Governor’s About-Face on Budget Immoral, Hahn Says

His voice quivering with rage, Los Angeles Mayor James K. Hahn condemned Gov. Arnold Schwarzenegger and state lawmakers as “immoral” for contemplating a budget deal that shortchanges cities.

Los Angeles County Supervisor Zev Yaroslavsky suggested retaliating by withholding $1.8 billion in property taxes each year from the state -- a step that he acknowledged is illegal.

On Wednesday -- the day the state would have sent an additional $254 million to local governments if Schwarzenegger had not repealed an increase in the car tax -- officials responded with unusual ferocity. They invoked not only the dire projections that typically accompany budget cuts, but outrage that they said stemmed from broken promises on a personal level.

The governor campaigned on a platform that included reversing former Gov. Gray Davis’ tripling of the vehicle license fee, which flows to local coffers. But Schwarzenegger repeatedly pledged that he would make up the lost funds to cities and counties from somewhere else. He repeated that promise to Hahn two weeks ago, the mayor said.

In an interview this week with CNN, however, Schwarzenegger distanced himself from that guarantee, and suggested that local officials should look to the Legislature to fill the gap of about $4 billion a year.

The statement outraged local officials. Dozens of mayors and other officials converged on the Capitol and warned of decimated fire and police departments.

In Los Angeles, the normally low-key Hahn held a morning news conference with City Council members and county supervisors and tore into state leaders in moral tones.

“This is just wrong,” Hahn said. “This is not only illegal, but I think it’s immoral for people to break their word, to go back on pledges.”

The mayor then ripped a page from Schwarzenegger’s playbook, saying that he would take his case “directly to the people.”

“We now have a governor who made a personal pledge to me, made a personal pledge to the people of California that cities and counties would not be harmed by the repeal of the car tax,” he said.

“We have to let the folks in Sacramento know that we aren’t going to take it anymore.... If they don’t keep their word this time, it’s over.”

Hahn said Los Angeles stands to lose $105 million between now and June, about $19 million a month.

Though that is a fraction of Los Angeles’ $5.1-billion budget for this year, Hahn said, it would mean “cuts in services in programs that people depend on.” It also would kill any hope Los Angeles has of expanding its overburdened Police Department, he said.

Yaroslavsky, the county supervisor, suggested a more unorthodox move: Withhold the $1.8 billion in property taxes that the county collects each year on the state’s behalf. He said he has asked the county counsel to look at it as an option and would “propose it ... in a heartbeat” if he gets a favorable answer.

“The state has broken the law,” Yaroslavsky said. “They are no more in the right in withholding what is rightfully ours than we would be in the right if we” withhold property taxes, he said.

Los Angeles County, by far the state’s largest jurisdiction, stands to lose $575 million through June -- out of an annual budget of $17.1 billion -- if the car-tax money is not restored.

David Janssen, the county’s chief administrative officer, characterized the loss as a massive blow to the county’s general fund that would hurt programs across the board.

The Sheriff’s Department alone could lose $114 million, the equivalent of 1,000 deputies, Janssen said.

Among the county facilities that could be cut back, he said, are hospitals, health clinics, libraries, parks, jails and probation camps. In the worst-case scenario, about 5,000 employees could lose their jobs. But so far, Janssen has yet to recommend specific cuts and does not plan to do so until January.

“It is a very difficult decision to pull the trigger and recommend service reductions,” he said. “If you do it and then you find there’s money available, there’s nothing worse. But if you wait too long, the cuts will be deeper. There is no science as to when you cross that line.”

Hahn announced Wednesday that he had ordered a halt to all new programs in the city, set a moratorium on new contracts and told department managers to reduce overtime expenses and devise other cost-cutting plans.

The mayor’s directive could mean that the city won’t buy new police cars, reorganize the Police Department or upgrade a computer program for the city’s 311 telephone system for public services, Deputy Mayor Doane Liu said.

Liu said the city has enough in its emergency reserves to last a few months before further program cuts would have to be considered. He could not offer specific service cuts that are being discussed, saying that the mayor hopes to avoid that action.

“We are talking about a devastating impact not only to our city,” Hahn said, “but on the county of Los Angeles and cities around California.”

Hahn said he would be particularly disappointed with Schwarzenegger.

“He gave me his word,” Hahn said. “He said that he would not hurt cities and counties. I don’t think it’s a question of naivete. It’s a question of whether or not somebody is going to keep their word. If it doesn’t happen, yes, I would feel a personal insult and betrayal, but more important, the people of California would feel they were betrayed.”

Joining the finger-pointing and angry rhetoric that has characterized state politics for months, local officials also warned legislators of political fallout.

“The governor and the Legislature better start talking, or the revolt will take them all out of office,” said Los Angeles City Councilman Greig Smith.

Councilman Antonio Villaraigosa, a former speaker of the state Assembly, called for “rallies and getting seniors and children up to Sacramento to put the pressure on the Legislature.”

Council members called for a special meeting Friday at which Councilman Jack Weiss wants to consider filing a lawsuit against the state to force officials to replace the car-tax money.

The California League of Cities and some local governments also have discussed a lawsuit.

A spokesman for Schwarzenegger said that the governor has sympathy for city officials, but that they should take their complaints to the Legislature.

“The governor cannot unilaterally provide these funds. The governor doesn’t write checks,” Vince Sollitto said. “The governor understands the very real concerns the cities and counties have about needing these funds.”

Even as they painted doomsday scenarios, officials conceded that in many cities and counties, layoffs and unanswered 911 calls are not imminent.

And some cities, including Los Angeles, may be able to absorb many of the cuts this year by dipping into their emergency reserves.

But officials also stressed that the potential for cuts is serious and would be felt by millions of people.

The pain may be especially intense in the Bay Area, where the technology bust has wrung local budgets dry.

In Monterey County, lawmakers may lay off or furlough employees to try to stabilize the county’s budget. Contra Costa County, which has weathered a 10% across-the-board budget cut this year, is facing potential reductions in law enforcement and health services.

Oakland, Berkeley and Santa Cruz all plan to ask voters to approve tax increases to help offset their losses.

“I frankly don’t have an answer at this point,” said Mike Swigart, city manager of Twentynine Palms, which is contemplating cutting up to “30% or more of our services.”

“I’m just dumbfounded that the state is being so stupid,” he said. “Cities and counties are what people rely on.... The city managers of California could balance the budget in about 15 minutes.”