CRA Plans to Trim 41 Positions : Finances: The agency blames declining revenue and says legal restraints will force it to stop funding social service programs.

Faced with shrinking revenues and a lawsuit-imposed spending limit on some of its Downtown projects, the once-flush Los Angeles Community Redevelopment Agency is planning to stop funding social services in the central business district and eliminate 41 jobs in the coming fiscal year.

The cuts are included in a proposed 1995-96 agency budget that the CRA’s board is expected to approve today and send to the mayor and the City Council for the final say.

The CRA’s budget proposal does not include any help for the city’s cash-short treasury. For the past three years, the CRA has funneled about $80 million, including almost $20 million in the current year, into the coffers of its parent organization.

But this year the agency that literally rebuilt Downtown during the 1970s and ‘80s is so strapped that it should be apparent the CRA “is not the cash cow it’s perceived to be,” agency Chairman Daniel P. Garcia said on the eve of the budget vote.

The controversial agency’s cash crunch comes at a time when it has taken on new projects and expanded its reach to include rebuilding neighborhoods devastated by the 1992 riots and the 1994 Northridge earthquake. None of these projects are expected to generate the huge jump in property values that enabled the agency to reap funds from earlier projects, such as the massive commercial redevelopment of Bunker Hill.

Also, the souring of the economy has dramatically slowed the flow of tax dollars to the CRA, officials said.

The budget proposed for the fiscal year starting July 1 totals $390 million, down from this year’s budget of $504 million. Garcia said more than half of the coming year’s budget is committed to pay off bonds sold to finance the CRA’s commercial projects, housing and public improvements.

Garcia said the “biggest crimp” in the CRA’s budget is a spending limit imposed during a 1970s lawsuit brought by the agency’s critics, including then-Councilman Ernani Bernardi. CRA foes dislike the mechanism, called tax increment funding, that enables the agency to pay for more improvements in its project areas. Critics say the tax dollars coming from increases in property values generated by CRA projects rightly belong to cities, school districts and other government agencies.

Because the agency is nearing its spending cap in the central business district, CRA officials said, $4.6 million has been lopped from the coming budget. This year, that amount was distributed among seven organizations to help provide services for the homeless on Skid Row and elsewhere.

The groups were notified last spring that their CRA funding would be dropped unless officials could win court permission to raise the spending cap. In February, the seven organizations appealed to Bernardi to drop his fight over the spending cap. But Bernardi recently began selling videotapes from the Big Band era to help finance his court battles against the agency.

Agency officials said they expect that the 41 jobs proposed for elimination can be achieved mainly through attrition.