Local Governments Count Their Losses--and Blessings

For months, city and county officials throughout the state have claimed that the governor would balance his difficult budget at the expense of local government. On Tuesday, they received a welcome surprise: the growing budget shortfall did not disproportionately fall on city and county budgets.

State officials estimated that cuts and funding deferrals would result in $1 billion less for counties during the next fiscal year. That means deep cuts for services to the poor, at-risk youth, libraries and the counties’ ability to fund the staff that manage them.

But still, officials on both sides said it could have been worse.

Before Gov. Gray Davis announced his revised budget plan Tuesday, some newer cities in Orange County were so nervous about the local impact that they talked about disincorporating. That talk ended with the news that they will continue to receive funds from vehicle registration fees.

News that the governor isn’t proposing taking away their share of vehicle license fees left officials in Orange County’s three youngest cities--Aliso Viejo, Laguna Woods and Rancho Santa Margarita--feeling cautiously optimistic.

“That’s what you use to build your whole fiscal analysis for incorporation,” said Carmen Vali, mayor of Aliso Viejo, a city of 45,000.

About $4 million of Aliso Viejo’s $10-million budget next year is expected to come from vehicle license fees.

“We applaud the governor for fulfilling his promise not to balance his budget on the backs of local government,” said Raechelle Kline, spokeswoman for the League of California Cities. “But we are still going to remain diligent in what he does next.”

The city of Los Angeles was still figuring out what its loss may be, but Ellen Sandt, assistant city administrative officer, said the city may lose up to $30 million of redevelopment money and $12 million designated to reimburse the city for state mandates.

Though local agencies had expected worse, they warned that residents still would feel the cuts. Los Angeles County alone stands to lose an additional $150 million, said county Chief Administrative Officer David Janssen.

The cuts “are not especially visible, because they involve administrative costs,” he told the Board of Supervisors. “In effect, counties will be asked to do the same or more than they are doing now, but with less funding and personnel to deliver services.”

Officials said that large cuts in administrative budgets mean the county no longer has all the money it needs to manage Medi-Cal, foster care and food stamps. People needing such services will still get them, but might see longer lines and other difficulties.

Many departments were just beginning Wednesday to digest what Davis’ additional cuts meant.

Jean Huston, an aide to Los Angeles County Supervisor Mike Antonovich, spent part of her day counseling the many community groups that, after years of lobbying, received $36 million in state grants for the first time this year for gang intervention, self-esteem, at-risk youth and other programs.

That money is gone under Davis’ latest cuts.

“This took years to put into place, and these organizations had assurances that it would not be a one-time deal,” Huston said. “For that money to go away is unconscionable.”

Similarly hard-hit is the county library system, which already faced a $1.1-million cut from its $80-million budget.

County Librarian Margaret Donnellan Todd and aides gathered Wednesday to hear that they’ll lose another $1.2 million. The county’s libraries already were expecting to drastically reduce hours and may have to close some branches.

In Orange County, Cynthia P. Coad, who heads the Board of Supervisors, and County Executive Officer Michael Schumacher joined counterparts from the state’s 10 largest counties in meetings Wednesday with Assembly Speaker Herb Wesson to discuss the budget’s effects.

Orange County supervisors insisted this week that they oppose tax increases at the state or local level to balance the budget.

Davis has said that an increase in the tobacco tax and vehicle registration fees is necessary to balance the state’s budget.

Orange County receives the smallest share statewide of local property taxes paid, only 6 cents for every dollar sent to Sacramento, making cuts in state funding even more crucial. Attempts to increase the county’s share have failed.

“We’re a donor county, and we’re destined to stay that way,” said Gary Burton, the county’s assistant chief financial officer.

But leaders in the three communities--all of which incorporated within the last three years--say they aren’t out of the woods yet.

“He’s talking about increasing fees to consumers, so I don’t know where that’s going to go in the Legislature,” said Laguna Woods City Manager Leslie Keane. “And if the economy doesn’t improve, we might find ourselves back in this same situation next year.”

That money is perhaps most important to Laguna Woods, where the fees cover more than half of the city’s budget--about $2.5 million of its $4.2-million spending plan for next year. If that were to go, city officials had worried that the community of 20,000 residents would have to disband as cities and return to county rule. The city wouldn’t have the sales tax base to go it alone.

That threat wasn’t as strong in the 44,000-population town of Rancho Santa Margarita, where vehicle license fees make up a little more than a third of the city’s budget.

“It wouldn’t mean disincorporating, but ... losing $1.5million or $2million would negatively affect every level of city services,” said Jim Hart, Rancho Santa Margarita’s city manager.

*

Times staff writers Jean O. Pasco and Catherine Saillant contributed to this report.