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SECEDE—LAFCO Breakup Plan Is Not the Final Word

Leaders of the group spearheading a Valley secession movement say a recently released plan for a breakup is merely a draft that addresses only one portion of their final proposal and that it’s too early to drive a stake through the heart of their cause. They also say the paid consultants who crafted the report rushed the findings in order to appease city officials opposed to a split. In the process, the report has created much confusion on both sides of the debate, but secessionists say revisions will be made in order to offer up a ballot initiative worthy of passage in the November 2002 election. The Draft Fiscal Analysis report, released Oct. 5 by the Local Agency Formation Commission (LAFCO), reversed the recommendations in an earlier proposal calling for a straight transfer of services and assets to a new Valley city. Instead, the plan, drafted for LAFCO by consultants from Philadelphia-based Public Financial Management (PFM), calls for the new city to contract for all municipal services except city street maintenance and give most of the $1 billion it will collect each year in revenue back to Los Angeles to cover the costs. Although the plan predicts the new Valley city would have more revenues than expenditures, it would start out with a meager $7 million surplus, which critics say isn’t enough of a cushion in times of economic uncertainty or in the case of a fiscal emergency. Richard Close, chairman of Valley VOTE, the group pushing for Valley cityhood, insisted last week that LAFCO’s latest blueprint for a breakup wasn’t supposed to tackle the issue of city assets. Close said LAFCO’s next step is to prepare the “terms and conditions,” which will describe which assets the new Valley city would either control outright or contract for. “The consultants have always assumed that there would be a division of assets,” said Close. “This is just a draft proposal of an economic analysis. In the meantime, we have met the test for a ballot initiative.” Keith Curry, managing director for PFM, agreed the report has been severely misinterpreted as a final proposal for a breakup. He said this plan gives secessionists the best opportunity to set up an independent city first, then go back and deal with complicated infrastructure questions later. Curry also said, though his firm would be involved in drafting the final “terms and conditions” that will address the transfer of assets, direction for that will come straight from LAFCO. “We didn’t include the discussion of city assets because we would have had to make judgements about assets that are really the jurisdiction of LAFCO,” said Curry. “We have no objection to the transfer of assets and the only reason they aren’t here in this report is because they are not needed for our recent report to work.” But William Powers, an attorney and Valley VOTE board member, said the consultants failed to present their findings clearly and appear to have caved into challenges posed in the city’s recently released response to the Initial Fiscal Analysis, which LAFCO submitted in June. “What happened was the consultants kind of threw a curve to everybody,” said Powers. “I think they got intimidated by city officials, so in terms of doing a complete job, they didn’t. But we have every confidence after hearings and after LAFCO’s final evaluations of assets, the final draft will contain elements of a meaningful ballot proposition.” Confused? You’re not alone. Roughly 250 residents and city officials turned up Thursday for the first of six public hearings on secession at Los Angeles Valley College, and many expressed concerns about the murkiness of the report and what the consultants would be coming up with next. Even City Councilwoman and LAFCO Commission Member Cindy Miscikowski agreed prior to the meeting that the latest report was raising eyebrows and furrowing brows all over city hall. “I do know that this report has surely taken almost all LAFCO board members by surprise,” said Miscikowski, a staunch secession opponent. “It’s kind of like they just threw this out there.” But the subtext is a question of fiscal survival: Can a fledgling city of 1.4 million people get the services it deserves on such a meager surplus during a time of war, potential state budget cuts and gloomy forecasts for a downturn in the region’s tourism markets? “Clearly $7 million seems to me to be a pittance,” said Robert M. Stern, president of the Los Angeles-based Center for Governmental Studies. “And unfortunately, given the state of the economy and the prospect of an emergency, such as a major earthquake, this (report) puts a real question mark out there as to whether they should be proceeding at this time.” But Close argued that the Valley’s equity in city assets would mitigate those concerns. “We have $1 billion a year to operate, plus we would have the existing Valley assets to work with,” he said. Close said he didn’t know if LAFCO would also recommend the new city share services based in Los Angeles, such as LAX and the port, or be given credit for its share of their net worth. “Do we really want to own a part of the harbor or LAX?” said Close. “To me, I think the best thing to do is to take a credit to reduce those liabilities. I believe it would be less destructive.” And what about the voters? How big of a surplus does a new Valley city have to have to persuade residents that, despite national calls for unity and a murky economic outlook, this is a good time to split up and start over? “Voters like smaller governments that are more responsive,” said Stern. “But the problem, of course, is the voters will be looking at the bottom line and I think they are going to be a little more conservative these days about not wanting to see major changes, which also means incumbents are likely to have an easier time getting reelected.” Not so, said Close. “People are going to vote for this because they want local control,” he said. “Every city is subject to budget cuts and adjustments when there are economic hurdles, regardless of what their surplus is. And, if the issue of recession comes into play, my response would be this: If we stay a part of the city of Los Angeles, and they have to cut expenses to cope with a state budget deficit, where do you think they are going to cut first? It’s going to be the Valley.”

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