EDITORIAL L.A.'S LOOMING CRISIS CITY HALL MUST CHOOSE BETWEEN THE PEOPLE AND THE SPECIAL INTERESTS.

THE state budget mess in Sacramento will soon create a budget mess in Los Angeles City Hall - and a test of city leaders' real priorities.

With an estimated deficit of $21.1 billion, California's leaders are going to have to take drastic measures to get the state's finances in order.

But with legislative Democrats adamantly opposed to slashing social programs, and Republicans every bit as dead-set against tax hikes, it's not hard to guess who's going to end up bearing the brunt of the state's bills:

California's counties, cities and towns.

If there's one certainty that local leaders can expect in the coming years, it's severe reductions in funding from Sacramento.

For officials in L.A. City Hall, that daunting reality should make for some difficult challenges. City leaders staked their yearlong campaign against San Fernando Valley secession on a promise - the promise of better city services.

Throughout the campaign, Mayor James Hahn and members of the City Council all acknowledged that Angelenos, both within the Valley and without, don't get enough back from City Hall for what they pay in exorbitant taxes.

But under their leadership, they said, it's a new day in Los Angeles. Good government has arrived.

How city leaders intend to live up to that commitment now, in light of the impending decline in state funds, should be interesting.

Making matters even trickier are the promises that city leaders made to another set of constituents, the downtown special interests. Those interests invested $7.4 million in Hahn's anti-secession campaign, and they expect handsome returns.

Typically in L.A., special interests are repaid with taxpayer dough - lucrative contracts for developers and consultants, excessive pay raises and perks for public-employee unions.

But with a smaller cash flow pouring down from Sacramento, there will be less gravy to dish out in City Hall.

Suddenly, the two components of Hahn's anti-secession strategy - ameliorating voters with promises of better services and plying special interests in exchange for cash - are on a collision course.

With a straitened budget, City Hall will be hard-pressed to deliver on one set of promises, let alone both. And with overtaxed Angelenos unlikely to accept any more tax hikes, it can't count on any new revenues, either.

Faced to do more with less, city leaders will have to make a critical decision: Will they honor their promises to the people of L.A., or their promises to the downtown special interests?

If it really is a new day in L.A., they'll soon have their chance to prove it. But it may be that Hahn's fear campaign against secession will come back to haunt him, since the odds now are that L.A. will faces higher taxes and fewer services. And the mayor won't have the Valley cityhood movement to blame.