Tax Revenues for New Valley City Overstated by $31 Million

A consultant for the commission studying San Fernando Valley secession said Wednesday that a breakaway city would have about $31 million less in annual tax revenues than originally estimated.

The reduction would amount to 3% of a Valley city’s $1-billion budget. Keith Curry, the consultant to the Local Agency Formation Commission, said the projected revenues were rolled back because of obscure state laws governing taxes on property transfers.

“It’s a significant blow, but it’s not devastating,� said Curry, who is managing director of Public Financial Management of Newport Beach. “It’s big to you and me, but it’s not the whole world.�

To make up for the loss, Curry said, a new city could seek legislation that would allow it to collect more money for the property transfers. It could also reduce services or take other steps to cut costs or increase income, he added.

Los Angeles collects $4.50 for every $1,000 worth of real estate sold in the city. But a new Valley city, which would be organized under a different set of state laws, would receive 55 cents for each $1,000 of real estate sold.

Larry Levine, co-chairman of the anti-secession group One Los Angeles, said the paper loss of $30.9 million in Valley revenues would prevent a new city from providing services equivalent to those now offered by Los Angeles. He also said a Valley city might default on its financial obligations.

But Jeff Brain, president of the secessionist group Valley VOTE, said the proposed budget for a new city already takes into account the $30.9-million loss.

LAFCO will decide this spring whether to put secession to a citywide vote in November.

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Times staff writers Patrick McGreevy and Nita Lelyveld contributed to this report.