‘Alimony’ Could Cool Valley Secession Ardor

The San Fernando Valley secession movement is often likened to a divorce demand by a neglected-feeling partner--so perhaps it’s only fitting that the alimony could be a real killer.

Under an obscure law passed seven years ago to help counties cope with dwindling finances, new cities can be formed in California only in a “revenue-neutral” way that does not cost the government agency losing control of the area any money.

So if the solidly middle-class Valley broke away from Los Angeles and formed the nation’s sixth-largest city, some experts say, it probably would be burdened for years by a massive, legally required payment to the city it left behind. The county might get a piece of the action as well.

Because of the financial handicap the law creates for fledgling cities, many experts believe it poses the greatest threat to Valley secession--even greater than securing water rights or dividing Los Angeles’ tangled assets and liabilities. A study sorting out all those issues would have to take place before secession reached a public vote.

“It adds a whole new level of complexity to the equation,” said consultant Bob Braitman, a former director of Ventura County’s Local Agency Formation Commission. “Before, you just judged an incorporation on whether it was fiscally feasible. Now you have to worry about whether it is revenue neutral.”

Since the law’s passage, only two new cities have been formed in California. The mere thought of trying to apply its sweeping requirements to a split as large as the Valley leaves seasoned wonks flabbergasted.

“This has huge implications for the city of Los Angeles, the county of Los Angeles, and the proposed new city,” said Walter Kieser, a consultant often hired by municipalities to perform similar fiscal studies. “I don’t think the secession could occur without special legislation. The current statutes cannot govern this effectively. It defies normal analysis.”

At the very least, experts say, the revenue-neutral law would make it more difficult for leaders of a Valley city to deliver the vastly improved public services secession boosters are promising voters, and could lead to costly lawsuits over the size and scope of the payments.

Leaders of Valley VOTE, the group pushing the secession drive, concede that a Valley city would probably be writing sizable checks to Los Angeles for years, but contend that the financial pros of “independence” still far outweigh the cons.

Though a Valley city would have less money to work with than the area generates in taxes, it would at least be able to govern itself, they point out, furthering Valley-centric economic development goals and pursuing Valley-specific state and federal grants.

“We believe when all is said and done, we’d be able to provide better services and lower taxes,” said Valley VOTE President Jeff Brain. “If we have to pay $3 million in alimony for every $30 million we get, at least we get to control that other $27 million. That’s more than we can do now.

“People say, ‘Why leave L.A. when that’s where all the museums and sports teams are?’ ” Brain added. “My response is, ‘Why are all the museums and sports teams in L.A.? The money is not flowing through to the Valley.’ ”

Not everyone is convinced it would be the Valley making the payment. As its name implies, the revenue-neutral law also prevents a government ceding control of an area from making money off the transaction.

Los Angeles chief legislative analyst Ron Deaton said it is just as conceivable that a study on the breakup’s impact could find that Los Angeles would receive a financial windfall under the breakup--forcing an alimony payment to the new city. He cited the Westside’s high sales-tax base and the utility user taxes paid by refineries as examples of big money generators outside the Valley.

“I could speculate on both sides,” Deaton said. “The truth is, I don’t think anyone really knows. This is new ground. Nothing like this has been done before.”

Far smaller cityhood movements have found the controversial law to be a major hindrance. Critics say that was the intent.

Sacramento County lobbyists sparked the law in 1992 while waging a 12-year legal fight with activists from Citrus Heights, a 97% white community anchored by a large shopping mall that sought to incorporate.

The bitter squabble, which reached the state Supreme Court, has become legendary among bureaucrats as an illustration of the increasingly common fiscal wars fought by cash-starved local governments after passage of Proposition 13. It also serves as a microcosm of the debate surrounding Valley secession.

Sacramento County leaders argued that the Citrus Heights incorporation represented an unethical cocooning of a middle-class enclave to skirt financial responsibilities to poorer neighbors. Citrus Heights activists argued that the cityhood drive was driven simply by strong sentiment for better, more responsive government in a community that felt disenfranchised by Sacramento politicians.

After the law’s passage, the two sides eventually agreed upon a payment of $5.6 million a year for 25 years, and the incorporation was placed on the ballot. But only months after voters approved the city of 88,000 in 1996, Citrus Heights leaders reneged on the payment, claiming it would eventually plunge Citrus Heights into bankruptcy or prevent the city from providing the bolstered services voters expected.

Although the city and county settled on a smaller figure last year after an exchange of lawsuits, both said they continue to feel burned by the experience. The payment was even listed on the ballot voters received.

“The minute they got elected, they said they were not going to live up to it, because the minute they took a look at the situation, they realized they could not provide better services and still pay that money,” said Sacramento County Supervisor Illa Cohen.

Cityhood activists see the situation differently. In their view, the county, and the law it spawned, could not prevent them from getting what they wanted: more police officers, a redevelopment agency, a city hall and a powerful sense of civic pride.

“There was no other way to get on the ballot than give the Board of Supervisors their 12 pieces of silver,” said Doug Ose, now a Republican congressman. “We cut the deal because there was no other way to form Citrus Heights. . . . I consider the concept of revenue neutrality to be abhorrent.”

Not surprisingly, efforts are underway to kill, or at least alter, the law, which is considered poorly written and problematic even by its supporters.

It is so vague that it does not even outline how many years a payment should be made, leaving that critical determination to local agency formation commissions, the state-mandated, locally funded agencies that oversee creation of new cities.

Several legislators unsuccessfully proposed killing the revenue-neutral requirement last year, and are expected to reintroduce similar bills this year. Moreover, it is being scrutinized by the Commission on Local Governance for the 21st Century, a state panel created to help revise cityhood laws.

Among the panel’s 15 members is businessman Bert Boeckmann, a Los Angeles police commissioner and influential conservative political benefactor who is considered one of the biggest supporters of Valley secession.

The committee plans to hold a series of public meetings throughout the state this year on the revenue-neutral law and other hot button topics. It is scheduled to meet in the Burbank-Glendale area in March to discuss Valley secession.

For Valley VOTE, the law presents an obstacle--but also a potent weapon when trying to convince other sections of Los Angeles about the merits of breaking up the city. As the activists are well aware, secession requires a majority vote of the entire city, not just the area breaking away, making citywide support crucial.

“The law allows us to say, ‘We couldn’t hurt you if we wanted to,’ ” Brain said. “We have to leave L.A. healthy. It’s a new factor we have to deal with, but it can be worked out.”