Cities to Feel Budget Pinch, but Expected Worse : Government: Property and cigarette tax moneys are taken away along with redevelopment funds. But officials seem optimistic that they can manage.

When the smoke clears and the impact of the state budget crisis is better known, cities throughout the San Fernando, Santa Clarita and Antelope valleys will be hobbled, but not nearly as badly as most had expected.

Such was the assessment offered Wednesday by city officials, state budget experts and municipal lobbyists, just hours after the state finally passed its fiscal year budget and before all the details were officially announced.

“We’ve been wounded, but it’s not terminal,” said Stephen W. Helvey, assistant Burbank city manager. “There is relief that the crisis is over. And we recognize that it could have been much worse.”

State legislators balanced much of the state budget on the backs of the counties. But they also raided the treasuries of cities across the state--taking back property tax and cigarette tax revenues and purloining redevelopment funds for one year. They left alone the cities’ share of vehicle license fees, which, if the state had taken it away, could have nearly doubled the cuts passed on to municipal governments.

For Burbank, that meant a loss in state funding of nearly $1.2 million, as well as $2 million in redevelopment fund losses, according to Helvey. That will curb the city’s efforts to build more low-income and senior housing, Helvey said.

Nevertheless, Burbank officials had been bracing for as much as $6 million in cuts. “To be honest,” Helvey said, “I think it was probably the least harmful of the budget scenarios we had been dealing with.”

From the smallest to the largest of municipalities, local officials scrambled for details on how badly the cuts will affect their budgets.

Many, like Burbank, expressed guarded optimism that they escaped a fatal bullet. Others tempered their prognosis with a dose of confusion over the lack of information, and in some cases, contradictory statistics over what they will lose.

Statistics offered by nearly every city, including Burbank, were at odds with the estimates and preliminary numbers being circulated by state budget analysts and municipal lobbyists working for the League of California Cities.

“There are some discrepancies in what is going around Sacramento, and some confusion,” said Ron Deaton, assistant chief legislative analyst for the city of Los Angeles.

A weary legislative aide to a powerful Valley-based state senator agreed. “We’ve been so busy settling things that we have no clue,” said the staffer, who said his entire office had spent the last few days and nights staying awake on coffee and adrenaline. “Now we all have to begin assessing the misery index--how bad has your district been hurt?”

Whatever the bottom line, many city officials breathed a heavy sigh of relief that the stomach-churning brinkmanship played by Gov. Pete Wilson and state legislators is finally over.

In the tiny city of Westlake Village (population 8,000), the bottom line loss will be about $80,000, said Bonnie Klove, a councilwoman and former mayor. “I don’t know if we should be grateful it’s not more,” she said, “or biting our nails because it’s so much. It’s quite a lump for us.”

Big lump of money or not, Westlake Village officials say they will continue with plans to move their mostly volunteer operations to a new City Hall and build a municipal library. The city has more than $530,000 in surplus funds it has bsaved for emergencies, which it plans to use to offset the state funding cuts without having to cut services or seek a tax increase, Klove said.

Agoura Hills considers itself even more fortunate. “Given the magnitude of the problem, we came out of this relatively well,” City Manager David Carmany said. The city had expected to lose as much as $721,000, and city officials were considering eliminating the city’s Parks and Recreation Department and its 40 full-time employees.

Carmany said such a drastic move is highly unlikely now, because the city’s expected $145,000 loss in state funding can easily be covered by its $1-million reserve. But because city officials are hesitant to dip into the reserve pool, some cuts probably will be made, Carmany said. Like many other municipal officials, he said it is far too early to tell what those cuts might be.

Officials from Calabasas and Hidden Hills could not be reached for comment. Preliminary estimates show the cities will lose at least $47,000 and $121,000, respectively.

Santa Clarita City Manager George Caravahlo also expressed relief, saying the city will lose only $400,000 in state funds and that there will be no major cutbacks in service as a result.

“We thought we’d lose a couple of million, so we’re not viewing this as a crisis,” Caravahlo said.

Santa Clarita has formalized a response to the budget that many other local cities have done informally: It convened a cost-cutting committee to study the problem. To make up for the shortfall, Caravahlo said the city may use $150,000 in reserve funds, charge some salaries to programs funded by the state or federal governments, such as transit programs, and possibly trim some city programs, such as park or street maintenance.

“Fortunately, the public probably won’t notice the impact much at all,” Caravahlo said.

Other cities may be hit harder, especially Los Angeles, which serves a huge number of the Valley’s residents. City officials may be able to offset some of the cuts with money from the Port of Los Angeles, but Mayor Tom Bradley vowed Wednesday to veto any such effort by the City Council.

In all, the city of Los Angeles surrendered an estimated $53 million in anticipated property and cigarette taxes and an additional $20 million in revenue destined for redevelopment projects. The Los Angeles shortfall had been projected to exceed $300 million. Even so, some city officials lamented the $73-million loss of funds, saying it could be perilous coming in the midst of the most stubborn recession in 50 years.

“Until we know the totality of the cuts we really don’t know what to predict,” said Richard Alarcon, Valley area coordinator for the mayor’s office. “But, clearly, it is not going to be an enjoyable process. It will be very difficult for us in the Valley to overcome this budget. There will be ramifications across the board.”

City Administrative Officer Keith Comrie said there will be painstaking efforts to make sure the Valley gets no more than its share of losses, and no less. “It will be impossible to determine the impact of the budget for a while,” agreed Ron Cagle, a city lobbyist in Sacramento. “But the Valley will share the pain with the rest of L.A.”

Los Angeles officials said no department, including the police, will be exempt from the budget ax.

The cuts will have a serious impact in the city of San Fernando too, where half of the $22-million annual budget is used for ongoing operations, such as police, fire and public works, City Administrator Mary Strenn said.

San Fernando will lose about $95,000 in property tax revenues, $22,000 in cigarette taxes and $340,500 in redevelopment funds. As a result, the city is considering a partial hiring freeze, scaling back street repairs and not requiring police officers to take reports in non-injury accidents, Strenn said.

Strenn said completion of a $750,000 neighborhood redevelopment project will probably be delayed as a result of the cuts, and other redevelopment projects probably won’t be started.

In Lancaster, officials disputed the amount of property tax revenue the state estimates it will lose. Instead of $242,000, Lancaster officials said they believe the city will lose less than $100,000.

Even if city officials are right, Lancaster recently eliminated 43 jobs and so “every $100,000 counts to us,” said Nancy Walker, the city’s spokeswoman.

Some cities disputed the state’s estimates. For instance, according to the state, Palmdale will not lose any property tax revenue. But Palmdale City Administrator Bob Toone said the city is assuming it will lose $90,000 in property tax revenues.

Even so, “Palmdale will be able to handle the loss without any problems,” Toone said. “We expected things to be a lot worse.”

The city recently laid off 32 employees, primarily because of a decrease in development fees as a result of the economic slowdown, Toone said. But he said no further layoffs will be necessary even if the property tax cutback applies to Palmdale. The city will weather the loss by developing new revenue sources, such as selling advertising at its bus shelters, dipping into its reserves and renegotiating its franchise agreement with a trash hauler.

But like many other city officials throughout the Valley, Toone couldn’t react to the budget until he knew the details--and those were slow in coming.

“We’re having a hell of a time getting information from Sacramento today,” Toone said, “even from our own lobbyist, who represents 30 cities.”

RELATED STORY: Other areas under the budget gun. A27

State Budget Hits Valley Cities According to initial state estimates, Valley-area cities will lose nearly $7 million under the new state budget, losing property tax revenue, redevelopment funds and cigarette tax revenue they had hoped to receive. Uncertainty prevails at many city halls, with some local governments saying they will lose more than the state predicts, others saying they will lose less.

PROPERTY REDEVELOPMENT CIGARETTE CITY TAX FUNDS TAX TOTAL Agoura Hills $127,727 $ 0 $18,000 $145,727 Burbank 1,264,971 1,255,581 93,000 2,613,552 Calabasas 47,479 0 * 47,479 Hidden Hills 9,748 109,864 1,729 121,341 Lancaster 242,724 1,384,387 97,000 1,724,111 Palmdale 0** 1,140,205 68,000 1,208,205 San Fernando 94,531 295,200 22,000 411,731 Santa Clarita 373,618 0 147,000 520,618 Westlake Village 68,571 0 11,000 79,571

** Although the state says Palmdale won’t lose any property tax funds, city officials estimated that Palmdale will lose $90,000. Source: State Legislative Analyst’s Office and the League of California Cities.