HAHN BOOSTS BUDGET 10% $566 MILLION WOULD FUND EXTRA COPS, PARKS, MORE.

Byline: Beth Barrett and Rick Orlov Staff Writers

Mayor James Hahn on Wednesday proposed a 10 percent increase in city spending in the next financial year - a nearly $6 billion election-year budget that critics called overly optimistic in the face of a continuing structural deficit, concerns over the reserve and economic uncertainty.

Spending on the city's main departments - including cops, firefighters and most other city employees and programs - paid for mostly out of the general fund, would grow from $3 billion to $3.3 billion, or an increase of 10 percent, and would add 574 new positions, for a total of 36,081 employees.

The remainder of the budget, $2.6 billion, is largely funded out of special revenues and goes for debt service, some construction projects or is allocated across several departments or citywide.

Revenues were up due to a stronger economy, which significantly boosted property-tax receipts and taxes on real estate transfers, as well as by a city hiring freeze, some efficiencies and unexpected revenues that resulted in $280 million being rolled over into the new budget.

Hahn, who was in Canoga Park meeting with members of a Neighborhood Watch group as part of his re-election campaign, said the proposed budget, titled ``Best Practices LA,'' reflects his vision for a safer city. He is the first mayor in recent history not to attend the unveiling of the city's budget.

``Four years ago, I promised to make this a safer city and we have done that,'' Hahn said after the campaign stop. ``Crime, violent crime, is down in the city.

``What I wanted to do with this budget was add more police. We will have a net increase of about 360 officers and bring the department up to 9,500 officers for the first time since 1999.''

Councilman Antonio Villaraigosa, who is challenging Hahn in the May 17 runoff election, said the budget was based on unrealistic revenue projections, lacks efforts to create efficiencies and does nothing to close the structural deficit the city faces each year.

``As mayor, he has an obligation to submit a balanced budget,'' Villaraigosa said. ``He may have made it look that way on paper, but it's clear that this is just an election year budget that papers over our city's fiscal situation and fails to present us with a long-term vision for our city.''

Deputy Mayor Doane Liu responded that Villaraigosa either didn't read or didn't understand the budget. Liu said there has been no depletion of the city's reserves.

``His analysis is completely wrong,'' Liu said. ``He clearly doesn't understand accounting.

``There was a $112 million reserve last year, and a $113 million reserve this year. How is that raiding the savings? It is not.''

Liu said the city instead was able to make $280 million in savings, largely through efficiencies.

City Administrative Officer Bill Fujioka also defended the budget, saying critics ``don't understand the budget structure.''

He said the revenue projections are conservative and take into account possible volatility in Southern California's real estate market.

In addition to more cops, Hahn said he's included funding to add 48 paramedics. Also proposed are more miles of street repair, and small new programs for children, seniors and gang intervention.

The San Fernando Valley is slated to get $2.5 million for the Orange Line busway. Other Valley items include about $300,000 for a neighborhood prosecutors team to be based at the Los Angeles Police Department's Mission Hills station, and funds to operate four new fire stations, three new libraries and a senior center in Van Nuys.

Also included is funding for three new or refurbished swimming pools in the Valley, continued funding for the Children's Museum at Hansen Dam, and $500,000 for a park in Arleta, among other projects. There are no new fees or taxes proposed, and the budget calls for eliminating the city's business tax for firms that do less than $50,000 gross in business per year.

Former Mayor Richard Riordan, who's backing Villaraigosa, also questioned the soundness of a budget that outstrips recent inflation by about three times. The region's inflation increased by about 3.3 percent between 2003 and last year.

``That needs some explaining,'' Riordan said.

Councilman Bernard Parks, who heads the council's Budget and Finance Committee, which will oversee an ad hoc committee's series of budget hearings prior to full council consideration, said he's worried that the budget might be overly optimistic and hurt the city's financial position in the long run if the economy worsens.

Parks also said it's unclear whether the budget addresses the city's structural deficit, which has been estimated at about $300 million. The structural deficit is the result of one-time funding that locks the city into long-term costs.

``If they're using a windfall like property tax and spending it on multiyear items like personnel, it could result in a bigger structural deficit,'' Parks warned.

City Councilman Jack Weiss, a Villaraigosa supporter, called the budget ``Christmas in April,'' and accused the mayor of deficit financing in allocating reserves from this year to next year's budget.

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said the city's revenue assumptions are reasonable for the foreseeable future, barring another recession. He said the long-term forecast is for a slowing of the national economy, but that the budget assumptions seem capable of weathering moderate fluctuations.

``Unless there's an unexpected recession, it looks reasonable,'' he said.

City budget officials said the city has adequate reserves with a total of $113 million, or 2.85 percent of the general fund budget, and that the city's bond rating is solid. The council on Tuesday said the reserve must be at least 2 percent of that budget, and recommended increasing it to 5 percent over time.

The city's outstanding debt from voter-approved general obligation bonds to finance capital projects is $1.4 billion. Its debt service next year will be $163 million.

City officials said they are addressing the structural deficit, and Fujioka said it is ``significantly lower'' than $300 million, although he did not provide a figure.

``I think we have taken care of that with the voters approving Proposition 1A,'' Hahn said. ``Working with Gov. Arnold Schwarzenegger, we have a promise the state will no longer take our property tax money after 2005. I think with that promise and the improvements in the economy, we will be able to deal with the built-in deficit.''

Liu said the city's been ``disciplined'' but that cost-cutting measures last year didn't affect the level of services residents received.

``We've done a pretty good job, even responding to our extraordinary rain,'' Liu said.

He said the $566 million increase in the budget reflects the desires for new services by residents, including neighborhood councils that had input into city budget priorities.

``We want to do things like hire new cops, increase the number of firefighters,'' he said. ``Basically we're going back to priority-based budgeting and funding the things the residents have asked us to provide.''

Most departments got an increase in their budgets, with the exception of the City Clerk's Office, whose budget dropped by $13.4 million because there are no city elections next year, and the Finance Department, which would be cut by $738,000, reflecting the transfer of some tax functions to another department. The Mayor's Office's budget stayed the same at $6.7 million.

The total for salaries in the city's main departments next year is $2.59 billion.

Hahn said the upswing in the economy means the city won't need an extra transfer from the Department of Water and Power, like the additional $60 million this year that brought the total up to $250 million. Next year's budget calls for a total transfer of $190 million.

The utility's power system is estimating $3.2 billion in appropriations next fiscal year and the water system $1.1 billion in appropriations.

Beth Barrett, [phone]

beth.barrett(at)dailynews.com

AT A GLANCE

Highlights of the proposed 2005-06 Los Angeles city spending plan include increasing the Police Department's budget by nearly $90 million, to $1.1 billion or about one-third of the amount appropriated to the city's main departments.

The LAPD will be able to hire 720 officers, which after attrition should add about 360 extra officers.

The budget would add an additional $5 million to the Efficiency Projects and Police Hire Fund to pay for future police hiring.

Also proposed is $375,000 to expand the City Attorney's Office's anti-gang efforts, including teams of prosecutors, one of which is to be assigned to the new Mission Area police station in Granada Hills.

LA Bridges - gang-diversion programs at middle schools - would be fully funded at $13 million. The LA's BEST after-school program would be expanded with an additional $1.3 million to eight more elementary schools, bringing the total to 138 schools.

A new Los Angeles Project for Violence Prevention, modeled after a successful anti-gang program in Chicago, is to be funded at $500,000.

Other key elements include:

--The Fire Department's budget would be increased by $31.8 million, to $477 million, with funding to recruit and train 120 new firefighters.

--Transportation funding would be added to include $3.5 million for the Exposition Line, $2.5 million for the Gold Line Eastside expansion and $2.5 million for the Orange Line busway in the San Fernando Valley, as well as $1 million to study expanding the Metro Red Line subway along Wilshire to the Westside.

--Funding for 200 miles of street construction, and an additional 300 miles of slurry seal is included.

--Neighborhood councils, which each get $50,000 for neighborhood projects, also would get a $100,000 credit in the new budget with the Bureau of Street Services for street improvements in their neighborhoods.

--More than $3 million for the Griffith Observatory, which is scheduled to reopen next spring, is included.

--The Cultural Affairs Department is funded at a total of about $10 million for facilities and programs.

--An additional $100,000 for meals for seniors at senior centers, and an additional $200,000 for meals to be delivered to the homes of seniors who can't get out, is included.

--The Recreation and Parks budget would jump 17 percent to $125 million.

- Daily News

CAPTION(S):

6 photos, 7 boxes

Photo:

(1 -- color) PUBLIC SAFETY

(2 -- color) PARKS AND LIBRARIES

(3 -- color) TRAFFIC AND TRANSPORTATION

(4 -- color) HOUSING

(5 -- color) JOBS AND BUSINESS CLIMATE

(6 -- color) CITY GOVERNMENT

Box:

(1) PUBLIC SAFETY

(2) PARKS AND LIBRARIES

(3) TRAFFIC AND TRANSPORTATION

(4) HOUSING

(5) JOBS AND BUSINESS CLIMATE

(6) CITY GOVERNMENT

SOURCE: Daily News research

Jon Gerung, Gregg Miller/Staff Artists

(7) AT A GLANCE (see text)