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County Cuts Would Hurt Business, Unions Say : Finances: Budget reductions for social services would lead to increases in disease, property damage and insurance costs, report predicts. Analysts say this would devastate the economic climate.

May 18, 1993|HECTOR TOBAR | TIMES STAFF WRITER

Southern California's business climate will suffer a devastating blow and the region's delicate social fabric will tear even further if Los Angeles County officials adopt proposals to cut $1.4 billion from social services and public safety, according to a study released Monday by union leaders.

Private businesses will face escalating costs for security, fire insurance and employee health care if the proposed budget cuts are implemented, said economist Richard Rothstein, who co-authored the report with policy analyst Lenny Goldberg.

"While it may be true that business doesn't like high taxes, the kind of cuts in public service required by this budget are far more harmful to the prospect of economic recovery and the business climate," Rothstein said.

Representatives of county employee unions and civil rights advocates joined Rothstein and Goldberg at a news conference announcing the study's findings. County workers face up to 25,000 layoffs under current budget proposals. The Board of Supervisors is scheduled to begin its budget deliberations in July.

County officials, union leaders and social service advocates are opposed to Gov. Pete Wilson's proposal to shift $2.6 billion in property-tax revenue from local government to schools. The property-tax shift would leave Los Angeles County with the largest budget deficit in its history.

In their report, Rothstein and Goldberg forecast the cumulative impact of county proposals to implement 25% across-the-board budget reductions, including deep cuts in county hospitals and the Sheriff's and Fire departments.

The closure of county hospitals and clinics could lead to epidemics of tuberculosis and meningitis, infecting thousands of workers and raising health insurance premiums to new heights, the report said.

Under current proposals, the Los Angeles County Fire Department could lose 48 engine companies. Closing down fire stations would lead to greater fire losses throughout the county, the report said, forcing businesses to pay "skyrocketing" costs for casualty insurance premiums.

A proposal by Dist. Atty. Gil Garcetti to balance his budget by no longer prosecuting nonviolent crimes against property--including vandalism--would have a similar effect.

"Businesses are going to have to hire private security forces," Rothstein said. "That's a cost of business that's going to rise astronomically."

Rothstein is an economist with the Economic Policy Institute in Washington. Goldberg is a public policy analyst who helped write Proposition 167, the failed "tax the rich" voter initiative.

Union officials said the study focused on business costs because Gov. Wilson and others have argued that tax cuts and fiscal austerity are necessary to prevent capital flight from California. In their report, Rothstein and Goldberg called for an extension of a statewide half-cent sales tax increase to fund social welfare and public safety programs.

"Businesses rely on county services to function," said Phil Ansell of the Coalition of County Unions. "If those services don't exist, businesses won't expand, they won't want to come here and they won't stay."

Rothstein and Goldberg said the impact of the cuts would be most severe in South-Central Los Angeles because more county employees live there than in any other area. They estimated that the budget cuts would lead to the loss of 6,250 jobs in the private sector because of reduced purchases of goods and services by county workers.

Beyond economics, the study points to the declining quality of life caused by fiscal austerity and the closing of parks and libraries.

"If we cannot provide the public services to those who need them, the legacy to our children is going to be far worse than a (budget) deficit," said Ramona Ripston of the American Civil Liberties Union, who joined union leaders at the news conference. "The children who will someday be adults will be paying for the havoc wreaked in this city."

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