Valley, L.A. Begin Haggling Over Split

Los Angeles officials said Thursday that a new San Fernando Valley municipality might need to pay as much as $76 million in annual “alimony” to compensate the remaining city for lost tax revenues and employees.

The first day of financial negotiations over a possible Valley secession yielded little agreement on the division of expenses between Los Angeles and the proposed city. But both sides appeared willing to hash out their differences.

The talks also dealt with a proposed municipality in the harbor area, which faces more daunting financial hurdles. “We will accomplish something. How much? I don’t know,” said Larry Calemine, the executive officer of the Local Agency Formation Commission, which is studying the feasibility of the Valley and harbor area separating from Los Angeles.

LAFCO wants the three parties to agree on dividing the city’s operating expenses, revenues, physical assets and liability costs before the commission decides whether to place the secession plans on the November 2002 ballot.

A study by a LAFCO consultant estimated that a Valley city would have to pay Los Angeles about $61 million annually to offset the revenue losses. City officials, however, said Thursday the city might need $15 million a year more to replace lost workers. “That is one area where we can discuss making the remaining city whole,” said Tim McOsker, the chief of staff to Mayor James K. Hahn and a member of the city’s negotiating team.

The new figures came up as city officials and secessionists debated a theoretical split of Los Angeles’ work force. The split would be used to calculate the cost of services that Los Angeles would provide to a Valley city under contract. Leaders of the secession group Valley VOTE hope a real division of employees eventually takes place.

The city officials disputed the LAFCO study’s method for assigning employees to Los Angeles or the Valley. The consultant based the division of workers on the percentage of those now assigned directly to the Valley.

But the city officials said that formula would hurt Los Angeles by taking away many employees who perform centralized duties. The officials added that the LAFCO method would deny the city at least 147 positions it would need to maintain services, and it would cost about $15 million to fill those jobs.

Ron Deaton, the city’s chief legislative analyst, offered the example of library workers who catalog books systemwide. Transferring 35% of the staff to a Valley city would make it difficult for Los Angeles to handle the same number of library titles, Deaton said. Valley VOTE President Jeff Brain said Los Angeles could fill the jobs by finding savings in its $3-billion annual budget.

Walter F. Kieser, a consultant hired by Valley VOTE, said the LAFCO proposal for the Valley to contract with Los Angeles for all services during the first three years of cityhood could reduce the alimony payment, with the amount subject to negotiations.

The city and Valley VOTE generally agreed to accept LAFCO’s proposal for dividing revenues, although secessionists said a new city should get a share of Los Angeles’ tobacco settlement funds.