CITY LOSING $11.1 MILLION LEADERS VOW TO FIGHT PROPOSED STATE CUTS.

Byline: Heather MacDonald Staff Writer

SANTA CLARITA - City officials expect Santa Clarita's budget to be slashed by $11.1 million over the next 18 months as state officials attempt to wipe out a multibillion-dollar shortfall by reducing key sources of revenue for cities.

City leaders vowed again Tuesday to fight the deep cuts proposed by Gov. Gray Davis last week, but acknowledged that there may be little they can do to prevent their ultimate adoption by the state Legislature.

``These cuts are probable, and will have a tremendous impact on the city and the way we do business,'' said City Manager Ken Pulskamp.

The proposed cuts roughly equal the cost of contracting with the Los Angeles Sheriff's Department to protect Santa Clarita for one year, records show.

``There will be tremendous ramifications,'' Pulskamp said.

While Davis estimates the shortfall at $34.6 billion, California's nonpartisan legislative analyst, Elizabeth Hill, said Wednesday that the governor is overstating the deficit by $9 billion.

However, both Hill and Davis agree that a combination of spending cuts and tax hikes will likely be necessary to stem the tide of red ink.

If approved by a two-thirds majority of state lawmakers, the cuts proposed by Davis could force the City Council to dip into its reserves and put off community and road maintenance projects throughout the city, officials said.

The City Council may have to again revise its budget for the last six months of the current fiscal year, as Santa Clarita stands to lose $3.6 million in money already budgeted for a range of city projects, including road resurfacing and parks construction.

``That's completely unprecedented,'' said Steve Stark, director of administrative services for the city of Santa Clarita. ``There's no process to do that.''

In the 2003-04 fiscal year, officials expect to lose at least $7.5 million - which could threaten many projects, including the City Council's plan to build a new community center in Newhall that will replace the current rat-infested, converted warehouse on San Fernando Road.

Davis has proposed that the state stop reimbursing cities and counties for deep cuts in annual vehicle license fees, and to slash funding for the city's redevelopment zone, which includes most of downtown Newhall.

Santa Clarita officials rely on vehicle license fee reimbursements from the state to provide everything from basic city services such as police and fire protection to funds for new parks and recreation programs and services.

City officials had been counting on $2.9 million over the next six months and $6.2 million next fiscal year from the state in reimbursements for cuts in the vehicle license fee.

Cities throughout the state are vehemently protesting the proposed cuts, and state Democrats said this week they are prepared to raise vehicle registration fees for motorists in order to avoid deep cuts to cities.

The vehicle license fee is now 0.65 percent of the depreciated value of a vehicle, compared with 2 percent in 1998. Raising the fee back to the 1998 level would mean the fee for the owner of a car worth $10,000 would jump from $66 to $203.

However, Republicans have vowed to oppose any fee increases or tax hikes, and Davis has said he is not enthusiastic about the proposal from his fellow Democrats.

The Associated Press contributed to this report.