SOARING COSTS HIT LIFESTYLES MORE CALIFORNIANS FIND IT HARDER TO MAKE ENDS MEET.

Byline: BRAD A. GREENBERG Staff Writer

Sergie Mendoza makes $60,000 a year customizing cars at a Canoga Park garage -- an income that in most places would afford him a middle-class lifestyle.

Instead, Mendoza plans to move his wife and two children to a place where the American dream costs a lot less.

``We're going to move out of here. We're going to Florida,'' said Mendoza, 34, who's already sold his Northridge home. ``It's too hard to live here. Everything is too expensive. You can't survive.''

Californians such as Mendoza are increasingly finding it harder to make ends meet, according to a Public Policy Institute of California report to be released today.

The study is also critical of the criteria for the federal poverty line, which is based on income and doesn't take into account the cost of living in a specific region.

After adjusting for home prices, the percentage of Los Angeles County residents living below the poverty line increased from 15 percent to 18 percent, placing it among the 10 highest-poverty counties in the nation, the study found.

California's ranking among the states and Washington, D.C., rose from 15th to third.

``We don't have a realistic picture of how many families are struggling to make ends meet in California, which is particularly true in Los Angeles,'' said Deborah Reed, the study's author and director of the institute's population program.

The study also attributed California's hidden poverty to the nation's largest immigrant population and to growing income inequality.

Incomes have fallen 4 percent for low-income families since 1969, while rising 16 percent for middle-class and 41 percent for upper-class families.

And what is average costs a lot more. In the past year, for instance, San Fernando Valley home prices soared 17 percent and apartment rents 9 percent.

In addition, the Los Angeles Department of Water and Power has proposed raising water rates 3.9 percent this year and 3.5 percent next.

Mayor Antonio Villaraigosa is pushing a 64 percent trash-fee hike.

And nobody needs to be told that gas prices -- among the highest in the nation -- are through the roof. The local average for unleaded is now $3.39.

``There are millions of people in L.A. County who are not affording the basic necessities to support their families. It's obvious in the crisis we are seeing in housing and education and, of course, health care,'' said Jessica Goodheart, co-director of research at the Los Angeles Alliance for a New Economy.

The federal government's formula for calculating the poverty line -- devised four decades ago by the Office of Management and Budget and used by the Census Bureau -- is adjusted for inflation but doesn't account for disparities in costs for utilities and real estate markets.

The poverty threshold for a family of four was $19,157 in 2004, the most recent year statistics were available. That year, landlords could charge low-income tenants $12,252 in Los Angeles, which experts say doesn't go far in booming Southern California.

``Right there, if you are paying the fair-market rent, 64 percent of your income would go into that rent,'' Reed said.

Needy Californians also are less able to qualify for anti-poverty programs, such as food stamps and Head Start, because their income is more than 80 percent above the poverty line.

For example, almost 2 million Californians participated in the federal Food Stamp Program last year, second only to Texas. But in New York, with a population little more than half of California's 38 million, 1.75 million people received food stamps.

In Louisiana, which has a lower poverty ranking when adjusting for housing costs, 18 percent of the state got food stamps in 2005.

Today's report is the latest to criticize the federal poverty line.

In 1995, the National Academy of Sciences recommended that the poverty-threshold formula take into account food, clothing, health care, housing and utilities.

``The saddest part to me is watching the young people have to work full time, go to school and every penny they make is going to cover their rent -- nothing more,'' said Toni Gorton, a Woodland Hills psychotherapist.

``I think we can kiss the middle class goodbye.''

brad.greenberg(at)dailynews.com

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The High Cost of Living

SOURCE: Daily News Research, Bureau of Labor Statistics, USC 

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