Budget Slip Costly News for County : Spending: Legislators raised the amount of tax revenues to be shifted to the schools to remedy an omission in the state’s formula.

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.”

Pomona must pay back $933,000 in the next two years, but it will also lose about that much annually in revenues. So this fiscal financial year, it will have about $1.4 million less in property tax revenues.

“We were completely oblivious to this. . . . We were told this would be a minor adjustment,” Pomona City Administrator Severo Esquivel said. “We had been assured by the League of California Cities and legislators that cities weren’t being hit this year.”

Alhambra was one of the few cities, along with the county, that budgeted to cover the loss.

“It’s bad, and it’s not going to get any easier for cities,” said Alhambra Councilwoman Barbara A. Messina, president-elect of the Independent Cities Assn., a group of more than 50 Southland cities.

In Covina, where the council recently passed a utility tax to make ends meet, officials said property tax revenues account for less than one-eighth of the city’s revenue. “It’s ludicrous,” Covina City Manager Fran Delach said. “We feel we’re gradually being strangled.”