Five Things to Know About This Year’s County Budget

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For two decades, the county of Orange’s annual budgeting process was in many respects an exercise in managing fiscal crises — whether it be facing hundreds of millions in cuts after the disastrous 1994 bankruptcy, or dealing with a huge drop in revenues during the Great Recession.

But the county is now in a far stronger financial position, with stable, steadily increasing revenues, and millions in freed-up dollars thanks to the end of bankruptcy debt payments.

Earlier this week, county staff released their draft budget for the 2016-17 fiscal year, which projects over $40 million in extra discretionary dollars from property taxes and calls for a variety of ramped-up investments in law enforcement, infrastructure projects, parks and social services among other things.

(Click here to explore the county’s draft budget, including departments’ discretionary requests.)

The proposed budget is slated for public hearings before the Board of Supervisors on June 14 and 15, with adoption of the final budget scheduled for June 28.

After an initial look at the budget and talking with top county budget officials, here are our takeaways:

More money will be spent overall, due to growing tax revenues and bankruptcy debt winding down

With the economy continuing to grow at a steady rate, property taxes – which account for over 90 percent of the county’s discretionary revenue – are expected to bring in an extra $43 million to the county coffers next fiscal year.

This is on top of another $40 million that will be available due to the end of bankruptcy debt payments.

A big chunk of this money — about $32 million — will cover a 1-percent budget increase for each county department, as well as funding beyond that to keep departments at their current operating levels if they exceed the 1-percent growth target.

Another roughly $12 million is planned for department requests to expand their services, such as hiring new 26 new parks employees and 24 new District Attorney staff to handle increased workloads and new technology like police body cameras.

Homelessness and animal care are getting a sizable chunk of spending, largely due to public pressure

Two big items in the budget are $3.6 million to operate year-round homeless shelters, and $25 million for the construction of a new county animal shelter in Tustin.

It’s unlikely either of these items would be in the budget if it wasn’t for years of public pressure, as prior boards of supervisors did not prioritize a year-round homeless shelter or replacing the county’s dilapidated animal shelter.

Last year, the county purchased property for a year-round homeless shelter in Anaheim for $4.2 million, and is now seeking an operator for the facility.

And after more than a decade of complaints about the current animal shelter – both from the public and multiple grand juries – the county has secured a new plot of land and hired a local firm to design and build the facility.

Among other community services being recommended for funding are hiring 26 parks employees to help with maintaining old infrastructure, purchasing new land, and running new park programs. Also, two new staffers would be hired to help increasingly impoverished seniors connect with services, like home-delivered food and in-home health care.

And social services is slated to get a bump, with an extra 20 positions to support a growth in Medi-Cal caseloads. Staff is recommending approval for the positions, which would be paid for by $1.8 million per year in state funding.

Law enforcement still dominates discretionary spending

Law enforcement – particularly the Sheriff’s Department and DA’s Office – account for about half of the discretionary budget, and are on track to get 76 percent of the extra discretionary spending beyond the 1-percent increase each department gets.

This amounts to $28 million and includes funding for 30 additional DA staffers to help keep up with evidence and discovery requirements, upgrades to jail security cameras, and funding for a new cyber crime unit at the Sheriff’s Department and four new patrol deputies for unincorporated areas.

The impact of the ‘$73-Million Oops’ is ramping up

Due to an error by county supervisors and lobbyists in 2007, the county later lost its access to a $73 million-per-year funding stream that paid bankruptcy debt, and the county ultimately owed the state $150 million in back payments.

Those payments are ramping up, with a $25 million payment due next year that’s coming straight out of the county’s discretionary funds, which could otherwise be spent on other items.

It remains to be seen how the county will cover the following two years’ payments, which increase to $50 million in 2017-18, and $55 million in 2018-19. County officials say it’s too early to say how those payments will be covered.

OC is getting – and apparently will continue to get – the short end of the stick from Sacramento on property taxes

Orange County officials have long complained about receiving the lowest return on property taxes of any county in California. While counties like Los Angeles and San Diego see 20 and 12 percent of their property tax revenue go to their county governments, respectively, Orange County gets just 6 percent, according to figures from the state Board of Equalization.

Property tax inequity

So while the total valuation of Orange County’s taxable property is about 14 percent higher than San Diego County’s, our county government gets about $300 million less in property tax revenue each year.

And despite numerous bills introduced in Sacramento to address this, county officials say there are no signs of any movement by the Legislature.

“There hasn’t been any interest in decades in changing it,” said county spokeswoman Jean Pasco, who said the first article she wrote in 1983 as a cub reporter for the Orange County Register was about this very issue. 

The latest effort, by state Sen. Janet Nguyen (R-Garden Grove), didn’t make it out of committee and is listed as dead.

“We can’t really rely on the state to change those funding formulas, so we have to see how else can get better use out of the money we have.”

Nick Gerda covers county government for Voice of OC. He can be reached at ngerda@voiceofoc.org.

  • Philmore

    So, while crawling toward the light of recovery from past adverse financial events, is there ANY provision WHATSOEVER for reserve fund increases against any future blindside, (Like, um, “lessons learned” ?) or ONLY the spend, spend, spend (oh, excuse me….. INVEST, invest, invest !) boomerang to delight ourselves while we try NOT to think (or perhaps “magically” think ) about covering the two consecutive impending $50 M / $55 M payments due ? If it’s “too early” NOW, WHEN will it be “right on time”, can you tell us ? We’re already TOO familiar with “too late” !!!