EDITORIAL HAHN'S SHORTFALL LACK OF SPENDING DISCIPLINE PUTS LOS ANGELES AT RISK.

OF all the problems that Los Angeles faces, the most serious in terms of its impact on the lives of ordinary people and the future health of the community is the squandering of the public treasury.

Yes, corruption of the political processes must be addressed and City Hall cleaned up.

Yes, at least 3,000 more police officers are badly needed along with a massive expansion of youth programs to combat the scourge of street gangs.

Yes, City Hall's pandering to special interests without regard to the public interest must end and the notoriously anti-business reputation of Los Angeles repaired.

But it is the massive budget shortfall created under Mayor James Hahn's leadership that holds the greatest threat.

Hahn and the City Council continued on their out-of-control spending frenzy in the past 3 1/2 years in the face of a weak economy. They turned a budget surplus into a $300 million shortfall that they tried to hide with gimmicks and, in the case of the Department of Water and Power, the outright theft of ratepayers' money.

The consequences of their economic malfeasance are dire, so dire that even the city's top bureaucrats who spend most of their time concealing the city's problems from the public view have issued a report sounding the alarm.

Their answer, of course, is to make the public pay higher taxes and fees and give them fewer services - which has been the city's official policy throughout the Hahn years.

``A ticking time bomb'' is how Valley Councilman Tony Cardenas described the situation, warning that what happened to state government under ousted Gov. Gray Davis could happen in Los Angeles unless steps are taken now.

Fortunately, the city is in the middle of an election campaign and the five experienced, well-funded candidates vying to be mayor have ample opportunity to put forward solutions.

With 80 percent to 85 percent of the cost of city government going to pay salaries, benefits, workers' compensation and pensions, it ought to be obvious where the only cost-savings can be made. We will see between now and the primary on March 8 whether any of the candidates has the courage to state the obvious: City Hall's payroll costs have to be reined in.