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Thursday, Mar 28, 2024

Breakup Fans, Foes Interpret State Report Differently

Breakup Fans, Foes Interpret State Report Differently The Secession Question By JACQUELINE FOX Staff Reporter Secessionists say a report by State Controller Kathleen Connell bolsters their case that smaller is cheaper and their breakaway plan is fiscally sound. “This is a green light,” said Richard Close, chairman of Valley VOTE, the group leading the secession drive. Opponents, on the other hand, say Connell’s report will be used to convince voters a new city would be broke as soon as it forms. They and city officials intend to use the information as ammunition in their attempt to kill the drive for a Valley split, expected to appear on a Nov. 5 ballot. Connell was asked by Los Angeles Mayor James Hahn to review the Comprehensive Fiscal Analysis (CFA) prepared by the Local Agency Formation Commission (LAFCO), detailing financial terms for a new Valley city, including a proposed three-year budget and beginning cash reserves. In her report, Connell wrote that the new city would have a workable budget, but only about $12 million in reserves by its third year in operation, substantially less than the $35 million state guidelines recommend for cities of that size. In addition, she said, LAFCO’s report underestimates by $4 million the amount a new Valley city would need to cover its share of existing municipal bond indebtedness. Close, also a LAFCO alternate commissioner, said Valley VOTE’s consultants have prepared their own budget, which shows the new city would have plenty of available cash. That proposal, said Close, will be submitted to LAFCO in the next few days. “The controller did not and couldn’t really consider the budget that was submitted by our consultants because she was supposed to only look at the CFA,” said Close. “But we will be submitting a budget that shows a surplus of about $200 million, which is sufficient to reduce the business license tax, increase services for police and fire, and create sufficient reserves.” Connell also said the stranded costs and annual so-called “alimony” Los Angeles claims the Valley would owe it is closer to the $61 million secession advocates have in mind than the $300 million Los Angeles does. Further confusing the issue for Connell, according to Close, is the fact the CFA budget is based on existing operational costs for the city of Los Angeles, not a proposed Valley city of only 1.4 million. “The CFA budget is based upon what it costs L.A. to operate, with all its issues, and I believe that it’s a given that it operates at an extremely expensive level,” said Close. “So, for those people who argue that bigger is cheaper, we can prove them wrong.” Sam Stevens, co-founder of One Los Angeles, which opposes secession, said she thinks the controller’s findings reflect an accurate and “neutral” test of how financially healthy a separate Valley city would be. Her group has already included portions of Connell’s findings in one of its fliers, which says “the only way the new city can pay its bills and avoid going broke is to reduce services and raise taxes and fees.” Stevens said the findings should be enough to keep LAFCO from putting a ballot initiative together. “LAFCO is supposed to only move forward if the Valley would be fiscally viable, and what we’ve read in the controller’s report shows us that it isn’t,” said Stevens. “What it shows us is that we wouldn’t have enough of a reserve to allow for fluctuations in the economy. So I don’t know how LAFCO can say this is viable, and how the proponents of a new city plan to show the voters that this is what’s in their best interest when a neutral and, I think, credible (agency) has said otherwise.” Close said the facts will become clearer once LAFCO’s terms and conditions are made public. “They (One Los Angeles) want a status quo to tie in with downtown politicians,” said Close. “Their credibility is very low. The public will look at all the information, including the fact that LAFCO has a proposal for an alternate budget.” Hahn spokeswoman Julie Wong agreed that Connell’s findings should be taken seriously. “The controller was very clear in her analysis of the CFA, particularly with respect to the issue of a reserve fund,” said Wong. “That’s something the new city should be very concerned about, and the (voters) should want to know.” One LAFCO staff member took a very different, not altogether surprising, view of the controller’s report, considering the degree of autonomy typically afforded the agency. “It’s just an opinion, and we don’t have to do anything with that opinion,” said Sandor Winger, LAFCO’s deputy executive officer. Wong said, “We asked for the information, we think that it is important and we will make sure we get that information to the voters.”

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