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Inland Empire

Strong Local Economy Will Ease Cutbacks

Inland Empire's robust job, housing markets make it less vulnerable to the state's inevitable budget slashing. But tough choices lie ahead.

May 05, 2003|Hugo Martin and Seema Mehta | Times Staff Writers

While much of the state has staggered under a faltering economy for the last few years, the Inland Empire has enjoyed a strong housing market and stable job growth.

The region's sunny economic conditions will help ease the sting of the state's $35-billion budget shortfall, but they won't make the region immune to pain.

Already, San Bernardino County has announced the layoffs of 218 workers in child support and welfare assistance programs because of an anticipated $28.2-million cut in state social services funding.

Nervous county, city and school officials are not certain how many more layoffs will be needed, if any, until lawmakers in Sacramento agree on ways to close the budget gap this summer. The constitutional deadline for the Legislature to approve a spending plan is June 15, which it often misses.

Until then, Inland Empire officials are bracing for the worst.

"The anxiety level is really high, not knowing what is going to happen," said Chris Prato, general manager of the San Bernardino Public Employees Assn., which represents 17,000 government workers in the region.

In recent years, the Inland Empire has led the state in job growth and continues to have one of Southern California's hottest real estate sectors, drawing home buyers priced out of surrounding counties, according to economists and business leaders. The strong job and housing markets have generated a steady tax stream that has allowed some Inland Empire cities to build up reserve funds and absorb deep state cuts.

Most local officials predict they can avoid severe layoffs by slashing such expenses as supplies, furniture and travel, thus avoiding cuts in basic government services including trash collection, street cleaning and police and fire protection.

But if the state's budget picture does not improve soon, fiscal experts say schools and municipalities in the Inland Empire will face the daunting task of trying to meet the needs of a population expected to grow by about 80% -- 2.5 million people -- by 2020.

"We can expect to have challenging times ahead," said San Bernardino County spokesman David Wert.

Riverside, the Inland Empire's largest city, with a $145-million general fund budget, has built up a $23-million reserve fund to help absorb an anticipated cut in state funding of up to $21 million over the next 18 months.

Riverside city officials have also asked department managers to draw up plans to cut spending 5%. The city has not acted on all of these proposals, but is considering cutting dozens of vacant positions and putting off some expenses, such as buying new police cars. The city's final budget proposal is due this month.

"We certainly have made provisions for possible reductions, [but] I don't know what they are doing to us yet," said Riverside City Manager George A. Caravalho.

Corona also hopes to absorb some of the cuts by dipping into an $11-million reserve fund. But if the state budget crisis is not resolved quickly, city officials worry that they too will have to make hard decisions.

"We'll burn up our reserves, and then where do we go?" said Corona City Councilman Jeffrey Bennett.

Riverside County, with a general fund budget of $1.9 billion, could lose up to $76 million in state funds next year, according to county officials. In anticipation, the county bulked up its reserve to roughly $56 million over the last year, said Christopher Hans, the county's budget coordinator.

"The reserves would get us through the worst of anything the state could send us, for one year. We've built it up to give us a cushion so we could react to what the state could throw at us and we wouldn't be thrown into emergency crisis mode," he said. "But that reserve, once it's spent, it's gone."

Budget officials have also drawn up a list of potential cuts for the coming fiscal year that could save as much as $25 million, including a moratorium on car purchases, eliminating the use of temporary employees and cuts in travel and training. The Board of Supervisors will consider adopting some of these reductions as part of the annual budget process in June.

San Bernardino County officials have a reserve of $34.7 million, plus an additional $10.5 million in surplus from last year's budget that can be used as a buffer against deep state cuts, said Valerie Clay, the county's budget director.

In addition, the county has already eliminated more than 230 vacant positions, mostly in social service programs, and plans to cut nearly 500 positions that, through attrition, should become vacant in the next year.

But even with those preventive measures, the county could not avoid laying off 218 county employees who assist welfare recipients, train unemployed workers to find jobs and oversee child support programs. County officials blame the layoffs, which take effect July 1, on a $28.2-million cut in state social service funding for the county. Those cuts are likely to lead to longer lines at social service offices throughout the county.

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