Cities and Counties Balk at Plan for State Spending Cap

The spending curbs at the center of Gov. Arnold Schwarzenegger’s plans for a fall special election could deprive cities and counties of hundreds of millions of dollars for police, firefighters, healthcare and social service programs, local government leaders say.

On Monday, Schwarzenegger is expected to call the special election to bring the spending measure, the Live Within Our Means Act, and other initiatives before voters Nov. 8. But city and county leaders -- until now largely the governor’s close allies -- have been meeting privately with administration staff members, urging them to back off from the proposal.

County officials, in particular, say they will work to defeat the measure unless the governor somehow strikes a compromise with legislators -- already hostile to the spending restraints -- that explicitly protects the money.

“We are very concerned about this,” said Rich Gordon, chairman of the Urban Counties Caucus.

If the governor and lawmakers cannot devise an alternative plan that the Legislature would then put on the fall ballot, he said, “local government will have to work with others in a campaign against “ the measure.

The gathering resistance is a significant setback for Schwarzenegger. Cities and counties have been among his loyalists, sticking with him as other public-sector groups waged a bruising public relations attack on him over an earlier measure affecting their pensions. The governor abandoned that proposal after analysts said it would end benefits for survivors of public safety workers.

Now, Schwarzenegger faces the prospect of local government leaders campaigning against a spending cap for which there is no overwhelming public enthusiasm. Despite a statewide television ad campaign featuring the governor talking with cafeteria customers about overspending in Sacramento, a poll last month by the Public Policy Institute of California found that just 43% of likely voters supported the measure.

The initiative would limit growth in state budgets, and could force reductions throughout state government if lawmakers and the governor could not agree on a budget by their July 1 deadline, or if the budget fell out of balance during the year.

Local officials say the measure endangers tax money set aside by state law for specific local programs, such as law enforcement -- a contention that administration budget analysts deny.

Analysts in Los Angeles County determined that if the spending cap had been in effect in the last fiscal year, the county would have had to cut the Sheriff’s Department budget by $37 million.

The analysts say that under the spending restraints, county healthcare and social service programs funded by $1.2 billion from the state could be subject to unpredictable cuts.

“The lack of adequate funding for these programs could force the county to reduce or eliminate vital services to its residents,” David A. Janssen, the county’s chief administrative officer, wrote in a letter to the Board of Supervisors last month. “It is clear the proposed initiative has some potentially serious implications.”

The California State Assn. of Counties has circulated a memo warning that the cap “contains serious drafting errors that will result in unintended consequences that will have a severe fiscal impact on counties.” The group’s board will meet in September, when association officials say they probably will vote to oppose the measure unless some remedy is found.

Schwarzenegger has called the spending cap “the most important thing” on the ballot in a special election. The governor said on a Sacramento radio program this week that he would announce his plans for the election by Monday.

“I don’t see how we can move forward with the agenda and create the reforms that we need without calling a special election,” he said.

The spending cap measure has not officially qualified for the ballot. But signed petitions have been submitted to place it there, and backers are confident that it will be certified. Another item supported by the governor, but not yet qualified, is a proposal for redrawing the state’s voting districts.

The ballot also would include a plan endorsed by Schwarzenegger to lengthen the amount of time public school teachers must be on the job before receiving tenure, and a measure that would limit the ability of unions to contribute member dues to political campaigns. The governor has taken no position on the union-dues measure.

There also would be an initiative prohibiting girls younger than 18 from having an abortion until their parents were notified. Schwarzenegger has taken no official position on that item either, but his aides say he supports the concept of parental notification.

On the spending cap issue, administration officials say the concerns of local governments are unfounded. Money for police services, they say, is explicitly protected in the state Constitution and would not be affected by the initiative. The same goes for reimbursements to local governments that provide state-mandated healthcare and social service programs, they say.

“I have no doubt there are any number of worst-case scenarios floating out there,” said H.D. Palmer, spokesman for the Department of Finance. “But no one is trying to take a run at that money.”

Palmer suggested that the governor’s political foes were spreading false information. “To what extent people who have broader opposition to budget reform are maybe creating those worst-case scenarios, I don’t know,” he said.

Local leaders are unpersuaded.

“Our attorneys who have looked at this don’t see it that way,” Gordon said. “The advice we are getting is that this money would be in jeopardy.”

Los Angeles County officials agree.

“We’ve had this analyzed by all our technical and legal people,” said Dan Wall, the county’s lobbyist in Sacramento. “Our best guys believe it to be the case” that county funds could be frozen.

“This is serious money coming into L.A. County,” he said. “If it stops flowing to us, then we will have a hell of a problem.”

Santa Clara County Supervisor James Beall said he “can’t believe how sloppily the people who wrote the initiative did this.... This is a big mess.”

The initiative cannot be changed at this point. And the Democrats who dominate the Legislature said they were unlikely to support any alternative measure resembling the plan the Republican governor has embraced.

On Tuesday, Assembly Speaker Fabian Nunez (D-Los Angeles) called the spending cap “retrogressive and atrocious.”

Times staff writers Robert Salladay and Nancy Vogel contributed to this report.