Los Angeles County chief executive officer William T. Fujioka earlier this week proposed a $21.9 billion all-funds budget that cuts spending by 2.6%.

The spending plan includes $1.5 billion of capital spending, a decrease of $183.8 million. Just $185.2 million of the spending will be financed with long- or short-term borrowing — 70% will be paid from the general fund. The capital budget includes $523 million for public safety projects, including renovation of the Men’s Central Jail.

The county is cutting spending because the local economy is being hard hit by the economic downturn. Property taxes, the biggest local revenue source, are forecast to grow 5% in the coming fiscal year, down from 9% in the current budget year. Sales taxes will grow just 1% to 3.5%, depending on the items taxed.

“The county now faces uncertainties driven by the economy and the state budget deficit,” Fujioka said in his budget statement. “Although 2008-09 will be a challenging year for the county, we are in a good position to face these challenges in large part from our conservative approach to the budget in past years.”

The budget does not fully account for any decrease in state funding that may be announced when California completes its budget. The state is currently working to close a projected $16 billion gap in its budget for next year. Los Angeles County depends on the state for almost a quarter of its funding.

The county Board of Supervisors will begin public hearings on the proposal May 7 and must approve a budget before the 2008-2009 fiscal year begins on July 1.

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