. And now cities, special districts and the county owe more than $100 million.

What happened, county officials said, was that the state forgot about redevelopment agencies. The state’s formula gave counties, cities and special districts a certain amount and figured on all the rest going to schools. But the county also had to give money to redevelopment agencies in some cities, and took that out of money that otherwise would have gone to the schools.

That meant that in 1993-94 the state fell $300 million short of the $2.6 billion it expected to shift to schools statewide, leading legislators to pass legislation in July to collect the money that was owed and force the county to pay redevelopment agencies out of local government funds, not the school fund, Olsen said. He said it was either tell cities and counties to pay up or cut state services.

But Tyler McCauley, county assistant auditor-controller, said that what the county did was legal under state law and that to address the problem, Sacramento legislators are changing the rules. Not only must local governments pay the extra money they got over the last two years, but from now on they will get less money because their share of property tax revenues will be figured on the state’s formula.

“It’s a double hit,” McCauley said. “It’s like your salary is being cut and it went into effect a year ago.”

Pay-Back Time

Here are the amounts of money that Los Angeles County and San Gabriel Valley cities owe the state in additional property tax revenues for schools. The amounts must be paid over the next two years. Cities that do not have a redevelopment agency do not owe any money.

Agency Amount owed** L.A. County general fund $85 million County libraries $837,000 County flood control $2.293 million Alhambra* $237,000 Arcadia $58,000 Azusa $164,000 Baldwin Park* $127,000 Bradbury 0 Claremont* $68,000 Covina* $195,000 Duarte* $106,000 Diamond Bar 0 El Monte $45,000 Glendora $134,000 Industry $90,000 Irwindale $38,000 La Canada Flintridge 0 La Puente 0 La Verne $168,000 Monrovia* $195,000 Monterey Park $204,000 Pasadena $557,000 Pomona* $934,000 Rosemead* 0 San Dimas* $86,000 San Gabriel 0 San Marino 0 Sierra Madre* $26,000 South El Monte* 0 South Pasadena $17,000 Temple City* 0 Walnut $208,000 West Covina $239,000

** Each entity will also lose about the same amount as above in property tax revenues annually in addition to the repayment.

* Special districts in these cities for lighting, landscaping, sewers, police vehicles owe amounts less than $5,000.