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Severe L.A. Revenue Shortfall Foreseen : Government: City officials say that even a modest economic recovery won't ease the gloomy forecasts that they presented to the mayor.

January 22, 1992|FREDERICK M. MUIR | TIMES STAFF WRITER

Even a modest economic recovery will leave Los Angeles with a severe revenue shortfall in the coming fiscal year, according to city officials who presented their gloomy forecasts to Mayor Tom Bradley on Tuesday in the annual revenue hearings that kick off the city's budget process.

Major revenue sources--including sales tax, property tax and business tax--are forecast to remain flat or increase slightly in the coming year, officials said. But even those taxes that are expected to go up next year, such as the utility users tax, will still be at or below the levels achieved before the recession began nearly two years ago.

And some revenue sources, such as income on the city's investment portfolio, could tumble by as much as 26%, according to the city treasurer.

City Administrative Officer Keith Comrie said the deficit for fiscal 1992-1993, which begins July 1, could easily top $150 million.

The data presented also showed in detail how the current year's deficit grew to nearly $100 million as nearly every revenue source failed to meet projections.

Of 20 major revenue sources, only four met or exceeded their budget projections, officials disclosed.

"These reports bear out the reality that we are in a long-term recession," Bradley said as the two-hour hearings concluded. "It will require some sacrifice to meet the shortfall in revenue," he said, adding that the deficit will have to be made up by budget cuts and not tax increases.

The primary reason for dwindling revenues is the decline in business activity during a recession. Business taxes, for instance, were projected to rise 6.7% in the current year to about $303 million. But instead they are now expected to fall by about 7.25% to about $263.8 million--less than was raised two years ago.

Officials also blamed the cash-strapped state government for taking more of available tax revenues--such as traffic safety fines--for its own use. Those fines were expected to climb by about 5.2% this year and raise about $14.9 million for the city. Instead, the state drastically reduced the share it passes along to cities and so revenues to Los Angeles actually fell by 47.2% to about $7.5 million.

Even Rodney G. King--the motorist whose beating by police was videotaped and displayed around the world--may have caused a drop in city revenue.

In his report to the mayor, City Controller Rick Tuttle said the Los Angeles Police Department reported writing fewer traffic tickets since the King beating brought the department under increased public scrutiny. However, Tuttle said the drop may be part of a long-term trend, unrelated to the King incident.

In the 10-month period from January through October, 1991, police citations dropped 21.8% to 516,188 from 660,140 in the comparable period of 1989, according to Tuttle's report.

LAPD spokesman Lt. John Dunkin said he could not immediately confirm the figures or discuss any possible link to the King case.

Some taxes are expected to raise even less money next year.

Fees collected by the Department of Building and Safety are expected to drop by about 3.6% in the coming year, to about $53 million from the $55 million expected to be raised this year. That would be the lowest level since the 1987-1988 fiscal year, according to the CAO.

Other revenues expected to fall next year include traffic fines, down an additional 7.1%, and Convention Center income, forecast to drop 1.6%.

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