L.A. County seeks to tap reserves for expenses

Los Angeles County officials plan to seek approval Tuesday to tap $34.1 million in reserves -- money intended for one-time expenses -- to cover mounting welfare, construction and operating costs.

In a letter to supervisors, William T Fujioka, the county’s chief executive, said turmoil in state budget negotiations and shrinking tax revenue make the move necessary. Without the reserve cash, officials said, they would have to start cutting programs and services, many of which help the growing number of people who have lost jobs.

“And we don’t want to do that,” said Debbie Lizzari, a top aide to Fujioka.

Already, Fujioka has asked county department heads to cut their budgets by 5%, a reduction that they say could be made without laying off workers. That savings, however, is unlikely to put much of a dent in the budget deficit.

The county is facing a shortfall of $35.8 million this fiscal year, which ends June 30. Next year, the shortfall is expected to grow to $173 million and continue to rise for two more years.

Supervisor Zev Yaroslavsky said he and his four colleagues on the board would have to find a lasting solution because reserves may not be available in years to come. But he said that right now the move makes sense.

“This is an effort, at least on several critical programs, to provide some bridge funding at least until the end of the fiscal year,” Yaroslavsky said.

The county’s growing budget shortfall has been largely fueled by an increased demand for welfare. County welfare officials are now handling 70,000 general relief cases -- more than 30% above the 52,000 cases they had expected. They are scrambling to pay for the increase as property and sales tax revenue sags.

Between July and November, county sales tax revenue fell 3.6%, Lizzari said. Lackluster holiday sales mean they were expected to fall further. This fiscal year the county is expecting shortfalls of $14.5 million in deed transfer taxes, $68.2 million in sales taxes and $38.1 million in vehicle licensing fees.

The county registrar-recorder saw fee revenues decrease even as demand for services increased during the presidential election, creating a $11.5-million shortfall.

The $34.1 million in reserves Fujioka plans to tap would go to fund a variety of services and projects, including $6.3 million for the registrar-recorder/county clerk and $10 million for the swelling welfare ranks.

Philip L. Browning, director of the county’s Department of Public Social Services, said officials expect another 10,000 general relief cases next fiscal year, bringing the caseload to 80,000.

After the state cut about $20 million from Browning’s budget this year, he left 1,000 jobs vacant, canceled technology projects, overtime and unused phone lines and told staff to cut corners, making double-sided copies and substituting scrap paper for legal pads.

“Our goal is not to lay off anybody,” Browning said, because due to increasing demand for services, “We are going to be stretched really, really thin.” Browning said a Boeing engineer recently filed for welfare for the first time after he was laid off and lost his house.

“We’re getting people that we’ve never had before, people coming in who have had good jobs -- they’ve worked in banking, in the mortgage industry,” Browning said.

In addition to general relief, which is paid to individuals, the CalWorks program, which supports families, has seen a 15% to 20% increase in demand this fiscal year, Browning said, compared with an average 2% to 4% annual growth in years past. The program serves about 300,000 people, and demand for services is expected to grow 19% next year, Browning said.

The plan to tap reserves would also transfer $3.6 million to capital projects, including $1.2 million in reserves for cost overruns in the $30-million renovation at the Mark Taper Forum.

Yaroslavsky defended the spending, calling it “a very small amount for a major institution that employs a lot of people and has a lot of economic reach.”

The county’s most pressing concern remains the state budget standoff. The county can expect at least $50.5 million in state cuts this fiscal year and $268.6 million in state cuts next year, Fujioka reported. If the state controller delays cash payments to counties after Feb. 1, as he has said he would, the county would be unable to cover its roughly $2 billion monthly cash outlays past March, Yarovslavsky said.

Supervisor Don Knabe introduced a motion last week to oppose the governor’s proposal to delay state welfare payments to L.A. County. County officials have said they would cover a shortfall if the state delayed payments.

Knabe plans to re-introduce the motion Tuesday, his staff said, with an added provision calling for Fujioka to update supervisors weekly on the effects of proposed state cuts.

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molly.hennessy-fiske@latimes.com