SPEAKING OF FINANCES ... DECISIONS DEPEND ON WHO'S IN CHARGE.

Byline: Harrison Sheppard Staff Writer

Like many issues in the secession debate, nobody can say with absolute certainty what would happen to taxes if the San Fernando Valley becomes its own city.

Experts say the future tax and budget picture for a Valley city would depend on the economy, who is managing the city and political decisions like bond issues and other add-on charges.

Two facts about taxes appear to be certain, however: One, under state law, property taxes cannot increase without approval by two-thirds of the city's voters.

Second, a new Valley city would not be able to levy the so-called documentary transfer tax on real estate sales that Los Angeles charges, losing $31 million in revenue but saving homeowners nearly $1,400 on the sale of a median-priced Valley house.

Approval of Measure F on the Nov. 5 ballot would mean the Valley would pay $127 million a year in alimony to Los Angeles - about what it pays now in excess of services it gets - but the payment would fall 5 percent a year and then end in 20 years. The decreasing payment means that over the 20-year period, the Valley city would save $1.3 billion that it otherwise would have sent to Los Angeles.

A study by the Local Agency Formation Commission, which approved the cityhood plan, found that a new Valley city could provide all needed services with a 5 percent reserve the first year, growing to 14 percent in the third year of the city's existence.

The biggest source of revenue for the Valley city would be property taxes, contributing about 20 percent of its estimated budget, followed by the utility users tax, sales tax and business tax. Together the four would generate more than $625 million, according to LAFCO.

The fifth-biggest revenue source would be the state motor vehicle license fee, contributing about $88 million to the new city.

Secession opponents argue that a Valley city would be ill-prepared for unexpected financial problems because it has no credit history.

``We have never bought LAFCO's financial analysis in terms of how the city will do economically,'' Deputy Mayor Matt Middlebrook said in an interview earlier this year. ``Even if you buy their financial analysis, the new Valley city runs dangerously low on reserve funds. When you run into a deficit, there are two ways to address it: You raise your taxes, or you reduce services.''

Secession supporters, however, say a Valley city could provide the same level of service - or better - by operating more efficiently, economically and effectively than Los Angeles.

``Part of it, we think, will be saved in reducing the huge redundant bureaucracy that exists in downtown Los Angeles,'' Valley Independence Committee Chairman Richard Katz said earlier.