BUDGET HITS COULD CAUSE DISRUPTION OF LOCAL SERVICES.

Byline: Mariel Garza Staff Writer

From Los Angeles city and county government to the suburban towns around the San Fernando Valley, officials have braced for the worst: Big cuts in state funding that will mean sharp cutbacks in local services.

Burbank is placing development projects on hold and asking new employees to be prepared for layoffs, officials said Thursday. Thousand Oaks initiated a hiring freeze and, along with Simi Valley, asked city departments to prepare for a 10 percent across-the-board cut.

Santa Clarita worries it could lose $2 million destined for street resurfacing and other popular projects. And the Los Angeles County Sheriff's Department is considering whether it might be forced to free more prisoners and, for the first time in its history, lay off employees.

In a report issued Thursday, Los Angeles city officials warned of up to $300 million in cuts that could mean fewer perks for employees and fewer services for the public.

``We're planning now for the worst-case scenario,'' said Glendale City Manager Jim Starbird, reflecting broad concerns of officials across the region.

Local governments' anxiety is fueled by the stalemate in Sacramento. Gov. Gray Davis and his fellow Democrats in the Legislature can't agree on what to do about the state's budget shortfall - estimated at somewhere between $26.1 billion and $34.6 billion - and legislative Republicans are opposing the proposed solutions.

Assembly Democrats want to triple vehicle license fees except on cars bought for less than $5,000 to protect cities and counties protected from the $4.2 billion in cuts to local government the governor wants. Davis is opposed to that, and Republicans object to all tax hikes and want to cover the deficit by cuts in spending.

With hopes dashed for a midyear budget adjustment by today, local officials have moved forward with plans to make cuts in their spending.

``This means we would lay off people for the first time in the history of the Sheriff's Department,'' said sheriff's Capt. Ray Leyva, who predicted layoff notices could be issued to as many as 1,400 deputies and 450 civilian employees.

As the budget showdown plays out in Sacramento, cities across the state are preparing their midyear budget adjustments to absorb the loss of up to 18 percent of some cities' budgets.

Los Angeles City Administrative Officer Bill Fujioka on Thursday released a plan to balance the city's budget to account for the $92 million hit in the next six months - and more than $209 million next year. The plan includes cutting expense accounts, not hiring more city employees and shifting around the city's savings to fill gaps.

``The city, like the state, has also been impacted by the struggling economy,'' Fujioka said. ``We're seeing economically sensitive revenues drop, like hotel tax.''

In addition, the city expects to pay millions more this year in rising workers' compensation costs and employee pensions.

Los Angeles city officials even will consider consolidating programs and functions as a way to offset cuts in the long term.

``It's hard to know what's going to happen,'' said Assemblywoman Fran Pavley, D-Woodland Hills, a former Agoura Hills mayor. If the revenue from vehicle license fees isn't restored, ``cities would have to have emergency meetings to grapple with the short- and long-term effects,'' Pavley said. Police, parks, libraries and other city services would take a hit.

``For most of the cities in my district, it represents 12 (percent) to 18 percent of their budget.''

Los Angeles County stands to lose more than $650 million in state funds if the governor's cuts are approved - much of it coming out of the Sheriff's Department with an estimated $144 million slashed from the fiscal year that begins July 1.

In addition to layoffs, sheriff's officials said, it would mean closing a portion of Men's Central Jail and releasing 2,900 misdemeanor inmates, reducing the number of bailiffs providing court security and contracting out polygraph examinations on criminal cases and delaying the prosecution of felony cases.

Those steps wouldn't even be under discussion if the state would just clean house, said Assemblyman Keith Richman, R-Granada Hills.

``The solution is to reduce the level of state spending and reduce the state bureaucracy before we take it out on the backs of local governments,'' Richman said Thursday. ``In the past four years, in the state of California there are more than 40,000 new state employee positions ... . Before we look at raising taxes on hard-working California families, we should go through every line item in the budget.''

Besides cutting current spending, local governments say, they're looking ahead to cutting even deeper in the next budget year.

``We have not pushed the panic button yet,'' said Simi Valley City Manager Mike Sedel. The city has not frozen hiring for now, but Sedel has asked all departments to plan for a 5 percent cut in this year's budget and will be asking for a 10 percent reduction in their budgets next fiscal year.

The next 17 months promise to be difficult for Santa Clarita, which is accustomed to having millions of dollars to spend on popular community improvement projects and to aid local nonprofit groups.

Santa Clarita officials expect the first round of cuts proposed by Davis to slash $2 million from their budget, which could force a dip into the city's reserve accounts or put off popular projects like road resurfacing.

In the Antelope Valley, Lancaster and Palmdale officials say each city could lose more than $2 million through June and as much next year as $4.8 million - about 12 percent of each city's general fund budgets - if the vehicle license fee revenue is cut.

Lancaster officials are drawing up two potential 2003-04 municipal budgets - one anticipating drastic revenue cutbacks, one without them. If city officials make cuts, they are likely to be focused on specific areas rather than a uniform reduction and will try to avoid cutting law enforcement, Finance Director Gary Hill said.

State officials expect the struggle to resolve somewhat by early next week. But city officials, wary of the state politicking, aren't so sure.

``We think this is a lot of jockeying at this time, a lot of ideas being floated,'' Palmdale Mayor Jim Ledford said. ``I don't think we've seen it all.''

Staff Writers Susan Abram, Troy Anderson, Charles F. Bostwick, Nicholas Grudin, Heather MacDonald, Grace Lee and Rachel Uranga contributed to this report.