L.A., VALLEY FARE POORLY STUDY FINDS THE CITY TRAILS OTHERS IN FUNDS, SERVICES.

Byline: Beth Barrett Staff Writer

Los Angeles fares poorly compared with other nearby cities on spending to fight violent crime and attract business, and gets less per person in state and federal funds than most large cities in California, according to a draft of a comprehensive study to be released today.

The report by the prestigious Rose Institute of State and Local Government at Claremont McKenna College sheds light on many key issues raised in the San Fernando Valley secession debate by comparing Los Angeles with other cities in the county and state.

It found that Los Angeles, with the area's highest business taxes, generates less in sales tax revenue per person than most cities in the county and the gap is getting worse.

The study, funded in part by San Fernando Valley CIVIC Foundation, found the Valley is particularly shortchanged in such key areas as redevelopment investment, getting only one-tenth of the city's redevelopment funds, and in police services, getting far less in per capita spending than any other part of the city.

While the study is a detailed litany of comparisons between Los Angeles and other cities, it has wide implications should the Valley secede. Steps to create a more friendly business climate could generate much higher sales tax revenue while more aggressive efforts to get federal and state grants could bring in millions of dollars to the new city's treasury.

``Secessionists argue that this shows that the size and inefficiency of Los Angeles works against all of its communities - not just the Valley - and that in addition to a new Valley city they would all be better served with a more localized new City of Los Angeles,'' David Fleming, chairman of the Valley CIVIC Foundation, said in a statement.

The study, conducted by Steven Frates, senior fellow at the Rose Institute, will be released at 8 a.m. today at a press conference at the Sheraton Universal Hotel in Universal City. It is titled ``Los Angeles in Context: A Comparative Analysis of Current and Proposed Cities in Los Angeles County.''

According to the draft copy obtained by the Daily News, the study identifies as a central element L.A.'s relatively poor performance at generating retail sales, finding that more than half of the cities in Los Angeles County earn more in sales tax per capita.

``The City of Los Angeles is much less successful in generating sales tax revenue per capita than most other cities in Los Angeles County,'' the study concluded. ``Other Los Angeles County cities have clearly created a more successful retail sales environment than the City of Los Angeles.''

Frates, who declined to provide a copy of the final report, answered limited questions about his findings.

``Los Angeles' large size doesn't translate into more money ... the argument that the size of L.A. adds political potency is on the face of it false,'' he said.

Deputy Mayor Matt Middlebrook said city officials had not received a copy of the report and therefore would not have a comment.

'Hostile business environment'

Shirley Svorny, an economics professor at California State University, Northridge, said that while city-to-city comparisons are often difficult to draw conclusions from, the study nonetheless illustrates an underlying structural problem with the city.

``A better way to look at it is that every community needs to make these decisions for themselves, and City Hall is too far removed,'' Svorny said.

Frates said Los Angeles has a ``hostile business environment'' - including the highest gross-receipts tax on retail businesses among county municipalities who levy such a tax - that drives high-volume retailers and others to more tax-friendly communities.

Burbank, for instance, has attracted many large retailers that don't have outlets in the East Valley so shoppers spend their money in Burbank, which gets the sales tax revenue to spend on its services.

The result, researchers found, is that Los Angeles has less tax revenue, while its growth in per capita revenue from sales tax was less than half that of other cities: 5.2 percent versus 11.1 percent.

``L.A. is bleeding, relatively speaking,'' Frates said.

The city of San Fernando, for example, in fiscal 1999 reported a per capita sales tax as a percentage of income almost four times higher than Los Angeles. San Fernando generated the higher per capita sales tax in relation to income even though its approximately 23,000 residents are poorer: $11,485 per capita income versus $20,671 per capita in Los Angeles.

``The city of L.A. has a business environment that's so hostile that many high-volume retailers, automobile dealers relocate to more business-friendly cities. Those services are not available to the citizens of Los Angeles. They go across the border to Pasadena, Burbank, Glendale and buy things. That's very significant,'' Frates said.

Were a new Valley city to be ``just a little bit'' more business-friendly, Frates said, it could ``do very well, indeed.''

The report identified other business disincentives in Los Angeles, including the highest gross-receipts tax on retail business of all cities in the county that impose the tax. Most do not. For sales receipts of $2 million in 2001, for example, L.A.'s charge of $2,959 was the highest, the study found.

``Other Los Angeles County cities have clearly created a more successful retail sales environment than the City of Los Angeles,'' the study concludes.

L.A. lacks clout

A central argument of Mayor James Hahn, and others fighting the secession movements, is that Los Angeles would lose much of its clout in Washington, D.C., and Sacramento. The study found those claims inflated.

It concluded that Los Angeles experienced a decline of 15.25 percent in federal funds per capita between fiscal years 1997 and 1999.

Those findings are consistent with a Daily News investigation published Sunday that found that the Valley, with 35.6 percent of the city's population, gets only about $50 million, or 24 percent, of the $203 million in federal funds allocated geographically, out of a total of about $300 million in federal funds the city is entitled to each year.

``Los Angeles' political representation in Congress is not very effective,'' Frates said.

Los Angeles, with $118.51 per capita in federal funding in fiscal 1999, trailed other large cities, including Long Beach, which got $160.90, and Anaheim and Oakland, each with $122. Los Angeles did better that year than San Diego, Sacramento and San Jose.

Los Angeles' $118.51 per capita in 1999 also trailed smaller cities in the county, including Santa Monica, at $282.20 per capita, and Hawthorne at $190.87 per capita.

The study concluded that Los Angeles did even worse when it went after state dollars, ranking 38th out of the county's 88 cities in fiscal 1999 at $81.37 per capita.

By 1999, the city had dipped to where it was receiving less than the county's average in state funding per capita.

In 1999, Sacramento, Long Beach, Oakland, San Jose and San Diego all did better on a per capita basis than the city.

``These per capita distributions of state (financing) clearly indicate that the size of the City of Los Angeles ... has not translated into political power regarding state (financing),'' the report said.

Frates said when Los Angeles and its share of county funds were compared with San Francisco, which is a city and county, San Francisco still got twice as much per capita in state money, even though Los Angeles is about five times as big.

``What I make of it is that the representation of L.A., the state senators and Assembly members, are very, very ineffective. The city of L.A. has very little political power for its size versus San Francisco,'' Frates said.

``Anyone who is a citizen from Los Angeles, when they travel to San Francisco, should go and see the beautiful library, stop by the schools that get better funds and the beautiful restored beaux arts City Hall. The citizens of L.A. paid for that.''

Redevelopment gap

The city's redevelopment focus remains squarely on downtown, the study also said.

The Valley in fiscal 2000 retained about $6.8 million in property tax increment money - the amount of tax generated above a baseline by new projects, or about one-tenth of the $69.6 million retained by the rest of the city.

The gap was greater between total expenditures on redevelopment in the Valley and the rest of the city: $7.1 million for the Valley to $123.3 million.

But Los Angeles, with $38.61 per capita in redevelopment expenditures, was far outdistanced by nearby communities, with Santa Monica spending $903.37; Burbank, $294.25; Pasadena, $167.33; and Glendale, $89.19, per person on redevelopment.

``Redevelopment activity in the City of Los Angeles is focused downtown and not in the Valley,'' the study found. ``Redevelopment expenditures in selected cities immediately adjacent to the City of Los Angeles are much higher on a per capita basis than comparable expenditures in the San Fernando Valley.''

On the services side, the city - and the Valley in particular - do less well than other municipalities.

``The Valley receives less police protection per capita than the rest of the city of Los Angeles,'' the report said. ``(The city) spends less on police protection, as a function of the violent crime rate, than - other cities in Los Angeles County.''

Among other key findings:

--Spending on police in the Valley was $170 per capita, compared with $288 per person in the south side; $232 in the central area, and $225 on the Westside in fiscal 2001.

--On a geographic basis, in which distances affect response times, the Valley also fared the worst, getting just over $1 million per square mile, compared with $3.5 million per square mile in the city's southern section; $3.6 million per square mile in the central city, and $1.7 million per square mile on the Westside.

Most significantly, Frates said, is Los Angeles' ranking at the bottom of major California cities - only Oakland is lower - in per capita spending per violent crimes.

Los Angeles spends $29.51 per capita measured against violent crimes per 1,000 residents, compared with the city of San Fernando, which spends $42.26, Glendale at $68.48, and Burbank at $83.16 - cities with crime rates more comparable to the Valley.

CAPTION(S):

5 charts

Chart:

(1) Sales Tax as a % of Per Capita Income

(2) LAPD Expenditure Per Capita

(3) Per Capita Redevelopment Expenditures

(4) Per Capita State Funding

(5) Per Capita Federal Funding

SOURCE: The Rose Institute of State and Local government at Claremont McKenna College