NEWS ANALYSIS : Less Clout Puts County in Its Worst Budget Vise : Finance: Spending plan used to be easy task for supervisors. But as the state wrests away revenue and power, they face almost intractable problems.

During the golden age of Los Angeles County government in the 1950s and ‘60s, when Southern California’s economy was booming and strong, the Board of Supervisors’ budget deliberations were happy affairs.

The board met for a day or two, added up the requests for social services and public safety, then set the property tax at a rate to pay for it all. Libraries were built. Hospitals were expanded. There was never any question of a deficit.

This year, supervisors are contemplating a projected $1.4-billion budget shortfall, the largest in county history. Many health facilities, fire stations and libraries will almost certainly close after the board adopts its budget in late July.

The origin of this crisis, officials and analysts say, lies in a decades-long power shift that has eroded the authority of the Board of Supervisors, transforming it into a cash-strapped government serving the region’s poorest residents.

“Counties have been left with those problems that seem most intractable,” said Jane Pisano, dean of the USC School of Public Administration. “The county has a lot of responsibility to provide services but no authority to generate revenue to pay for them.”

More than half of the county’s budget--$6.6 billion--is spent by the welfare and health departments. The demand for welfare services has increased by more than 90% since 1988, with one in six county residents receiving some sort of public assistance.

And yet, with each passing year, state officials chip away at the county’s authority to raise revenue. This year, Gov. Pete Wilson is proposing a plan to shift $2.6 billion in state-allocated property tax funds from local government back to the state. A similar tax shift last year cost Los Angeles County $500 million.

“As a fighter in the trenches of county government for many years, I don’t take kindly to losing home rule,” said Supervisor Ed Edelman, a member of the board since 1974. “The governor is taking home rule and smashing it.”

Officials and analysts argue that the property tax shift is only part of a much wider redistribution of government resources away from “safety net” social programs. Those resources have gradually been shifted into suburban redevelopment schemes, commuter rail systems, public schools and other services.

First came Proposition 13, the 1978 voter-approved amendment to the state Constitution that froze much of local government’s revenue base, taking away county supervisors’ power to set the property tax rate. Much of the control over the allocation of property tax revenue passed from the supervisors to Sacramento.

For years, a healthy economy and a large state money surplus made it easy for Sacramento to allocate sufficient funds to keep city and county services at existing levels. But with control of resources in Sacramento and not the downtown Hall of Administration, it was only a matter of time before Los Angeles County got short shrift.

When the California economy began to sour, battles over the state budget became increasingly contentious and politicized. Special interest groups began using voter initiatives to control the allocation of dwindling state resources.

Proposition 98, a 1988 voter-approved initiative, amended the Constitution to set aside about 40% of the state budget for school districts. That effectively limited the funds available for county-administered programs.

“You have people budgeting by ballot box, rather than by having the elected officials taking charge,” said Gerald Roos, the county’s top finance officer.

Advocates for county social programs hold few of the cards in this battle, where initiative petition drives and election campaigns often determine the outcome.

“Generally speaking, people who use (county health and welfare) services are not voters and not taxpayers,” Roos said. “They’re the poor, the sick. It’s hard to get these people out to vote.”

Board members and high-ranking county officials such as Chief Administrative Officer Harry Hufford confess to having little clout in Sacramento. State officials even balked this year at providing the relatively small amount of $30 million to help keep county probation camps open, despite an intense lobbying campaign by supervisors.

The declining influence of county officials in Sacramento is mirrored in the slow decay of the county’s $13-billion bureaucracy, the largest county government in the United States.

Last year, the board eliminated more than 1,900 of the 80,000 jobs in the county work force. County libraries closed or cut their hours, mental health clinics shut down and waits grew even longer at emergency rooms.

In some cases, the county does not even have the resources to run programs that are partially funded by the federal government.

The welfare department will lose $89 million in federal and state funds this year--enough to pay for 2,800 additional caseworkers--simply because the county does not have the required matching funds.

A chart in the office of welfare department administrator Ann Jankowski graphically illustrates the county’s dilemma. One line, representing the welfare caseload, rises sharply. The other, representing the welfare department work force, falls at about the same rate.

In another, faraway time--the 1960s--the welfare department hired temporary workers during periods of recession to meet the increased demand for welfare services.

“It was a needs-driven budget process,” Hufford recalled. Hufford, a county employee since 1953, worked on his first budget in 1956, a period of great expansion of county government. Officials worked to decentralize government by building courts and social-service offices in the county’s suburbs. “We built parks, roads, recreation facilities to serve the growing middle-class population,” Hufford said.

These days, the process of drafting the county budget is more like triage. Hufford and the supervisors must decide which programs will die and which will live: Will parks shut down or will jails close? Proposition 13 has transformed the county’s budget deliberation process into a frustrating and often meaningless exercise. Because county officials no longer set the tax rate, county supervisors begin debating the budget without knowing how much money they have to spend.

This year, Hufford will present his 1993-94 budget to the Board of Supervisors on June 15, just two weeks before the beginning of the fiscal year. County officials have spent months preparing the budget, drafting proposals that could reduce spending by as much as 25% or as little as 8%. The documents are slowly piling into several three-foot-high stacks in Hufford’s office.

But all that work is nothing more than an educated guess, Hufford said, because county officials will not know until well into the fiscal year how much money they will receive from the state.

“The whole (budget) thing is built on a house of cards,” he said. “It’s a ridiculous system.”

Although most local governments have suffered under the state budget crisis and the property tax shift, counties have been especially hard hit because they have few other sources of revenue. Unlike cities, counties cannot levy a business license tax or utilityuser tax on all residents. The Board of Supervisors can impose these taxes only in unincorporated communities, an ever-shrinking portion of the county population. With 88 cities, Los Angeles County is one of the most heavily incorporated counties in the country.

In recent years, county officials argue, the transfer of resources from the counties to cities has intensified. Cities can divert property tax revenue into redevelopment agencies. Last year, Los Angeles County’s cities diverted about $500 million in property tax revenue into redevelopment, officials said.

“Some cities that are not blighted at all have used redevelopment to increase their tax base at the expense of ours,” county finance director Roos said.

Attempts to provide counties with additional funding sources have only served to dramatize the impotence of county officials and their dependence on Sacramento. State officials might be willing to give counties more money, but they also want more say in how that money is spent.

Last week, Wilson said he would extend a statewide half-cent sales tax to help fund local government. But the money might come with a very heavy string attached: Wilson wants to earmark the funds for law enforcement and public safety, shutting out county social service programs.

The governor has also proposed eliminating certain state-mandated welfare programs, such as general relief payments to indigent adults, which are paid for with county funds.

Wilson’s proposals do not sit well with some supervisors.

“Are we going to let people starve?” Edelman asked rhetorically. “That won’t help. Are we going to let them die on the streets? We can’t let society deteriorate to that point. The governor is pitting groups against each other.”