CITY BUDGET COPES WITH STATE WOES PLAN WOULD BOOST RESERVES.

Byline: Heather MacDonald Staff Writer

SANTA CLARITA - The city's $163 million 2003-04 budget rebuilds Santa Clarita's emergency reserve accounts, cuts spending and delays dozens of projects to cope with California's fiscal crisis.

Santa Clarita's spending plan has been squeezed by the state's massive budget deficit, which Gov. Gray Davis said Wednesday topped $38 billion.

``This buys us time to deal with any potential cuts in a logical and reasoned manner,'' City Manager Ken Pulskamp said. ``We don't have to panic, or scramble at the last minute.''

While the budget in recent years has concentrated on building new roads and parks while preserving large swaths of undeveloped land, this spending plan focuses on maintaining basic city services in the face of the unprecedented fiscal crisis hammering the state.

``We're preparing for the worst-case scenario,'' said Councilman Bob Kellar, who has spent the past several months working behind the scenes with Pulskamp and Mayor Cameron Smyth to shape the budget.

Santa Clarita could lose as much as $7 million if the state stops reimbursing cities for deep cuts in the annual vehicle license fee, according to city officials.

On Wednesday, Davis proposed tripling the license fee to add about $4 billion a year to the state's coffers. In January, Davis' draft budget proposed eliminating the reimbursements to local governments rather than hiking the fee.

While Pulskamp welcomed the governor's change of heart, he said he was reluctant to relax.

``I'm not ready to jump for joy,'' Pulskamp said.

Republican lawmakers have vowed to oppose the hike - $130 more a year for the average driver - which sets the stage for a protracted battle over the budget in Sacramento.

As a hedge against the uncertainty created by the state's fiscal crisis, Santa Clarita's draft budget proposes to double the city's reserves to $6 million and leave another $3 million in the budget uncommitted.

An ambitious capital improvement plan, focusing mainly on roads and parks, drained the city's reserve accounts of about $8 million two years ago.

Under the proposed budget, the reserves would equal about 10 percent of the general fund, increasing to 15 percent in the coming years, Pulskamp said. This year, the city's reserves only amount to 4 percent of the general fund, he added.

``That has been really nerve-racking,'' Pulskamp said.

Pulskamp also has proposed slashing $1.1 million from the city's budget by streamlining operations in the city's six departments.

``We're doing more with less,'' he said.

In addition, Pulskamp has recommended putting $4 million in spending on hold until December. That includes funding for eight positions at City Hall, tree trimming, road maintenance, median landscaping and a new traffic signal.

While the budget contains funding for few new projects or programs, it sets aside more than $1 million for the operation and maintenance of the state-of-the-art Santa Clarita Aquatic Center and $200,000 more for other new parks.

Other bright spots in the budget include a 13 percent increase in the amount of revenue from the state sales tax and a 9 percent increase in property tax revenues, two of the biggest sources of income for the city's general fund, which funds most city services.

The city would pay the Los Angeles Sheriff's Department $11.8 million for police protection, 2 percent more than the previous year, according to the draft budget.

The elimination of an unfilled community service officer position and other cuts would allow the city to hire another deputy to patrol the city's busy streets starting in January, Pulskamp said.

Davis has blamed the recession, the slide in the high-tech industry and the energy crisis in 2001 for producing the nation's deepest state fiscal crisis.

The governor also called for $8.3 billion in new taxes, including a half- cent increase in the state sales tax and higher taxes on cars, cigarettes and the wealthy.

Santa Clarita must adopt a budget by July 1, the start of the fiscal year.

The Associated Press contributed to this report.