He Says It’s Time to Put Up or Shut Down : Rancho Palos Verdes: Councilman Steve Kuykendall doesn’t like big government or high taxes. But with his city deeply in debt, he says voters must decide whether to abandon local control or generate the money to support it.

When Steve Kuykendall won a seat on the Rancho Palos Verdes City Council in November, he was a “read my lips” conservative Republican opposed to big government and new taxes.

Like most people living in this upscale bedroom city of 42,000 on the Palos Verdes Peninsula, he didn’t trust the distant state or federal bureaucracies and favored local control.

“It was them against us,” he said.

He still feels that way, but his thinking has begun to change. The line between “them” and “us” has blurred and, at times, even he has felt the hot breath of anti-government hostility blowing his way.

After eight bruising months of trying to balance the city’s red-ink-stained budget, the 45-year-old ex-Marine-turned-banker-and-politician has learned that when political ideology comes hard up against fiscal reality, something has to give.

Twice now he has found himself justifying tax increases of one kind or another and voting to raise revenues. That isn’t popular in a city where Republicans outnumber Democrats almost 2 to 1.

Kuykendall is now proposing a ballot measure asking Rancho Palos Verdes residents whether they want to keep local control or turn the reins of government back to the county.

The referendum language should be spare and blunt, he said, such as: “Should we abandon the city form of government?”

If the answer is yes, the council should settle the city’s debts, close the doors at City Hall and disappear.

If the majority voted to keep local control, they would then have to specify how they intend to pay for paving streets and maintaining parks, police and fire services. The ballot would list taxing options to be checked off. There can be no more waffling; the message must be clear--either put up the money or shut down the city, he said.

“It’s not a question of ideology, but whether a locally controlled city government can survive or not,” Kuykendall said. “The voters have to decide if we’re going to have local government or not. It’s that simple. If they want local government, they’re going to have to pay for it.”

Rancho Palos Verdes is a sprawling, boots-and-saddles bit of suburbia that was incorporated nearly 20 years ago to stop high-density development. Perched on a rugged coastline and graced with spectacular ocean views, voters decided then that they wanted no part of high-rise condominiums, commercial shopping malls or industry.

The city was formed to control density and preserve the rural landscape. Wide, tree-lined streets, manicured yards, white rail fences, hiking and horse trails, a dozen city parks and a rich, laid-back lifestyle were valued more than a revenue-generating tax base.

City government by design was to be small and unobtrusive. No city hall was built; instead, the government was located in a cinder-block barracks building on an old Air Force missile base. Over the past decade a few temporary buildings have been added, but City Hall is still a surplus military barracks.

No city in the South Bay gets by on less tax money.

“This city is well managed and its staff is efficient,” Kuykendall said. “But it has a basic fiscal flaw: There is no tax base, no commercial or industrial area to generate the kind of revenues needed to run the city.”

From the start, in 1973, residents rejected the idea of commercial or industrial growth in Rancho Palos Verdes, believing they could make it on a residential property tax base uncluttered by shopping centers or factories. Then Proposition 13 was passed in 1978, cutting into the city’s primary source of revenue. Since then the once-affluent city has lived off of reserves and has failed to pay the full cost of city services, Kuykendall said.

Faced with a declining economy and a $3-million revenue shortfall this year, the council has cut $1.5 million from the budget, cut services and lopped off 14 of the city’s 50 employees. Still, projected revenues for the $7.2-million general fund budget are short by at least $1 million. And that doesn’t count the potential loss of another $2 million in state funds because of the state budget crisis.

In April, Kuykendall went along with the rest of the council and asked the voters for more money, in the form of an annual parcel tax. The measure was narrowly rejected in that election. When the council came back with a proposal this month to form an assessment district to raise $868,000, it touched off a storm of protest.

The message from a small but vocal group before the council was clear: no more taxes. Even so, the council created the special assessment district. The average homeowner will pay an added $51 a year and the money will be used to maintain parks, median strips, street lights and traffic signals.

Kuykendall originally opposed forming the district but then voted for it after insisting that its authority be limited by a two-year sunset clause. Unless the voters approve an extension in the November, 1993, municipal elections, the district will cease to exist in 1994.

“The assessment district is just a Band-Aid that doesn’t really solve any problems; it just gives us more breathing room,” he said.

The assessment district funds will come close to balancing the current budget, but things still look grim because of the budget problems in Sacramento. City officials say they might lose as much as $2 million more in state funds, a financial blow that the city would find hard to survive.

Between now and 1993, the city must find solutions to its fiscal problems or go out of business, Kuykendall said.

The budget-cutting efforts and the struggle to find revenues to run the city have left Kuykendall puzzled over his own role as a party activist who has campaigned for President Bush, Assemblyman Gerald Felando, (R-San Pedro) and Rep. Dana Rohrabacher (R-Huntington Beach).

As a fiscal conservative who abhors big government and raising taxes, he has had to come to grips with the realities of city government. Even with more budget cuts, he says there is no way to balance the budget without more revenues.

“That’s the cold, hard fact of it,” he said. The city hasn’t been maintaining streets and it has cut back on other essential city services, but still comes up short. The council is now considering abandoning parks and recreational programs to save another $200,000 a year, he said.

But even if it could balance this year’s budget, he said, the basic problem is still there. The city doesn’t have the funds to provide even the essential city services without more money.

“We’re talking the survival of local control here and that’s something only the voters can decide,” Kuykendall said. “If they want to keep local government, they’re going to have to pay for it.”

Without new sources of revenue, the city might have to cut back on police and fire services, scrap plans to improve transit services and give up senior citizen and youth recreation programs, officials have said.

When Kuykendall first suggested the ballot measure--the council can put such a measure on the ballot--Mayor John McTaggart voiced surprise and said he wouldn’t be a party to shutting the city down. Other council members also seem reluctant to support the measure, favoring keeping the city intact with further budget cutbacks.

Undaunted, Kuykendall made it clear the he also favors local control, but added: “It’s time to wake up, time for the people of this city to make some hard choices if they want to keep the city form of government.”

Later, in an interview, he added: “I may be like Don Quixote on this, but I mean it. We’ve got to make some hard choices here.”

Holding the Line on Spending

Since its creation nearly 20 years ago, Rancho Palos Verdes has kept taxes at a bare minimum, but now it finds itself out of funds and $1 million short of a balanced $7.2-million budget. Here is a comparison of annual per-capita general fund expenditures in Rancho Palos Verdes and nearby cities. Rancho Palos Verdes: $177 Torrance: $783 Manhattan Beach: $594 Rolling Hills Estates: $459 Palos Verdes Estates: $410