TOUGH TIMES FOR L.A. VILLARAIGOSA TO WARN BUDGET WILL BE TIGHTENED YET AGAIN.

Byline: RICK ORLOV

Staff Writer

Clamping down on Los Angeles' spending, Mayor Antonio Villaraigosa is expected to warn today that he will squeeze the city budget for a second consecutive year as he seeks to reduce the deficit by an additional $60 million.

Details will not be released for three more weeks, but aides said the budget will total about $6.7 billion and will not include any new major spending initiatives.

The only area to see any significant increase is expected to be the Los Angeles Police Department, which is struggling to hire more officers and combat an increase in gang violence.

Last year's city budget also was $6.7 billion, up 11 percent from the previous year.

But Villaraigosa's efforts to hold the line on spending will come under pressure. Contracts for about 13,000 civilian workers are up for renegotiation this year and union leaders have vowed to seek substantial raises.

The region's booming housing market also has slowed dramatically and only modest gains in related property and transfer taxes are expected this year.

"The city is not going to be getting as much (from residential housing), and the retail sales tax is down also," said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

"This is important to the city as far as what it can do, and there is more competition to Los Angeles from neighboring cities. It is going to be time for some reality checks in the city budget."

Officials said in a briefing Tuesday that much of the work in the coming year's budget has simply been finding ways to maintain programs that were added last year to libraries, parks and street maintenance.

Officials said much of the budget's projected savings will be achieved by wringing out more efficiencies in city work and reducing costs for workers' compensation and similar items.

Last year, about 40 percent of the budget went to public safety and education programs, 26 percent to municipal services, 14 percent to transportation and 6 percent to cultural and recreational programs.

The LAPD's budget last year was $1.2 billion, up 6.9 percent from the previous year.

Aides said additional funding for the LAPD will be designed to help hire 760 officers to fight crime, particularly violence related to the city's estimated 40,000 gang members.

Violent gang crime increased 14 percent citywide last year, and more than 40 percent in the San Fernando Valley.

As part of that effort, the Mayor's Office is reviewing all gang programs to try to assess which are working the best.

Anti-gang funds

The mayor also has asked Gov. Arnold Schwarzenegger for $30 million in state money for anti-gang efforts and has lobbied Congress for additional funding.

But a study by respected civil-rights attorney Connie Rice estimated that gang crime costs the city $2 billion a year and said massive funding and program changes are needed to stem the violence.

And many in the community are agitating for quicker action and more funding to tackle the problem, even as local and federal officials launch a more coordinated effort.

Deficit reduction

The push for anti-gang money comes, however, as Villaraigosa has made it a priority to reduce the budget's structural deficit, a gap between revenues and expenditures that had grown to $295 million when he took office.

In last year's budget, he allocated $49 million toward that goal and said it was the first installment in a five-year plan to eliminate the gap completely.

Aides to the mayor estimated the city's debt at $231 million and said Villaraigosa hopes to reduce it to $173 million this coming year.

"You have to look at it as something you pay from your savings account and you reach a point where you just can't afford it anymore," said one aide, who is working on the budget and asked not to be identified.

And city officials noted a squeeze between revenue -- about 5.4 percent more each year -- and costs, which have risen 7.9 percent.

Villaraigosa has been holding monthly meetings with general managers to stress the need to cut spending and set budget goals.

In preparing the budget, due to be released April 21, the mayor also has developed plans for the possible loss of $275 million a year from a utility users tax that is being challenged in court.

The mayor also has begun meeting with employee groups to explain the problems facing the city in an effort to avoid contract disputes.

Employees' pay

Earlier this year, members of the Engineers and Architects Association agreed to a three-year contract that gives them raises totaling 9 percent.

But the deal came only after months of job actions and protests by the EAA, which refused an initial city contract offer and said it wanted the same lucrative deal previously given DWP workers.

DWP workers last year received 3.25 percent raises each year for five years, and they have an escalator clause to account for inflation, which could nearly double the raises.

And seeing little repercussions after the EAA's protests, leaders for other union groups have begun to increasingly talk about staging their own work actions.

Barbara Maynard, a spokeswoman for Service Employees International Union, Local 721, said the union is polling members on what they expect to see in the coming contract.

"We are aware of the city's problems this year and have been working closely with the Mayor's Office to come up with proposals that can guarantee our workers fair pay and make sure that services are not affected to the public," she said.

rick.orlov(at)dailynews.com

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