For the second year in a row, Santa Ana-based nonprofits won’t get a dime out of the city’s federal Community Development Block Grant funds because city officials have moved the year’s entire $7 million allocation into the general fund.

It’s just part of the brutal budget balancing act that took place in Orange County’s largest city Monday as council members approved a fiscal year 2010-11 budget that features an 8.5 percent drop in revenues from last year.

Faced with a double hit from lax sales tax collections (down 10.3 percent) and dipping property taxes (down 7.8 percent), the city’s general fund budget is now hovering at $197.1 million.

“That right there speaks volumes of where we’re at,” said Councilwoman Michele Martinez of the dip in sales and property taxes.

To date, much attention has centered on the overtime cuts facing the Police Department as officers face off against 5,000 gang members going into a hot summer. Yet Martinez and others note that the shortage of funding on social services also will make that job much tougher.

She estimates that in the past, nearly 50 nonprofits received CDBG funding for a slew of programs including social services, at-risk youth, education and music.

“They go hand in hand,” Martinez said. “We need the social services to sustain so we don’t have to fall back on law enforcement.”

But the toughest challenge facing council members will be labor negotiations. More than three-quarters of the general fund is paid out to employees in salaries and benefits.

“The reality is when you look at benefits, they are high,” Martinez said. “Most (labor groups) don’t want to go there, but we have to because that’s where pressure is at.”

Martinez acknowledges that it’s a problematic situation for council members facing reelection in November. But there’s nowhere to turn, nor is there time, she says, to “reinvent” government. And council members have no choice but to step up.

“It’s tough,” she said. “We’ve made some tough choices. We’re getting beat up but we have to be firm.”


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