Pillars of Optimistic Hope for L.A. County’s Budget

Los Angeles County’s budget for the 1997-98 fiscal year, and the shaky assumptions on which it depends, ought to be considered in the proper economic context. Simply put, the economic engine that is revving across the rest of the state is still sputtering here. That fact comes at considerable cost to the county.

California’s financial outlook for 1997, for example, had the experts chortling about the state’s future for the first time in many years. Job growth led the nation in 1996, up by a robust 2.7% with more of the same on the horizon. The high-technology industry was booming in Silicon Valley, San Diego and Orange County. Exports were soaring.

“We could see California running on all cylinders for the first time since the ‘80s,” one economist told a Times business reporter.

Unfortunately, there was a ca-veat, and it was Los Angeles County, where the pace of job growth and retail sales were half that of the rest of the state, despite a thriving entertainment industry. There were also concerns over the relatively low wages of some of those new jobs. And commercial investment here was up by less than 3%. That contrasted with about 20% in San Diego and the rest of the state and a whopping 32% in Orange County.

That’s the economic landscape for county Chief Administrative Officer David Janssen’s $11.97-billion budget plan. It’s a hold-the-line budget in many ways, but it mixes a deep and controversial job cutback of 1,200 positions in the Health Services Department with 1,468 new positions in the Sheriff’s, Public Social Services, Mental Health and Children and Family Services departments.

It’s hard to argue with the choice, given the huge problems presented by jail overcrowding, the need to accept more participants in an existing welfare-to-work program and ever increasing caseloads in the Children and Family Services Department.

But back to those assumptions. The budget depends on the following, and more: voter approval in June of about $60 million in special taxes to replace funds that the county could once simply impose for the Fire Department and for library services; even more generosity than the governor has already shown in returning funds to local jurisdictions; hoped-for federal funding, and on not having to pay back $50 million that had been transferred to the county from the Metropolitan Transportation Authority. The budget also does not include $136 million in retroactive benefits for general relief recipients that a court has ordered it to pay. Finally, there is the decision to risk not setting aside additional money to address the impact of welfare reform.

That’s quite a bit of hope for a budget that already denies a salary increase to county employees and demands that all county departments absorb at least $30 million in fixed employee benefit cost increases.

In other words, it’s likely that this will not be the budget that carries the county through the next fiscal year. Janssen did not assume a worst-case scenario and propose sweeping spending cuts to prepare for it. The county Board of Supervisors concurred with that decision by approving Janssen’s framework. This course has not eliminated tougher choices. It may simply have pushed them down the road a bit.