LYNWOOD — The defeat of a series of financial propositions on Tuesday’s state special election ballot will hit home for local municipalities like Lynwood. Not only will the governor and state legislators be scrambling to find ways of trimming a massive state budget deficit now that voters rejected the propositions, but so will local officials at both the school district and city levels.

“This has come at a very bad time,” said Robert Torrez, assistant city manager of administrative and community services, who said that cities like Lynwood are preparing to go before their city councils requesting more budget cuts. It is unfortunate that the propositions lost, he said, “but it wasn’t a big surprise.”

“From [all] I’ve heard, and read … citizens ... believe the state should be living within its means,” he said. “Yeah, it’s unfortunate and it’s going to have an impact.”

“What they’re [the state] not saying, however, is that by taking money from cities … they are reducing services to the public, and of course, [cities] are going to get the blame. … So it’s a bad time. ... Every city is going through the same process right now. They’re all getting ready to face their councils to talk about the budget. … It’s just a difficult year for everyone right now.”

Voters on Tuesday soundly defeated Propositions 1A through 1E, which Gov. Arnold Schwarzenegger touted as critical tools to prevent the state’s budget deficit from growing even larger.

The only proposition to win on Tuesday was 1F, which prevents the governor, lawmakers and other state officials from getting pay raises any time the state has a budget deficit.

“Tonight we heard from the voters and I respect the will of the people who are frustrated with the dysfunction in our budget system,” Schwarzenegger said. “Now we must move forward from this point to begin to address our fiscal crisis with constructive solutions. … We face a staggering $21.3 billion deficit and in order to prevent a fiscal disaster, Democrats and Republicans must collaborate and work together to address this shortfall. The longer we wait, the worse the problem becomes and the more limited our choices will be.”

Assembly Speaker Karen Bass, D-Los Angeles, said the propositions’ failure meant some rough days ahead for the Legislature. “I hope the bipartisan cooperation between the Legislature and the governor that went into this effort will continue as we move forward — the people of California clearly expect us to work together to get the job done,” Bass said. “And we will.”

The defeat of the propositions will definitely be felt at the school district level, according to the Lynwood Unified School District Business Manager Bill Agopian, who said the district isn’t happy with the election’s results, but “we’ll have to make it work.”

Aside from plans to develop a Budget Advisory Committee, that will directly report to the school board, Lynwood Unified is now rolling up its sleeves, Agopian said.

“We have to ... remain optimistic. ... We have to deal with the hand that has been dealt,” Agopian said.

Aside from hosting a series of budget meetings, Agopian has been put in charge of briefing the community and school board members at each school board meeting on a budget he has called a “living document.”

Via a PowerPoint presentation and using budget-related stories from the Orange County Register and the Los Angeles Times, Agopian warned the audience at the May 12 school board meeting, that $21 billion hinged on the measures passing.

“If they do not pass,” Agopian said May 12, “then [the school district has] been told to anticipate having to make more cuts,” to the district’s budget for the coming school year. Still, while “we are hoping for the best, we are preparing for the worst,” Agopian said.

Joining Agopian during the May 12 budget briefing was Aubrey Craig, director of fiscal services, who added that the key to the 2009-10 budget rested on the election’s results.

In a brief interview Wednesday, Craig said he was still hopeful, despite the loss of the propositions.

“We don’t know what effect their loss is going to have on education,” Craig said. “If the state decides to cut more from education, then the school district could anticipate having to make more cuts. It all depends on what the state does from here.”

School districts like Lynwood have to wait and see what information the Los Angeles County Office of Education gets from the state level. Any adjustments made at the state level, are forwarded to counties, who pass it on to local districts. The orders come from the top, Craig said. The only thing he could add, was that any actions the state takes that will affect the 2009-10 school year, will also affect the 2010-11 school year.

“Right now, we are still operating on the assumptions we had before the election on Tuesday,” Craig said. “The impact those results will have on the school district, is not known yet.”

For months, since having to announce its layoff schedule of teachers — with more than 43 of those being rescinded earlier this month — school district officials including Agopian, have called the district’s budget — if voters rejected the propositions necessary to curtail the state’s looming deficit — a doomsday budget.

According to Agopian, until more information reaches the school district from the county, the school district’s doomsday budget is still just a proposal.

School board Vice President Alfonso Morales, during a brief Wednesday morning interview, said that the results of Tuesday’s election “aren’t what we were hoping to hear,” he said.

While the school district will be getting its share of President Barack Obama’s American Recovery and Reinvestment Act of 2009, school districts must look at those funds as a “line of credit,” Craig said, since they are not funds that the school district actually has in its coffers “right now.”

The district, he added, has to build a budget — this budget — based on the amount of funds the school district actually has, right here and now, not on what it may receive.

As of Wednesday, Torrez said he had not received official word yet from the state of California.

“We really don’t know what the state’s reaction to the propositions’ loss is going to be,” Torrez said. “All we know is that the governor proposed last week a Plan B, which would take 8 percent of city tax revenue, and for us that would be about $732,000. I’m surprised coming in this morning that we haven’t received news from the state or from the League of California Cities. Although there has been much discussion … about borrowing money … Plan B is not good news for cities like Lynwood.”

Torrez said he understands the state has services it provides, however, small cities like Lynwood are “where the rubber meets the road.”

“Cities provide the services to the citizens that they require,” he said, including parks and recreation, law enforcement, fire services, etc. “We are the provider of direct services, so it’s going to be difficult for us, if the state does follow through on its plans to take city revenues away.”

The city of Lynwood is currently in the process of developing its budget for the 2009-10 fiscal year, but it will not know, until further discussions are had, how such a loss of funds to the state, will affect any city programs, Torrez said.

A hearing on the budget will take place during a City Council meeting Tuesday. As of now, Torrez added, it’s not known if the governor will modify the plans proposed last week regarding his Plan B.

“When we get more definite information, we will be able to formulate a proposed plan for the City Council,” he said. “But more than likely it is going to require some [more] budget cuts. … We’re already in a situation, in order to balance next year’s budget, there will be some level of budget reductions required in the city’s budget.”

Before Tuesday’s election, Los Angeles city officials were preparing for the defeat of the measures with their own “doomsday” and the anticipated further reductions in money coming from the state into city coffers. Los Angeles officials estimated that the city could take a $120 million hit from the propositions’ defeat.

City Councilman Jose Huizar introduced a resolution Tuesday calling for federal legislation that would guarantee loans for California cities or states that need to sell bonds to balance their budgets.

Councilman Bernard Parks, chair of the council’s Budget and Finance Committee, also introduced a motion to convene a special meeting of the panel to evaluate the city’s options to resolve the potential deficit created by the outcome of the election.

 Los Angeles’ credit rating is high enough to sell a bond. However, an increasing amount of debt and the lack of a “rainy day” fund may make the city’s interest payments higher than on previous bonds, he said.

Without a bond, the City of Los Angeles would need to lay off more employees.

“The city and the state are going to have to do something structural in their budgets to begin to live on the money they have coming in versus the money that they’re borrowing,” he said. “Our city and state are both in jeopardy of putting us into bankruptcy because we cannot continue to live on this borrowed money and borrowed time.”

The Lynwood Unified School District isn’t alone in its doomsday fears. Los Angeles Unified School District officials, who were already expecting to lay off thousands of employees to resolve a budget deficit of its own, are also expected to respond to the defeat of the propositions.

The two most crucial propositions on Tuesday’s ballot were considered to be 1A and 1B.

Proposition 1A, the “Rainy Day Budget Stabilization and Accountability Act,” would have extended the state’s temporary 1-cent sales tax increase for a year and prolong the vehicle license fee and personal income tax hikes for another two years, generating an estimated $16 billion.

The proposition would have also increased the size of the state’s Budget Stabilization (“rainy day”) Fund from 5 percent to 12.5 percent of the General Fund, and it would have given the governor the power to make midyear spending cuts when revenues fall short of projections.

Proposition 1B would have transferred 1.5 percent of the state’s estimated revenues each year into a fund for schools and community colleges, until $9.3 billion has been deposited in that fund. The $9.3 billion represents funds previously withheld from local school districts and community colleges, and the state would not have started repaying the money until 2011-12.

Proposition 1C, which is called the Lottery Modernization Act, would have allowed the state to borrow $5 billion against future lottery revenue to address the current budget deficit.

Proposition 1D, the “Children’s Services Funding” proposition, would have redirected money from the tobacco tax to children’s health and social services, while Proposition 1E would have taken money from the Mental Health Services Act to pay for children's health programs and allowed other funds to be used for helping balance the state budget.

Schwarzenegger last week released two revised budget proposals — based on whether or not the propositions pass. Even if the propositions were approved, the state would have still faced a roughly $15 billion budget deficit. With the propositions failing, the deficit is expected to balloon to more than $21 billion.

Both budgets called for cuts to education, social services and corrections, withholding money for local governments, layoffs for thousands of state workers and possibly selling off some state assets, including the Los Angeles Memorial Coliseum.

The loss of these propositions are coming at a bad time for all cities, Torrez added. “All cities’ revenues are going down, some more than others, but sales taxes are down, property taxes are down across the state, because of the real estate slump and the general economy, so cities are already scrambling trying to balance their budgets.” All are basically, waiting to hear, what the state is going to do next, he said.

City News Service contributed to this story.