Despite Cuts, Official Says County Deficit May Hit $1 Billion

Despite a much-heralded federal bailout and the county’s biggest “downsizing” in history, Los Angeles County remains in dire financial straits, with a budget gap as high as $1 billion estimated for next year, Chief Administrative Officer Sally Reed said Wednesday.

Reed gave that gloomy assessment in a detailed briefing before the county’s newly appointed Blue Ribbon Task Force, a group of mostly business executives charged with helping to reshape the nation’s largest county government. Many details of the county’s budget for fiscal year 1996-97 remained in limbo, Reed cautioned, pending resolution of the federal budget and the state budget, which was released Wednesday by Gov. Pete Wilson.

But even without expected cutbacks in state and federal funds, Reed told the task force members, “We have an ongoing problem that approaches $1 billion, still.”

Reed said last summer’s contentious rounds of budget cutting--aimed at closing an unprecedented $1.2-billion deficit--relied on so many quick fixes and one-time solutions that only about $400 million to $450 million in savings can be carried over into the next fiscal year.

Reed said the $1-billion projection is a worst-case scenario that she hopes can be partially averted. She also said the county supervisors have continually failed to reach a consensus on how to prioritize long-term budget needs and restructure county government. That failure, she said, combined with dwindling state and federal revenue, has virtually guaranteed that the fiscal problems will continue for the near future.

“It makes it very difficult for us to cut the budget and develop legislative strategies,” she said. Reed specifically took issue with the supervisors’ bitter complaints Tuesday that their appointed lobbyists let them down by not wringing enough money out of Sacramento and Washington legislators.

“I don’t think our problem is our lobbyists,” Reed said. “We’ve struggled with no captain or too many captains. . . . If we knew where we were going, we could get there. But we can’t decide.”

When Reed finished with her unusually blunt and detailed discussion of Los Angeles County politics and budget deliberations, the 10 task force members remained silent for a few moments, some shifting awkwardly in their seats, before asking questions.

“Thank you for your presentation,” said Carmen Harvey Warschaw, one of Supervisor Zev Yaroslavsky’s two allotted representatives. “You have thoroughly discouraged us.”

The advisory body was created in the fall on the recommendation of then-board Chairwoman Gloria Molina, who said the county needed outside experts to help it plan a permanent restructuring that will not result in the elimination of law enforcement services or the health and welfare safety net for the poor.

The group has until mid-March to make its recommendations to the supervisors. By the end of its third meeting, scheduled for Wednesday, it hopes to complete its mission statement and determine if it needs volunteer researchers and other support staff to help it do its work.

On Wednesday, despite Wilson’s release of his budget, county officials said they knew too little about the massive document to determine its impact on next year’s budget. But Molina said she was “alarmed and disappointed” at what she called Wilson’s lack of attention to local problems. A spokesman said Molina was basing her remarks on Wilson’s stated intention to use more than $1 billion in unexpected tax revenues to bolster school funding and to give a tax cut directly to taxpayers.

If Wilson does not come through with more funding than expected for the county, the projected deficit will come from several sources, Reed said. Among them: a $200-million Department of Health Services budget deficit, which could result in an additional $200 million in lost federal and state matching funds.

Meanwhile, L.A. city officials said Gov. Wilson’s budget proposal includes about half a dozen items that could bring new revenue to cities.

Those include the Citizens Option for Public Safety proposal, which would allow residents to earmark 1% of their income taxes for local law enforcement agencies.

The city’s Sacramento lobbyist, Norman Boyer, said other proposals that would affect Los Angeles government include:

* Mandated relief that would allow cities to get revenues for some programs without providing matching funds.

* A split among the city, state and county of any growth in revenue from traffic tickets over the 1994-95 level. The state now collects all fines from such tickets.

* Wilson’s endorsement of two bond measures, the $320-million Wastewater Treatment and Reclamation Facilities Act, which allows municipalities to access federal funds, and the $100-million California Infrastructure and Economic Development Bank, which would give cities loans and grants.

Times staff writer Jodi Wilgoren contributed to this story.