YOU ARE HERE: LAT HomeCollections

NEWS ANALYSIS : County Budget Finally Forced to Face Reality : Spending: Demand for services has long outpaced revenues. Previous stopgap measures no longer apply.


It's a big, powerful and complex piece of machinery.

But when you look under the hood of Los Angeles County, you find an engine held together with baling wire and bubble gum.

The now-sputtering contraption known as the county budget has long been a miracle of accounting gimmickry, a collection of thousands of programs largely funded by other levels of government and presently facing the political equivalent of a product recall.

After nearly two decades in which demands for services have increasingly outstripped resources, county bureaucrats are finally acknowledging that they can no longer keep it all going with worn and, increasingly, borrowed parts.

This is the year, most players at the Hall of Administration agree, that the long-awaited restructuring of the nation's largest county government must begin.

And many say that acknowledgment has come not a moment too soon.

County borrowings have skyrocketed in the past decade. The Board of Supervisors has at times used long-term debt to solve short-term budget problems, a strategy that has proven dangerous in other jurisdictions. Two years ago, in one of its more aggressive and controversial moves, the supervisors authorized mortgaging one of the county's most valuable real estate assets--Marina del Rey.

Meanwhile, increasingly risky bets on financing schemes finally took a bad turn. The board wagered that the federal and state governments would come through with more than $600 million in additional health care financing to enable the county to balance its 1994-95 budget. It was a bad bet. And the county deficit swelled.

The budget mechanics have now largely run out of those quick fixes. The supervisors cannot afford to borrow much more, and, given the current cost-paring climate, they cannot count on a check from Washington or Sacramento.

Supervisors face a projected $1.2-billion budget deficit--the largest in county history--and the prospect of eliminating more than 18,000 jobs and closing County-USC Medical Center, along with dozens of clinics, parks and libraries. The county, which also is responsible for services ranging from restaurant inspections to checking the accuracy of gasoline pumps and supermarket scales to monitoring for an invasion of killer bees, is weighing cutbacks that could affect virtually every resident.

"The county has balanced its budget by borrowing against future revenues in order to pay today's bills," said the county's newest supervisor, Zev Yaroslavsky, who was sworn in the same day that Orange County filed for bankruptcy.

As county supervisors struggle to adopt a budget this summer, it seems clear that this year's deliberations, which started last week, will be dramatically different from those in years gone by.

The Orange County bankruptcy, the biggest of its kind in the nation's history, has changed the financial and political landscape for all California governments. And in Los Angeles County, two relatively new players--Yaroslavsky, formerly the budget expert of City Hall, and Chief Administrative Officer Sally Reed, who earned her tightfisted reputation as the top executive in Santa Clara County--are forcing the county's financial practices into the open.

They are now questioning the supervisors' status quo approach at a time when others in government and private industry were retrenching in the midst of a stubborn recession.

Despite five years of crisis budgeting, the size of the county work force has remained almost unchanged and county employees received pay raises when their counterparts in state government did not. The city of Los Angeles, by contrast, has frozen hiring, wages and reduced its non-public safety work force by more than 27%.

Reed said the county's sleight-of-hand budget actions have masked its real financial troubles.

"Often described as miracles, these techniques have merely been methods of delaying the inevitable reconciliation between the cost of services and available resources," she said. "Each year, the county is unavoidably faced with a larger problem than it had the year before. . . . With each successive budget miracle, the credibility of the county is damaged."

Supervisors and other county officials say their intention was to provide the greatest level of service possible, given the extraordinary financial circumstances: shrinking revenues and growing demand for services. They were always hopeful of an economic rebound and state and federal bailouts that never materialized. And along the way, they have made some cuts, such as closing down libraries and laying off workers in the assessor's office.

Richard B. Dixon, who served as the county's chief administrative officer from 1987 to 1992, defended the stopgap measures taken during his tenure, citing a conversation he had with a single working mother:

"I keep telling her, 'You've got to save money for the kids' education.' She says to me, 'I'm spending money to feed the kids. If I don't feed them, they won't be around for a college education.' "

Los Angeles Times Articles