County’s Efforts for U.S., State Rescue Stymied

Los Angeles County’s fiscal outlook took a dramatic turn for the worse Wednesday when a hoped-for financial rescue from Washington hit a roadblock and continued gridlock in Sacramento threatened to force even sharper cuts in the county’s already reeling health system.

County supervisors grew noticeably somber, saying prospects had dimmed for an infusion of at least $178 million in additional federal money that they counted on to ease the pain of sweeping cuts in the health care system.

After private meetings with top federal health officials over the past two days, county leaders said about $105 million of the federal money would be in effect a loan that would not solve the county’s fiscal crisis or avert deeper cuts in health services. The talks also have been stymied by federal concerns that a costly solution to Los Angeles County’s woes would set an expensive precedent that could be cited by other urban areas suffering similar ills.

In addition, federal authorities are adamant that no federal funds be used for most non-emergency treatment of illegal immigrants--a sticking point for county officials.

Supervisor Zev Yaroslavsky said the federal response to the county’s pleas was totally unsatisfactory.

“It does not address the problem at all. It leaves a huge gap,” he said. “Coupled with what’s not happening in Sacramento, I think we are careening as a county to some doomsday decisions.”

The county plans to shut down its comprehensive health centers and most community clinics Oct. 1 and lay off about 5,000 county employees. And closure of one or more county hospitals could follow if the federal money, which the supervisors built into their budget last month despite the risk, does not materialize.

County health czar Burt Margolin said that failure to receive the federal money would put “enormous additional strain on the health system, and could lead to closing a hospital, one or more.”

Margolin said the federal officials came to Los Angeles with good intentions of helping the troubled county. “But despite their best intentions, what they are proposing to us just wouldn’t . . . work. We are far apart.”

But a federal official close to the talks insisted there is no impasse with the county. “Where we are is in discussions. We are offering suggestions,” the official said. “We want to find a way to be constructive in assisting the county.”

Further talks will be held next week in Washington. “We’re back to a new round of discussions with the clock ticking and the deadline looming,” Margolin said.

Supervisor Yvonne Brathwaite Burke joined Yaroslavsky and Board Chairwoman Gloria Molina in new personal appeals for help from the nation’s capital.

“Things are not going well. We need to come up with some other ideas,” Burke said. “We have to do something to keep the hospitals from closing. It really is very bad.”

With help from Washington far from certain, the word from Sacramento was even more gloomy.

Los Angeles-area Democrats ran into solid Republican opposition while trying to steer a cornerstone of their own bailout package for the county through the Assembly: a local tobacco tax potentially worth hundreds of millions of dollars in future years.

But the proposed tax is opposed by Republican Gov. Pete Wilson and nearly all GOP legislators.

Democrats nevertheless were trying to round up support for the measure as it headed for a crucial floor vote. Republicans tried to hold it off with a series of parliamentary maneuvers. The bill calls for a new tax, with local approval, of up to 25 cents on a pack of cigarettes in Los Angeles County.

Other parts of the aid package were scheduled to follow the tobacco tax proposal onto the floors of the Assembly and Senate today or Friday before the Legislature concludes its business for the year.

Also under way were attempts by Democrats to link proposed aid components for Los Angeles County and bankrupt Orange County.

Los Angeles-area Democrats are seeking a shift of $125 million from the Metropolitan Transportation Authority this year, and more in future years, to help rescue the county’s financially ailing health services.

But Los Angeles Mayor Richard Riordan and a majority of the MTA board oppose any effort to divert more than $50 million from transportation programs to the county. Riordan’s personal lobbying of Wilson was a key factor in the governor’s decision last month to veto a $375-million raid on MTA funds over five years.

The mayor has been in touch with the governor’s office over the past few days concerning the county budget situation.

In addition to the federal money, the supervisors are counting on at least $50 million from the MTA to fund health services, an infusion which is also now in jeopardy.

Wilson has said repeatedly he would hold the line at that amount.

Supervisor Deane Dana said he spent much of the afternoon on the phone with Republican Assembly members trying to break the stalemate with Democrats. “Everything going on is so crazy. They don’t realize the seriousness of the situation,” Dana said of legislators.

“A lot of things get muddled up up there and you just have to hope and pray that reason will prevail,” he said. “We’ve got to have some money. We need to have $100 million or so [from Sacramento] . . . but it does not look good.”

Even Republicans from Los Angeles County said they would not vote for the Democratic package for a Los Angeles bailout, saying raising taxes was the wrong way to approach the looming crisis.

“Every time we raise taxes to meet some emergency all we do is delay the inevitable, which is forcing politicians to spend money wisely, not foolishly,” said freshman Assemblyman James Rogan (R-Glendale).

Although he said he was greatly concerned about the looming collapse of the health care system, Rogan said county officials each year have come to the state with pleas for a bailout, instead of responsibly acting to downsize government.

“Los Angeles County certainly has felt the same recessionary impact [in recent years], yet they have continued to defer making tough choices, and insisted on providing the same level of services all of this time,” he said.

“Well, we don’t have the money this year to bail them out, and Orange County out, and the state out. They have to stop looking at these quick fixes that will get them through the next election cycle and start looking to the root cause of these problems and come up with a bipartisan solution.”

Meanwhile, in a legislative committee meeting that adjourned early Wednesday, conferees from both houses agreed to link the Los Angeles transportation fund proposal to a similar measure for Orange County so that the two plans either succeed or fail together as they wend their way through the Legislature.

If passed, the measures will go to Wilson for his signature. The governor has threatened to veto bills that are intertwined unless substantial changes are made in the Los Angeles County proposals, including MTA funds and other concerns.

Without the changes, said Paul Kranhold, the governor’s press secretary, attempts to tie the fate of rescue bills for both counties to each other will result in a veto. He said Wilson will not accept any suggestion of a tax increase.

The Democrats appeared to be responding to the governor’s objections, in part, by keeping the tax proposal separate from the two-county shift of transit funds. As currently structured, the two proposals would reach Wilson in different bills.

Despite the threatened veto, the Democrats pressed ahead with a tobacco tax bill on Wednesday, saying they will face the veto obstacle when they come to it.

Analysts estimate the Los Angeles County would draw new revenues from the tax of up to $451 million in the next five years, beginning with $120 million next year.

Other elements of the overall relief package were recently joined to the tobacco tax measure, including both relief from some state-mandated programs and new state oversight of county operations.

The bill would allow the county to reduce general assistance grants to the poor, as well as relieve the county of requirements to fully fund its share of road repair costs and still remain eligible for new gas tax revenues.

New “accountability” rules would require the county to take direction from the state controller in its accounting practices, allow state elected officials to review its proposed budget and submit the county books to regular state audits.

“The accountability piece has always been a part of the deal,” said Assemblywoman Debra Bowen (D-Marina del Rey). “Many legislators from Los Angeles do not want to find out at the last minute next year that there is [another] crisis.”

During a contentious committee hearing on the tobacco tax bill, Assemblywoman Barbara Fried man (D-North Hollywood) called the proposal “the epitome of local control,” a principle that Republicans usually champion. She said that before the tax would be imposed, it would take at least four votes of the supervisors, followed by approval from voters.

The measure made it through the Assembly Revenue and Taxation Committee on a 6-5 vote, with maverick Republican and Assembly Speaker Doris Allen voting with the Democrats.

At the hearing, Assemblyman David Knowles (R-Carnelian Bay) sided with tobacco interests in opposing the tax, saying it would lead to Los Angeles County residents making trips over the county line to buy their smokes.

“There will be inter-county smuggling going on,” Knowles said.

A spokesman for the Tobacco Institute, a lobbying group, said that if the proposed new tax were applied, taxes on tobacco products in Los Angeles County will have risen 520% since 1989.

But others said the county’s health needs justified the tax.

Undersheriff Jerry L. Harper of the Los Angeles County Sheriff’s Department said that cuts in mental health programs have imposed new burdens on law enforcement.

He said there are about 3,000 Los Angeles County Jail inmates with mental problems, “the majority of whom should be receiving treatment in a mental facility.”

Msgr. John Moretta of the Resurrection Roman Catholic Church of East Los Angeles said the health crisis, if allowed to worsen, will reach overwhelming proportions.

“People don’t understand what a great health crisis it would be [if clinic and other services are cut]. It would apocalyptic. It would be something that we’ve never experienced in Los Angeles County.”

Rabin, Cheevers and Meyer reported from Los Angeles, Vanzi from Sacramento.