Board Puts Off Mental Health Cuts : Finances: Supervisors give themselves time to determine how to lessen impact. They may impose a utility user tax, raise business license fees and squeeze other departments.

The Los Angeles County Board of Supervisors on Tuesday postponed drastic cuts to the county mental health department to give itself one more week to figure out how to squeeze money from other county departments and consider the possibility of new taxes.

By the end of the meeting it appeared that cuts eventually would have to be made, though not as deep as the $41.9 million projected by the county and feared by some of the 650 patients, clinic administrators and counselors who packed the supervisors’ hearing room. The supervisors also delayed sending out legally required 30-day termination notices to 42 mental health clinics under contract with the county.

The tax option is being pushed by Supervisors Ed Edelman and Kenneth Hahn. It would make use of new county powers to levy utility user taxes and higher business license fees. Previously, only cities had the power to tax utility use and business license fees could not amount to more than the cost of issuing them.

About 1 million residents in unincorporated areas of the county would be affected by the taxes, generating annual revenues of $31.5 million, according to Edelman. Most county residents already pay utility taxes because their cities impose them.

In the meantime, county Chief Administrative Officer Richard B. Dixon has ordered county department heads to begin implementing in January austerity measures originally scheduled for July 1. He believes this could free roughly $15 million for use in the mental health system.

Those austerity measures were drafted in anticipation of another state revenue shortfall for the 1991-1992 fiscal year. The state had $3.2 billion less than it needed for this year, triggering large cuts in state aid to mental and public health programs.

Next year looks worse. A state finance commission on Tuesday forecast that California will end the current budget year in the red and face a shortfall of more than $4 billion in the fiscal year beginning July 1.

Advocates for the mentally ill say $15 million is not nearly enough to save clinics. They want at least $10 million more.

Supervisor Pete Schabarum, an outspoken foe of new taxes, was unenthusiastic about Edelman’s utility tax idea, but he did not rule it out.

He complained bitterly that for four years the state has failed to meet its funding obligations for mental health. To make matters worse, he said, a Los Angeles Superior Court judge last week blocked $7.6 million in already-ordered service cuts at county hospitals.

Another $12.7 million in budget-balancing public health cuts were scheduled for action next month, but Dixon warned the supervisors that the court’s ruling leaves them with only “questionable ability to effect those reductions.”

That also leaves the county looking for sources for that money. Hopes for timely bailouts--from the Proposition 134 liquor tax and through an appeal to Gov.-elect Pete Wilson--have been all but dashed. Voters defeated the liquor tax and Wilson has not been encouraging.

“There’s a great deal of sympathy for counties and cities,” said Otto Bos, a top aide to Wilson. “Pete has said he’d like to work with them to try to bring some order. But I’m not in a position to tell them right now we have a bundle of money set aside for the state to come in and help them out.”

Unwilling to rush into cuts or tax levies, the board instead voted unanimously (Mike Antonovich was absent) to delay not only the decision on service cutbacks, but also the issuance of the 30-day contract termination notices.

If all $41.9 million in service cuts were imposed, 27,000 of the 52,000 patients currently receiving care would be dropped, according to Richard Van Horn, chief executive officer of the Mental Health Assn. of Los Angeles County. The mental health system would be trimmed to respond only to crises and the most severely disturbed patients. Few dispute that the conditions of those left without stabilizing treatment would deteriorate, adding to the ranks of the homeless and putting additional burdens on police and prisons.

“It can’t be emphasized enough the importance of delaying those notices,” Ann Lodwig Brand, executive director of the Assn. of Community Mental Health Agencies, said after the meeting. “If they had gone out, we all would have gone forward with layoff notices, client discharges, breaking our leases. And we have no place to discharge our clients to.”

Brand added that the uncertainty of the situation had already led to losses of talented staff. She and other advocates nevertheless were encouraged by the supervisors’ willingness to delay the cuts, even as the county incurs $550,000 in unfunded expenditures for each week mental and public health service cuts are postponed.

Times staff writer Daniel M. Weintraub contributed to this story.