`POSITIVE PICTURE' OF COUNTY ECONOMY.

Byline: Gregory J. Wilcox Staff Writer

Despite consternation over a hostile business environment, many Los Angeles County companies are willing to expand in the area, and a majority are profitable, according to preliminary results of an extensive survey to be released today.

The survey of more than 1,000 businesses with at least 25 workers will go on throughout the year, and so far their responses equate to a B grade for the county's economy, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

``It's a positive picture. What you sense is Southern California is in better shape than the Bay Area.''

Employment in the county should grow by 1.9 percent over the next 12 months with the biggest job growth in finance and construction companies, 7.3 percent and 6.5 percent, respectively.

Job growth in the San Fernando Valley will be a respectable 2 percent.

That's what has been predicted by Bruce Ackerman, president and chief executive officer of the Economic Alliance of the San Fernando Valley.

``This area has not suffered as much in the downturn as other areas, so it's not going to rebound as much,'' Ackerman said.

South Los Angeles will see the most job growth, about 3.5 percent.

There are some surprises in the preliminary report. They include:

--Twenty-five percent of responding businesses indicate they plan to expand their facilities while 8 percent said they plan to relocate.

--Most of those that are moving are not going far, with 68 percent planning to relocate locally.

--Manufacturers said one of their biggest problems was finding skilled line or production workers.

--Eighty percent of the participants said their businesses turned a profit last year.

--Businesses planning to expand will spend money on facilities and equipment rather than payroll, at least for now.

Ackerman said this means the long-term outlook is also positive.

``I think what you are going to see, maybe not this year but next year in the second and third quarters, is they will add some employees. They are adding capacity right now, which is really good news,'' he said.

Not surprising is what businesses consider obstacles in their path to greater success - regulations and taxes. Thirty-four percent consider regulations a barrier to expansion, while 30 percent pointed to taxes.

``Rules, regulations and taxes are a huge impediment to doing business in Los Angeles,'' Kyser said.

Elizabeth Kaltman, Los Angeles Mayor James Hahn's press and policy deputy, said that the city is concerned about the business climate. She points out that Hahn kept in place the Business Tax Advisory Committee created by former Mayor Richard Riordan. And last month Hahn signed a business tax reform package that takes effect on Jan. 1.

``He believes the current system is not the best way to tax businesses, and he's looking for the fairest alternative,'' she said.

The economy is also a concern for businesses, with about 40 percent saying they are experiencing a negative impact and about the same amount undecided.

The project is a joint effort between the nonprofit Economic Development Corp., the National Center for Business and Economic Research and various local companies. Information for this report was conducted between April and July when representatives of more than 1,000 companies answered 50 questions.

Their responses indicate the economy is doing OK here, and this perception probably won't change when the final results are tabulated.

``I'm keeping my fingers crossed that we can keep the positive tenor, but we have a lot of challenges ahead.''

These involve rising workers' compensation costs and health insurance issues. Bills addressing these issues were passed by the Legislature late last week and await signatures from Gov. Gray Davis. The workers' compensation bill, Democrats said, will cut the cost of treating job-related injuries by at least 20 percent. Republicans contend that's not enough.

``You have to have a vision for the state of California ... and you don't see that in Sacramento,'' Kyser said.

Ackerman agrees that these issue need attention.

``It's a joke out there. It's an open-field run,'' he said of the workers' compensation landscape. ``How in the hell can you have the highest premium base of any state in the United States and rank 47th in benefits?''

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com