BUDGET REPRIEVE POSSIBLE CITY MIGHT NOT LOSE $9 MILLION REIMBURSEMENT.

Byline: Heather MacDonald Staff Writer

SANTA CLARITA - City leaders said Thursday they are guardedly optimistic that a proposal that would slash Santa Clarita's budget by $9.1 million over the next 17 months is dead.

The state Assembly this week rejected Gov. Gray Davis's plan to stop reimbursing local cities for deep cuts in the annual vehicle license fee after legislators were deluged with complaints from local government officials who said the cuts would devastate their budgets and jeopardize public safety.

``This is wonderful news, but things change in Sacramento very quickly,'' said Mayor Cameron Smyth. ``We're going to remain cautious until we have a signed budget deal.''

If enacted, the cuts would have been about equal to the cost of contracting with the Los Angeles Sheriff's Department to protect Santa Clarita for one year, records show.

``The cuts are truly outrageous and just don't make sense,'' said City Manager Ken Pulskamp, who joined Sheriff Lee Baca at a news conference to decry the proposed cuts, which would have totaled $4 billion statewide.

Smyth said he was especially relieved that the city would not have to cut $2.9 million from this year's budget, money that has been already budgeted for a range of city projects, including road resurfacing and parks construction.

``I'm breathing a sigh of relief on that front,'' Smyth said.

In December, the City Council boosted the city's emergency reserve accounts by $2.3 million as a hedge against the cuts.

However, the next 17 months still promise to be difficult for Santa Clarita, which is accustomed to having millions of dollars to spend on popular community improvement projects.

The governor will look elsewhere to fill the state's deficit, estimated at more than $26 billion, and Davis may be forced to triple the license fee paid by motorists to 2 percent of a car's value. The current fee is about $66 for a car worth $10,000.

Davis has said he is reluctant to do that, and Republican legislators have vowed to challenge any tax increases.

Other cuts proposed by Davis would slash $2 million from Santa Clarita's budget, and may force the City Council to dip into Santa Clarita's reserve accounts or put off projects.

About half of those cuts are slated to come from road resurfacing projects - some that have already been completed in anticipation of state reimbursement, according to Steve Stark, the director of Administrative Services.

Those cuts include $250,000 set aside to fund low- and-moderate income housing; $1.3 million earmarked to build a new community center in Newhall and $65,000 to fund state mandates, Stark said.

``We don't want to overreact, and we don't want to under react,'' Stark said. ``We'll try to steer a smooth course, despite all the uncertainty.''