VILLARAIGOSA OFFERS $6.7 BILLION BUDGET MORE THAT 40% TO BE SPENT ON POLICE, FIRE COSTS.

Byline: RICK ORLOV Staff Writer

VAN NUYS - Flanked by uniformed LAPD cadets to symbolize his commitment to public safety, Mayor Antonio Villaraigosa on Thursday proposed a $6.7 billion budget that will focus on ``cops and kids.''

More than 40 percent of the budget -- the biggest chunk -- is allocated for community safety, including police, fire and public assistance. About 26 percent goes to municipal services such as trash collection and sewage; 14 percent to transportation; and 6 percent to cultural and recreational programs.

Nearly 11 percent pays for administrative costs and 2 percent for human resources.

``Every budget is a balancing act, every budget is a statement of values,'' Villaraigosa said at a news conference at Van Nuys City Hall.

``This budget balances the values of public safety while ensuring the future of kids. Living within our means while providing for public safety is what is important.''

The budget, which takes effect July 1, is roughly 11 percent higher than the current $6.1 billion plan -- an increase supported, in large part, by higher property tax revenues resulting from the hot real-estate market.

The mayor said he used the windfall, as well as money squeezed from efficiencies, to allocate $49 million as the first installment in his five-year plan to eliminate a structural deficit -- a gap between revenues and expenditures that has grown over the years to $295 million.

``I think this budget takes a responsible approach in paying off the deficit and meeting the needs of the city,'' Villaraigosa said.

The budget also formalizes Villaraigosa's proposal to charge homeowners an additional $7 monthly for trash collection -- a fee that would go to $28 a month by 2010 -- to pay to hire 1,000 police officers over the next five years. Residents now pay $11 a month for their trash cans.

``I think the public is aware of the need for this and will support it,'' Villaraigosa said, adding that he has received few complaints from constituents about the previously announced fee increase.

And he said he will press the City Council to create a special fund to ensure that the revenue is used only for public safety.

``I've seen what happens in government and we want to make sure it goes for this purpose. If not for more police officers, than the technology and equipment we need.''

Overall spending for the LAPD is going up 6.9 percent, to $1.2 billion, to cover the cost of new equipment, including cameras in patrol cars.

In addition to paying down the deficit, Villaraigosa said he has eliminated a number of positions in the budget, limited new or expanded services in programs and worked to reduce workers' compensation costs.

One of the areas that did get more money is gang reduction -- a $2 million infusion of cash to create intervention, job training and mentoring programs for at-risk children ages 7-14.

Another $2 million will be used to expand a pilot project that will allow 1,400 high school students to attend classes in the morning and work in the afternoon.

The mayor, who met with neighborhood council leaders and council members in developing the spending plan, also included a reserve fund of $146 million, representing about 3.4 percent of the general fund budget of $4.3 billion -- the largest in the city's history, according to city Administrative Officer Bill Fujioka.

``He's showing responsibility as the chief executive,'' said Bob Stern with the Center for Governmental Studies. ``He's looking to the future to make sure the deficit doesn't get any bigger. If there's a deficit now with a good economy, imagine what it will be when there's a bad economy.''

In proposing the budget, Villaraigosa was helped by a strong local economy in all areas where the city collects revenues, boosting the budget by 11 percent -- about $400 million.

Officials said $200 million of that increased spending will go to cover higher pension costs for city workers, making up for underperforming stocks.

About $50 million will be used for a variety of programs, including expanded library hours at all branch libraries, expanding the L.A.'s BEST after-school program, a summer youth jobs program and creation of a unit to look for more park space in the city.

There also is funding for a variety of programs the mayor has discussed over the past year, such as planting 1 million trees, funding affordable- housing projects and expanding transportation programs.

The remaining funds are expected to be needed for cost-of-living adjustments for workers and salary increases.

The city is in contract negotiations with its 13,000 police officers and firefighters. Each 1 percent increase in salary costs taxpayers $13 million, officials said.

Councilman Bernard Parks, who chairs the council's budget and finance committee, said this week that he was pleased with the mayor's proposal.

``He reflects the priorities that we as a council have, with public safety being our top concern and also dealing with crime prevention.''

Council President Eric Garcetti said during a news conference Wednesday that he supports the mayor's call to expand library services and gang prevention.

The plan also increases spending for the Mayor's Office by 28 percent, from $6.7 million to $8.6 million, and boosts the City Council's budget by nearly 4 percent, from $20.9 million to $22.7 million.

A spokesman said former mayors always underestimated their expenses and then wound up overspending. Villaraigosa is trying to be more upfront in his operation, he said.

Revenue projections also increased across the board.

The documentary transfer tax -- a fee charged when property is sold -- should produce $220 million, about $34 million more than expected. By the end of this fiscal year, that's expected to come in at $190 million.

The city business tax has generated $420 million - $34 million more than anticipated. Because of that, Villaraigosa said, the city will be able to cut business taxes 4 percent next fiscal year and extend the waiver of taxes to firms earning less than $100,000 a year.

``I am pleased and not surprised,'' Councilwoman Wendy Greuel said of the increased tax revenue. She pushed for business tax reform to send a message that ``Los Angeles is open for business and we want their business,'' and she attributes the higher returns to companies that chose to move here or stay here.

Sales tax revenue also came in higher than expected, at $338 million, $28 million more than had been estimated.

Villaraigosa said he expects to keep the transfer from the Department of Water and Power to the city general fund at about the same level as this year -- $220 million. The DWP board is considering a 7.4 percent, two-year surcharge on power rates.

The budget will be considered by City Council committees, which will hold hearings on the proposal before the full council votes on the plan in June.

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