County Administrator Upbeat About Budget

Thursday signaled the opening of Los Angeles County’s budget season, a curious annual ritual in which a projected $87-million deficit is considered good news.

“Next year’s budget looks good,” David Janssen, the county’s chief administrative officer, said as he unveiled his regular forecast for the upcoming fiscal year, which begins in July.

Context is everything: Fiscal forecasts in previous years projected deficits of up to $1 billion, requiring layoffs and a federal bailout to keep the county afloat.

Eliminating this projected deficit should be virtually painless, Janssen said, with no layoffs or cuts in services anticipated. Surplus funds from the current year and increased revenues due to the healthy economy are expected to close the gap.

In fact, political maneuvering has already begun over how to spend surplus funds, with Supervisor Mike Antonovich issuing a news release calling for an increase in the Sheriff’s Department budget.

The January fiscal forecast marks the first step in the county’s budget process and represents a snapshot of the financial condition of the $14-billion-a-year bureaucracy, which provides a wide array of government services--from health care and welfare to maintaining roads and jails.

Janssen will present a budget plan in April to be amended and, ultimately, adopted by the Board of Supervisors. He said Thursday that based on the forecast, he expects a “status quo” budget.

The picture is promising, Janssen said, except for one area: The massive Department of Health Services has not saved as much money as it promised last year and forecasts a $119-million deficit.

“The health department remains the last significant fiscal uncertainty in the county’s budget,” Janssen said. “It is a problem that didn’t just happen last year or even four years ago.”

The projected deficit includes $61 million in new health programs that the board has not yet approved but is expected to endorse because they move the department from expensive inpatient care at hospitals to more preventive treatment in cheaper outpatient clinics. And the deficit is further whittled down by $31.5 million in surplus money expected to come from elsewhere in the bureaucracy.

But the long-term outlook is bleaker, because in two years the federal government’s bailout of the county’s public health system expires. And unless it is renewed, the system will again face a $300-million deficit, a gap that nearly dragged the county into bankruptcy in 1995.

Moody’s Investor Services recently upgraded the county’s bond rating, saying its financial situation has improved since that fiscal crisis. But supervisors Thursday cautioned against complacency.

“It is the result of a pretty good economy in Southern California,” Supervisor Don Knabe said of the rosy forecast, “but that’s not going to go on forever.”

Supervisor Zev Yaroslavsky said: “It’s a sad commentary that just because you’re breaking even, you act like it’s a good year.”

Supervisors continued to express disappointment with the leadership of the $2.2-billion-a-year health department for failing to save the money it expected.

“The promised expectations of the health department’s re-engineering need to be implemented,” Antonovich said in his news release, “or new leadership will be hired to do it.”

Antonovich called for expanding the Sheriff’s Department, echoing a call last year by newly elected Sheriff Lee Baca, who vowed to his deputies to wring $100 million more from the board for staff increases.

County sources have dismissed Baca’s initial statements, saying he has toned down his rhetoric and is not expected to ask for such an increase. Janssen said Thursday that his projections called for no change in the sheriff’s $1.1-billion budget.

Also Thursday, county officials released a report showing that the Sheriff’s Department will spend $42 million in excess overtime. The department’s budget remains balanced, Janssen said, because it has saved money by leaving many positions vacant.

The report says the department is trying to reduce overtime and notes that the Probation Department has cut its excessive overtime 66% by filling vacant positions.