County Officials Cite Improved Balance Sheets

After several years of extreme belt-tightening and a few strokes of financial luck, Los Angeles County’s budget discipline appears to be paying off.

The county has nearly $1 billion in its general fund, officials said Tuesday, and the Department of Health Services -- known for its unrelenting warnings of impending money meltdowns -- has amassed a $569-million surplus, including more than $215 million saved in the last year.

The healthy balance sheets, tallied as the county closed the books on the 2003-04 fiscal year that ended in June, were a welcome surprise for county leaders who had braced for massive cuts as the state struggled to close its budget gap.

“We had the most complicated budget year I’ve ever had in 12 years of county budgeting, starting with the recall of the governor,” said David Janssen, the county’s budget director.

That voter revolution in October was followed by a burst of fiscal acrobatics in Sacramento, marked by a fierce debate over cutting the state’s car tax, passage of a $15-billion bond measure and a plan to extract $2.6 billion from local governments.

All that uncertainty bred caution. L.A. County, which has a $17.1-billion budget, ended the year with $337 million more than expected in its general fund, for a total of $872 million. Much of the unexpected cash, $160 million, came from salaries budgeted but never spent amid a hiring freeze and money earmarked for supplies but never purchased.

“We have been extremely conservative, and it’s served us well,” Supervisor Zev Yaroslavsky said.

The county also reaped a few unexpected tax windfalls, such as $48 million in vehicle license fees attributed to Californians’ unflagging demand for cars and trucks. The sizzling real estate market kicked in $51 million in additional property and deed transfer taxes, and increased consumer spending generated $22 million in sales-tax revenue reserved for public safety.

On Tuesday, the Board of Supervisors decided to spend about $300 million in one-time surplus funds. Among other things, the money will be used to refurbish aging buildings such as the 91-year-old Museum of Natural History; build a better emergency communications system for county law enforcement; improve services in juvenile halls, and boost wages for healthcare workers who serve the elderly and disabled. The board also agreed to lift the hiring freeze for departments that have met their budgets.

The health department also ended the fiscal year with a surplus due to savings on salaries and supplies and increased vehicle license fees, among other things.

County health director Dr. Thomas Garthwaite predicted his department, which is burdened with a staggering load of uninsured patients, would face a $630-million deficit by 2007. In 2003, he warned of a $768-million shortfall for that year.

“The department’s fiscal outlook is extremely volatile,” he cautioned in his latest report.

Healthcare advocates who have sued the county over its plans to cut medical services for poor and disabled patients criticized the multimillion-dollar oscillations.

“I’m not impressed with their budgeting capabilities,” said Eve Hill, executive director of the Western Law Center for Disability Rights. “I don’t think this was an attempt to be prudent in terms of saving for a rainy day. It is already pouring, as anyone who follows the news knows, in the healthcare system.”