OC Officials Warn of Budget Cuts as State Legislature Convenes

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Just as Sacramento leaders return for the end of this year’s legislative session, Orange County leaders are sending an important message:

If the state and the county can’t come to an agreement in their dispute over $76.5 million in property taxes, the county will have to make significant cuts and ongoing reductions for some of the most sensitive county programs, including law enforcement.

County finance officials will issue a warning Tuesday that as much as $50 million in cuts would come immediately if a solution can’t be found by mid-September, which is when the Legislature is expected to end its session.

“Bridging the $76.5 million reduction would require a combination of labor reduction, revenue assumptions and non-labor cuts (e.g., services & supplies, equipment, capital projects, etc.),” reads a memo being distributed by county Chief Financial Officer Frank Kim.

County labor leaders have already sent out mass notices warning workers about potential cuts and where the pain might be felt.

“The County predicts they could bridge the revenue loss with labor reduction, revenue assumptions and non-labor cuts, however any specific and direct impacts are not currently known,” wrote Nick Berardino, general manager for the Orange County Employees Association, which represents more than 17,000 county workers.

“We told the County again, as we’ve said many times before, they should first look at the budgets and perks of supervisors and executives before taking any more from you and your families,” Berardino wrote.

Media representatives are expected to receive a detailed briefing at 3:30 p.m. Tuesday.

If a deal can’t be made by the end of the session, the fiscal 2014-2015 budget would be set in concrete, and the tax revenues left unprotected by supervisors’ refinancing of the 1994 bankruptcy debt would be unlikely to be returned.

County leaders have been fighting with Sacramento for several years after Gov. Jerry Brown’s budget staffers identified nearly $50 million in property taxes that could be taken away from Orange County and applied it to the fiscal 2012 budget.

The money was left in peril when Orange County supervisors refinanced the 1994 bankruptcy debt and disconnected an important legislative authorization that allowed the county to receive a special share of vehicle licensing fees.

Despite warnings from the media, supervisors and their army of legislative advocates never reconnected the legislative authorization.

After Brown’s budget staff took the money in 2011, county leaders persuaded then county Auditor-Controller David Sundstrom to ignore Sacramento’s budget allocations, redirect money from local schools and community colleges and steer more than $48 million back to county coffers.

While statewide propositions provided more money for local schools, community colleges received none and filed suit against the county and the state Department of Finance.

Earlier this year, a blitz from local labor leaders and lobbyists found Sacramento in no mood to negotiate with one of America’s most Republican counties. Orange County leaders have yet to make progress.

Kim is now warning that there are now three likely scenarios:

  • The county loses the $76.5 million and another $50 million in additional property taxes secured by state Sen. Lou Correa in a 2009 budget deal.
  • The county loses the $76.5 million and converts the Correa $50 million into vehicle license fees on an ongoing basis.
  • The county keeps the $76.5 million but loses the Correa property tax set aside.

Please contact Norberto Santana Jr. directly at nsantana@voiceofoc.org and follow him on Twitter: twitter.com/norbertosanana.

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