Legislature Rejects Aid Bills; County Crisis Worsens : Budget: Shift of $150 million is approved, but other measures fail. More far-ranging cuts may be necessary, in addition to health care layoffs and service reductions.

While state lawmakers came through with a crucial measure intended to help avert even deeper cuts in Los Angeles County’s health care system, the Legislature early Saturday killed a patchwork of other measures worth as much as $135 million that county supervisors had gambled on receiving to hold their precarious budget together.

After this year’s legislative session ended before dawn, county officials awoke to find their already troubled budget in tatters and the very real prospect that far-ranging and painful cuts beyond the crippled health system will be necessary to avoid insolvency.

Despite lawmakers’ approval of an unprecedented $150-million shift of transportation funds to ease the pain of the county’s health care crisis, the failure of the other measures left the supervisors with a gaping hole in the rest of their spending plan. The deficit now threatens to reach far beyond the 5,200 health workers handed layoff or demotion notices on Friday.

As the county’s fiscal crisis see-sawed from optimism at midnight to pessimism at daybreak, the supervisors and state lawmakers engaged in a blame game over who was responsible for the county’s continuing plight.

“They giveth and they taketh away,” said Supervisor Yvonne Brathwaite Burke. “This is very, very grim news.”

Beginning on Tuesday, Burke said, the supervisors must begin to make significant cuts in other areas of the budget besides health services.

“Nobody anticipated that we would suffer a net loss because of the Legislature’s inability to get its act together in the middle of the night,” said Supervisor Zev Yaroslavsky.

He demanded that Gov. Pete Wilson immediately call lawmakers back into special session to address Los Angeles County’s severe problems. Although a spokesman for the governor expressed disappointment that the Legislature went home without providing more assistance to the state’s biggest county, there was no indication that Wilson will call lawmakers back to the Capitol.

Ironically, it was members of Yaroslavsky’s own Democratic Party in the fractious Assembly who were responsible for blocking two of the measures, because they were philosophically opposed to slashing general relief payments for the poor and loosening requirements that the county provide services for the mentally ill.

“It was a bitter pill for Los Angeles, but that mandate relief hurt far too many people statewide,” said Assemblywoman Diane Martinez (D-Monterey Park).

The supervisors “do not understand that Sacramento has in fact responded,” said state Sen. Richard Polanco (D-Los Angeles). “We have to do what we can to continue to assist, not the Board of Supervisors, but the people of Los Angeles County.”

Martinez played a major role in a compromise measure by Polanco that passed the Legislature just before midnight Friday. The bill shifts $150 million from the Metropolitan Transportation Authority to the county’s troubled treasury to help avert even worse cuts in the county’s network of hospitals and health clinics.

She said the county’s practice has been to “wait until the eleventh hour in June or July, after our budget’s already set, and make us aware that they’re in bad financial shape . . . saying either give us money or we’re going to hurt libraries, poor people and things you care about. . . . It’s blackmail.”

The bill shifting the transportation money contains unprecedented accountability language that requires the supervisors to submit the county budget to the state each year and have the county’s spending audited twice a year.

But the transit money alone will not be enough to prevent the layoff and demotion in less than two weeks of thousands of doctors and nurses, lab technicians, clerical and janitorial staff at six comprehensive health centers, 28 community clinics, and outpatient wings of all six county hospitals.

In addition, $100 million of the MTA money is only a loan to the county that must be repaid over the next five years. The prospect of incurring more debt to cover operating expenses is troubling to some of the supervisors because it continues a long practice of heavy borrowing to sustain services that the county otherwise could not afford.

The supervisors are going to be faced with that dilemma on Tuesday when a massive demonstration of angry county workers is expected at the Hall of Administration. The board may be hard-pressed to say no to the MTA loan under such pressure.

Even with the MTA money, however, the county may be forced not only to close most of its outpatient services, but some of its hospitals as well.

“They turned a blind eye,” Supervisor Mike Antonovich said of lawmakers. “As a result, there will be additional cuts and layoffs that will take place. County-USC Medical Center could still be closed if the federal government fails to come through with the funds.”

Indeed, the county must receive a massive infusion of at least $178 million in federal funds to avoid the prospect of hospital closures. The Clinton Administration is trying to find a way to assist the county, but a senior White House official said at week’s end that a solution has not yet been found. The President will be in Los Angeles this week for a campaign fund-raiser and may again hear appeals from the supervisors to save the safety net for millions of poor and uninsured residents of the nation’s most populous county.

A spokesman for Wilson in Sacramento said the governor will sign the MTA bill for Los Angeles County, which is tied to a far-reaching financial rescue package for bankrupt Orange County that also won final legislative approval Friday.

Press secretary Paul Kranhold said it was unfortunate that key Democrats in the Assembly were “more interested in political gamesmanship than providing Los Angeles County with needed financial relief. . . . The governor is disappointed that the Legislature failed to provide [Los Angeles] County with an additional $100 million in mandate relief that the governor wanted to sign into law.”

Assemblyman James E. Rogan (R-Glendale) said he knew Democrats would blame Republicans for the county’s woes. “It’s very easy and tempting to point the finger,” he said.

“The bottom line is this: The problems [in Orange and Los Angeles counties] are local problems that have been magnified because of their gravity, but there is only so much the state can do for both counties,” Rogan said. “They are going to have to be responsible for their own house. We can direct them in a certain way and offer them relief in some areas, but if we were to pass bills tonight that would cure it instantly, my suspicion is it would be a Band-Aid on a cancer. There have to be systemic changes.”

The Orange County rescue package and several of the Los Angeles County aid bills were originally coupled together like cars in a railroad train. The locomotive was a series of bills to help pull Orange County out of bankruptcy. Behind them were measures to transfer $150 million from the Metropolitan Transportation Authority to Los Angeles County and a bill allowing the county to reduce health services while still receiving state cigarette tax funds for health programs.

By midnight Friday, all of these bills had been passed by both houses of the Legislature and sent to the governor. Left behind on a siding were two bills that Los Angeles County desperately wanted to see pass. They would have allowed the county to cut general relief payments and services to the mentally ill.

Both passed the state Senate and were sent back to the Assembly, where they died when Assembly Democrats returned from a long and divisive caucus about 4 a.m.

It was the latest in a series of failures. Efforts to win authority for the supervisors to impose a 25-cent-a-pack tax on cigarettes died late Thursday night. A measure to give them the power to impose a tax on all alcoholic drinks sold in the county went down to defeat in late July.

And a five-year, $375-million raid on the MTA was vetoed by the governor in August after heavy lobbying against it by Los Angeles Mayor Richard Riordan, who continued this week to object to any transportation funds shift beyond $50 million.

The measures killed Friday and Saturday by Assembly Democrats that would have provided financial assistance to Los Angeles County included:

* A bill to reduce general relief to poor, mainly single men, including elimination of the benefit for all but three months a year for those considered employable; a $40-a-month cut for health care whether the recipient receives treatment or not; a further cut in benefits for recipients who share housing with others, and allowing counties to require substance abuse tests as a condition of aid. The county had built its budget in part by assuming the changes would be approved. Loss to the county: $77.5 million this year.

* A measure to provide state funding to maintain county probation camps for juvenile offenders. But the county would have been forced to pay $4 million this year and other payments in the future to send offenders to California Youth Authority facilities. The budget had assumed a net $14 million gain for the county that was not received. This could force significant layoffs of probation workers.

* Allowing the county to reduce services to the mentally ill, but still receive a full share of a state sales tax now payable only if such services are fully maintained. Loss to the county: $3.4 million.

* Reducing indigent health care by $2 million a year but still allowing the county to receive revenues from an existing state tax on cigarettes. This loss, however, is more than made up for by passage of the other bill allowing the county to reduce health services below present levels and still receive more than $50 million a year from the state tobacco tax.

On the final day of the session, the county also lost the potential for up to $60 million more by restructuring federal payments to hospitals that provide care to the poor.

“We’re definitely hurt by this package,”

County Chief Administrative Officer Sally Reed called the latest developments “very worrisome.

“We’re definitely hurt by this package,” she said. “We’re back to the drawing boards with very little time left.”

Rabin reported from Los Angeles, Vanzi from Sacramento. Times staff writer Josh Meyer also contributed to this report.