AREA FACES MORE CUTS TO PAY FINE.

Byline: Krystn Shrieve Staff Writer

VENTURA - More county budget cuts would be needed if the Board of Supervisors chooses not to use tobacco settlement funds to pay $3 million in fines due in July for improper Medicare billing, interim CAO Harry Hufford said Monday.

Hufford's assessment came after two supervisors said they don't want want to use tobacco funds - now being targeted by a proposed ballot initiative - for making the payment on the fines, as was done last year.

``It would have a fairly significant effect on the budget,'' Hufford said. ``This will cause a need for other budget cuts. The budget will come to the board in June, and I imagine if this is something they want to do, it will have to be part of the budget discussions.''

Hufford said he was under the impression that the board's decision last year to use a portion of the $10 million annual tobacco settlement was a long-term approach to paying the Medicare fines.

Supervisors John Flynn and Frank Schillo, however, said they don't want the coming July payment on the Medicare fine to come from the tobacco settlement, and want to seek other sources.

The two supervisors have yet to offer an alternative funding source.

Supervisor Judy Mikels said she would like to see the tobacco settlement money not be used to pay the fine, if the budget allows.

``If the budget looks good, we can simply absorb $3 million and not allow anyone's budget to go up,'' Mikels said.

But she said she's not sure where the money to pay the fine would come from. Already the county is in the midst of a hiring freeze to help shore up a projected year-end shortfall in budget reserves.

``I don't know of any one place from where the money could come. Maybe it could come from several places if we spread the pain. Maybe it means not filling 10 jobs in one place or not implementing a new project in another place. Eventually it could add up.''

The proposed November ballot initiative aims to take the 25-year flow of tobacco settlement money away from Ventura County and instead divide it among the county's seven private hospitals.

Backers Community Memorial Hospital claim the initiative would ensure the funds would be used solely for health care programs.

Although none of the hospitals have taken a position on the initiative itself, six of the seven have voted in recent weeks that they want the money to go toward health programs and that they do not want it to be used toward the Medicare payments. Only Ojai Valley Community Hospital has not yet weighed in on the issue.

``If the supervisors voted not to use tobacco settlement money, that would alleviate that concern,'' said Jim Lott, executive vice president of the Healthcare Association of Southern California, which represents the private hospitals. ``But the concern still remains that we would want to see the money used for health services.''

Supervisors Kathy Long and Susan Lacey did not return telephone calls for comment.

Flynn said it was necessary to rely on the tobacco settlement money last year when the county was facing a $5 million budget shortfall. But now he no longer thinks it's a good idea to use the tobacco settlement money that way.

Schillo, who said he cast the sole dissenting vote last year against using tobacco settlement money, said the county should find some alternative.

The county owes the federal government $15.3 million in fines - to be paid in $3 million installments over five years - following a settlement reached after an investigation into a decade of faulty Medicare billing.

The supervisors voted last year to use $3 million of the tobacco settlement to pay the first installment, and the next installment is due in July.