NEW TAXES, MORE DEBT LOCAL LEADERS GRATEFUL IMPACT WASN'T WORSE.

Byline: Mariel Garza Staff Writer

Los Angeles city, county and school officials heaved a collective sigh of relief Wednesday that Gov. Gray Davis' revised state budget will hit them a lot less hard than expected.

But the governor's new $96 billion spending plan, which relies on nearly $20 billion in new taxes and borrowing to bridge a worsening, potentially $38.2 billion, revenue gap, still takes some hits at local governments.

``Overall, it's a much better budget than the one in January. But it will still have a significant impact on local government,'' said county Chief Administrative Officer David Janssen. He expects cuts to the county of between $70 million and $140 million in vehicle license fee revenues.

The city of Los Angeles is facing a loss of as much as $40 million from that same source.

``Difficult times force us to re-examine our priorities and make difficult choices. I've done that. My choices reflect my values,'' Davis said at a noon press conference in Sacramento.

``There's nothing more important to me than education. It's literally the path to life for everyone. It is the absolute key to California's future.''

The revised plan included $708 million in funding for K-12 schools to decrease class size and avoid layoffs, and $305 million more to the state's community college system, which faces stiff student fee hikes but less than the doubling proposed earlier.

The new budget offers only a small measure of relief - an increase of $20 million to $30 million - for Los Angeles schools, said Joseph Zeronian, chief financial officer for the Los Angeles Unified School District. That's a fraction of what the LAUSD needs to close a $420 million budget gap.

``That helps, but we are still quite a few ways from having a balanced budget,'' said Zeronian. ``We are happy the news is not worse. We still have our work cut out for us.''

To close the budget deficit, LAUSD officials are considering a number of options, including eliminating some school nurse, counselor and assistant principal positions and cutting school library hours.

The budget plan was mixed news to Los Angeles city officials. The city could lose up to $40 million in revenue from vehicle license fees, less than the $175 million loss proposed in the governor's first budget proposal in January.

However, the city is suffering its own budget woes, trying to figure out how to hire more cops and avoid future deficits of as much as $290 million.

Mayor James Hahn spoke with Davis on Wednesday, said mayoral spokeswoman Julie Wong, and urged him to move to trigger the rise in car registration fees quicker than planned so there would be no gap in funding to the city.

``The mayor will continue to lobby Sacramento to make sure Los Angeles gets the funding we need,'' Wong said.

Others said the governor's revised budget has a long way to go.

``It's the governor's proposal. It's all subject to change,'' said City Administrative Officer Bill Fujioka. ``All it is is another starting point.''

The county also is having money problems and will have to make $467 million in cuts in law enforcement, jails, hospitals, libraries and parks next fiscal year, Janssen said. Davis' proposal will gut county libraries' book budgets. County union officials say they expect the county to lay off 5,000 workers.

Davis' latest version of the budget also does a little better for transportation by keeping a small portion of the state's landmark Transportation Congestion Relief Plan in place, officials said.

Rather than transferring the entire $1.1 billion transportation allocation this year to shore up the general fund, Davis' new plan would keep $207 million for transportation projects already approved.

Metropolitan Transportation Authority officials could not immediately say which projects might benefit.

``There were a group of projects that were basically put on hold that would be funded by this amount,'' said the MTA's Michael Turner.

The budget for the 23-campus California State University system and the eight-campus University of California system remains the same - $300 million in UC cuts and $260 million in CSU cuts.

But the governor restored some money for community colleges, which will have to raise fees from $11 per credit unit to $18 per credit - down from the $24 Davis proposed in January.

``This is better than what the governor had proposed,`` said Tyree Wieder, president of Valley College. ``But it doesn't take us to where we need to be. It's still a reduction of services for students on campus, and we will not be able to serve as many students who are asking to be served.''

The Democratic governor's plan drew scorn from Republicans.

Assemblyman Tony Strickland, R-Camarillo, chairman of the Assembly Republican Caucus, said the governor probably won't win the six GOP votes needed in the Assembly to pass the budget.

``Gov. Davis knows that we as Republicans are not going to increase the income tax and sales tax and triple the car taxes,'' Strickland said. ``The only way to balance is a one-year spending freeze for 2004-05.''

Sen. Tom McClintock, R-Thousand Oaks, said state revenues grew by a healthy 25 percent over the past four years while spending increased by 40 percent, creating the deficit. ``This is not a revenue problem. It's a spending problem.''

Staff Writers Troy Anderson, Helen Gao, Lisa Mascaro, James Nash and Lisa M. Sodders contributed to this report.

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Source: Associated Press

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