Tug of War Grips City Budget Panel

Pity the Los Angeles City Council’s Budget Committee, whose members are beginning to resemble a group of students locked in a room with an unsolvable math problem.

As the five-person panel conducts its review of Mayor James K. Hahn’s proposed $5.1-billion budget, the council must somehow choose between two seemingly irreconcilable budget pictures.

On the one hand are warnings from two city analysts that Los Angeles could confront a shortfall of as much as $280 million by the end of next year. On the other hand is Hahn, who has made the hiring of 320 additional police officers the centerpiece of his budget proposal. He insists that his financial plan is balanced and calls the dire forecasts speculative.

In the last two weeks, the tug-of-war between the council and the mayor has grown increasingly contentious; it’s a sharp contrast from the deference most council members usually show Hahn.

City Council President Alex Padilla and Councilman Nick Pacheco -- both Hahn allies -- have warned that the mayor should take the forecast more seriously. Ron Deaton, the city’s taciturn chief legislative analyst, compared Hahn’s attitude toward the projected shortfall with the missteps that brought down the now-bankrupt energy giant Enron.

And after the council raised the possibility of rolling back the number of police hires because of the projected shortfall, Hahn held a news conference and threatened to veto any cuts to the Police Department as well as any large fee increases.

The showdown has dominated the Budget Committee’s hearings as council members have unsuccessfully sought an answer from the mayor’s staff about how Hahn plans to deal with the predicted funding gap.

“All I can say is the mayor’s proposed budget is balanced,” Crista Binder, Hahn’s budget director, repeatedly told the committee.

“I must say I find this extraordinarily frustrating,” Councilman Jack Weiss shot back. “I am not here to play word games. I am not here to play any games. I want to focus on the future of Los Angeles.”

The debate turns on whether officials should be alarmed by two city forecasts saying that by July 2004, Los Angeles may have to contend with a shortfall 10% of the size of the general fund. According to reports prepared by the city administrative officer and the chief legislative analyst, that gap could total more than $1 billion over the next five years.

Several factors have contributed to the possible shortfall. The city’s employee pension fund took a sizable hit in the stock market, requiring Los Angeles to subsidize the program by about $170 million over the next two years, and possibly more down the road. Hahn also has proposed using $160 million of the city’s reserve fund to pay for expenses next year; it’s a source of revenue the city can’t count on again.

In addition, the officers the mayor wants to hire would cost the city $65 million over the next two years, plus millions more in benefits and Civil Service adjustments.

The Budget Committee started hearing “an alarm bell ringing louder, louder and louder,” Councilwoman Cindy Miscikowski told her colleagues during a City Council discussion about the forecast Wednesday. “Are we going to say, ‘Let’s pull back from the brink?’ ”

Hahn has argued that shortfall projections are based on assumptions that could change. The amount of revenue flowing into city coffers could be higher than expected next year, and changes in workers’ compensation laws could dramatically reduce the city’s expenses, he noted.

“We’ll keep an eye on all those things and, if we need to, we can adjust spending when that time comes,” Hahn said. “But to me it’s not the prudent thing to do to cut back on the public safety plan.... The prudent thing to do is to continue moving forward in fighting crime in this city.

“This isn’t a gimmicky budget,” the mayor added. “It’s one that is sound and prudent.... Trying to figure out what will happen in five years is a guessing game at best.”

Hahn’s reluctance to address the possible shortfall has puzzled many of his allies on the City Council.

“I’m trying to understand the hesitation about answering the questions,” said Councilman Ed Reyes, who added that he wants to support the mayor’s police goals but is concerned about the Budget Committee’s frustration.

Complicating the matter is the divergent advice coming from the two departments that prepared the forecasts.

City Administrative Officer William Fujioka, who assists Hahn in preparing the budget and advises the City Council during its review, said he believes much of the projected shortfall can be managed. Improving the collection of unpaid revenue and forcing city departments to restructure, among other measures, would help reduce the gap, he told the council Wednesday.

“It’s my intent through this forecast to force some change,” Fujioka said.

But minutes later, Deaton -- whose legislative analyst’s office prepared the second forecast -- warned that, without changes to the budget, the city will not have enough revenue to cover its expenses in a year.

“You have the potential, the very real potential, of having to undo everything you do this year,” he said.

Weiss called the administration’s deflections about the shortfall “an insult to this body.”

“Do you know of any $5-billion corporation in this country that refuses to look 366 days into the future?” he asked.

“Enron,” Deaton replied, prompting snickers throughout the council chamber.

As the Budget Committee wraps up its hearings, which are scheduled to draw to a close Tuesday, its members are struggling to decide what to recommend to the full City Council when it takes up the spending plan Friday.

Pacheco, the committee chairman, has said he will consider hiring fewer officers than Hahn wants if Police Department attrition turns out to be lower than the mayor expects.

Deaton also told the council it could consider various fee increases and cuts to balance the budget. Raising trash fees from $6 to $33.45 per month for single-family homes, and from $4 to $22.30 for multiple-family homes, would net about $185 million a year, for example. Hahn proposed smaller increases.

Taking a greater share of the profits from the Department of Water and Power, which operates as an entity separate from the city, could generate $65 million, Deaton said. Meanwhile, if no additional police officers were hired, the city could save $32 million.

But Hahn’s threat of a veto put the council in an awkward position.

“The mayor didn’t leave us a lot of room for that discussion,” said Councilman Eric Garcetti, a Budget Committee member who has publicly urged Hahn to work out a compromise with the council. “Or he said, in essence, I don’t want to be at that table if you discuss it.”

Councilwoman Janice Hahn, the mayor’s sister and the one member of the Budget Committee who has not expressed concern about the projected shortfall, nevertheless voiced irritation at her brother’s warning that he will use his veto power.

“I wish the mayor hadn’t come out so early and drawn this line in the sand,” she said. “I’m not sure that was particularly helpful to the process.”