BUDGET INCLUDES SECESSION STUDY FUNDS, LEADERS TOLD.

Byline: Terri Hardy Sacramento Bureau

Gov. Gray Davis is expected today to approve $1.8 million for a San Fernando Valley secession study as part of his new budget, the Daily News has learned.

Sources close to the Governor's Office said Davis privately assured legislative leaders, including Assembly Speaker Antonio Villaraigosa, D-Los Angeles, that the money would be included - a move that would end months of fighting for the funds.

``The governor understands how important this is to the speaker and told (Villaraigosa) that he would support it,'' a Capitol source said.

Said another source: ``The item is in. The governor recognizes that this is a positive thing, a good thing.''

Davis will unveil his budget today during a signing ceremony on the Capitol's east steps. Michael Bustamante, the governor's spokesman, would not comment on the secession funding measure.

Bustamante did offer a broad outline of the governor's plans, saying the 1999-2000 budget will make education a top priority, and include substantial funding for infrastructure improvements and the environment, including $10 million for the Santa Monica Mountains Conservancy.

Which regional projects will receive funding - and which will fall under the governor's blue pencil - invariably keep lawmakers guessing. Last year, Valley lawmakers were angered when Gov. Pete Wilson killed a cityhood study funding request.

Valley representatives have been more optimistic this year, given the large budget surplus.

Villaraigosa told the Daily News last week that he personally lobbied Davis to keep the study funds in the budget.

``It was one of the many things I am interested in, but it is one of the most important,'' Villaraigosa said. ``After talking with the governor, I am fairly confident he will keep the money in. I explained to him the importance of having a legitimate study on which to have the debate.''

The speaker has led a bipartisan group of lawmakers pushing for the study, including Assemblyman Robert Hertzberg, D-Van Nuys, and Assemblyman Tom McClintock, R-Granada Hills. They have argued that Valley voters' efforts to pursue secession should not be thwarted because of the cost of a study. And, they have said voters are entitled to a fair process to study a possible breakaway from the city.

Sources said the crucial hurdle for the funding study money was Assembly Democrats' success in getting the funding item into the Legislature's budget, despite opposition from two powerful senators - Senate President Pro Tem John Burton, D-San Francisco, and Senate Majority Leader Richard Polanco, D-Los Angeles.

``The feeling was if they could get it past Burton and Polanco, it goes all the way,'' one source said.

Richard Katz, a board member for Valley Voters Organized Toward Empowerment and formerly a member of the state Assembly, said the funding will be ``a large step forward'' in the cityhood study effort.

``This is a tribute to the hard work of the speaker and the governor's recognition that a large number of people signed a petition saying they wanted a cityhood study,'' Katz said. ``The governor has shown that he is sensitive to what voters are saying.''

State funding is critical to starting the cityhood study because the county's agency responsible for the report - the Local Agency Formation Commission - does not have money in its budget for the work. Mayor Richard Riordan has said he would seek city funding for 10 percent of the cost and some Los Angeles County supervisors have said the county should pay a portion.

The study would be a comprehensive fiscal analysis of what amounts to a municipal divorce. State law requires that secession have a neutral impact on both the remaining city of Los Angeles and the Valley.

``Now the real work begins,'' Katz said.

Included in the study will be a comprehensive list of the city's assets and liabilities. City Attorney James Hahn has directed city officials to turn the information directly over to LAFCO.

``There's going to be a treasure trove of data - the challenge is going to be to keep public pressure on the city to turn over unaltered data to the county,'' Katz said. ``It would be a huge mistake for the city to play games with that information.''

On Monday, the Governor's Office provided some details on environmental projects that made the budget cut. Davis will allocate $141.5 million for habitat acquisition, restoration and enhancement projects, and $157 million for deferred maintenance for parks.

Besides the large distribution to the Santa Monica Mountains Conservancy, Los Angeles County will receive $4 million to acquire new land to expand the Kenneth B. Hahn State Recreation Area, located between Los Angeles, Culver City and Inglewood.

Also, $2 million will be used to acquire property as part of the Coal Canyon Biological Corridor, connecting the Cleveland National Forest and Chino Hills State Park. And, $1.5 million will go toward acquiring parks along the Los Angeles River in the Elysian Park area north of downtown Los Angeles.