Power Crisis Jolts County’s Budget Plans

Los Angeles County government expects to nearly double its energy bill for next year, from $75 million to a whopping $140 million, a hike that will cut into the county’s surplus and could force service cuts if prices continue to rise through what all sides predict will be a difficult year in the state’s energy crisis.

Any risk to the county’s budget is potentially a trying one for residents because the county government provides an array of social services, including health care, to the region’s poorest people.

“The jump has already hit us this year,” said Chief Administrative Officer David Janssen. “It’s seriously eating into our revenue growth.”

The biggest jump has been in natural gas costs, which have already more than tripled from $20 million in 1999-2000 to an expected $65.6 million for 2000-01. Officials have budgeted the same amount for the coming fiscal year.

The cost projections were announced Monday during a news conference to unveil the county’s proposed $16-billion budget for 2001-02. The budget includes $428 million in higher revenues over the current year, allowing for staff increases in social services: the departments of Children and Family Services, Mental Health and Public Social Services.

But the energy crisis, which has taken a toll on businesses and agencies up and down the state, is playing itself out at the Los Angeles County level as well. Energy prices have risen so dramatically in recent months that the predictions listed in the three-volume budget, which was prepared last month, already are outdated.

Los Angeles County’s situation is not unique. San Francisco, for example, used to make money from its hydroelectric power generators: $29 million last year alone. But because that county buys power for the six months when its generators aren’t producing, the increases ate through profits this year and left an $11-million hole, according to Ron Vinson, a spokesman for Mayor Willie Brown.

In Los Angeles, Janssen said he expects each department to find the extra money in its existing budget.

“As of right now, we’re saying you’ll have to absorb it,” Janssen said. “We don’t have any money for this.”

In the troubled Department of Health Services, which has twice been pulled from the red by federal bailouts, the increased costs will only add to financial woes.

But the main effect of the energy price spike will be a reduction in surplus funds--money that departments have left over at the end of the year because of increases in revenues and unexpected reductions in expenses. Those funds are usually used for capital improvements, training, maintenance and even occasional raises, officials said.

A robust economy has pumped so much money into the county that it expected to roll $100 million in such surpluses--called “fund balances” in county jargon--into next year’s budget. Much of that money now is going to pay utility bills.

The problem could be compounded by an expected downturn in the economy, which could reduce revenue and increase demands on government.

In the meantime, officials are searching for ways to conserve energy, including turning power off on weekends and spending $1.7 million on an energy management system to target areas for reduction. But a drive toward conservation in the last decade, which trimmed usage by 15% countywide, has left little room to cut, Janssen said.

Among his proposals to county supervisors when the budget is presented to them today: a “casual summer” dress code allowing employees to ditch the suit and tie for cooler attire.

The Department of Public Works has been cutting back on energy usage for about two years--using only a third of its lights in buildings, turning down thermostats and tightly closing drapes to keep out the heat.

“Just our building alone saved $100 million,” department spokeswoman Donna Guyovich said. “But that $100 million was spent in the first month or two of the increases.”

The Sheriff’s Department is trying to trim its energy consumption by 10% by using fewer lights and turning off computers when they’re not in use, said Capt. Ray Leyva. Captains and bureau commanders are now also the electricity police.

“We’re actually sending people through the buildings at night, making sure the lights are all off,” Leyva said.

The county’s projected $65-million increase in energy costs does not include libraries, parks, museums or public works facilities, which buy energy separately from the rest of the county. Officials said they have not yet estimated the increases in those agencies.

Other budget highlights:

* Health: No significant cuts are expected in the coming year for the department, recently pulled out of the red by changes in federal rules that allowed hospital money to pay for outpatient care. The county expects to eliminate 438 positions, most of which are vacant.

That agency’s budget also is buoyed by $41.8 million in tobacco settlement money, much of which is going to new projects.

Officials are still working on a plan to replace the approximately $223 million a year in federal dollars that will disappear in five years. The main problem there is that the majority of the department’s funding comes from federal and state sources, some of which are tied to county expenditures. For every county dollar cut, three federal and state dollars are lost as well, Janssen said.

* Social services: An increase of $90.2 million would pay for more than 1,000 new employees, primarily to draw more people into the state’s Medi-Cal system, reducing the county’s vast population of people who lack medical insurance.

An additional $11.5 million would be pumped in to sign residents up for the Healthy Families Program, also cutting the number of uninsured.

If the budget is approved as written, the county also will hire 129 people to expand mental health services for children and the homeless, at a cost of $28.4 million.

* Public safety: A $6.3-million increase for the Sheriff’s Department would make up for the loss of federal money earmarked for Community-Oriented Policing grants.

* Construction: A projected $203.6 million would be spent to design and build three sheriff’s and fire stations, expand the coroner’s autopsy and laboratory facilities, and improve and relocate other law enforcement facilities.

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Power Points

Background

The state Legislature approved electricity deregulation with a unanimous vote in 1996. The move was expected to lower power bills in California by opening up the energy market to competition. Relatively few companies, however, entered that market to sell electricity, giving each that did considerable influence over the price. Meanwhile, demand has increased in recent years while no major power plants have been built. These factors combined last year to push up the wholesale cost of electricity. But the state’s biggest utilities--Pacific Gas & Electric and Southern California Edison--are barred from increasing consumer rates. So the utilities have accumulated billions of dollars in debt and, despite help from the state, have struggled to buy enough electricity.

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Daily Developments

* Los Angeles County government’s energy bill for next year is expected to be $140 million, nearly double the current total.

* The county’s cost of natural gas has tripled since 1999-2000 and is expected to reach $65.6 million next year.

* So far this year, the state has spent $5.1 billion buying electricity, an average of $54 million a day, state legislators learned.

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Verbatim

“We’re actually sending people through the buildings at night, making sure the lights are all off.”

--Los Angeles County Sheriff’s Capt. Ray Leyva

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Complete package and updates at www.latimes.com/power