For the first time in recent memory, Orange County’s $5.6-billion budget is balanced without tapping reserves.
That’s the main message being sent today to Orange County supervisors as they are presented with a largely status-quo budget for the 2011-12 fiscal year beginning July 1.
County finance officials say they are cautiously optimistic because sales taxes are slightly above projections in the first half of the year. In fact, since last July the county has been able to boost its general fund reserves by $19.4 million.
And while officials said it’s the fourth consecutive year that county departments have absorbed a 5 percent, across-the-board cut, they don’t expect large impacts. But there’s also tacit acknowledgment that Sacramento’s own budget deliberations will largely dictate what happens next in Orange County.
“The state could blow all the county budgets out of the water,” said county Finance Director Bob Franz at a budget briefing on Monday.
Franz and Budget Director Frank Kim credited supervisors with adopting “conservative management principles” that have allowed the county bureaucracy to “glide down” in terms of service and staff cuts in recent years.
In a strictly fiscal sense, that has meant consistent votes in recent years among all county supervisors to avoid backfilling state funding cuts in social and human services.
Reserves have instead been devoted to bolstering public safety departments, such as the Sheriff’s Department and District Attorney’s Office, especially with sales tax revenues dropping so steeply. Those agencies have also offset cuts by seeking grants and contracts for services, such as for housing illegal immigrant detainees for the federal government.
Franz also notes that in recent years numerous capital improvement and information technology upgrades have been put off or funded through alternate methods.
But the real cost cutting came in the form of 200 layoffs in 2007 across the social service and health care agencies. Since then, the bureaucracy has survived intact with a hiring freeze and the sustained pay cuts.
The county’s discretionary or “net county cost” budget now hovers at $663.3 million, down from $718 million in fiscal year 2008-09.
While the number of county employees has remained relatively fixed at 17,165 in recent years, costs have risen by $145.8 million, according to county budget documents distributed Monday morning at a press briefing.
County budget staff said the rise is caused primarily by an increase in caseloads for community services and the repayment of pension prepayment bonds.
Another insight into the spike in expenditures could come later this month when a performance audit review of the Human Resources Department is released for public review.
That study is reported to detail instances of top-level managers increasing their salaries by reclassifying their positions to higher levels.
County officials on Monday also announced that there is $36.1 million in additional requests that departments are attempting to restore to the budget. County budget staff support slightly more than $30 million of those requests.
Those issues likely will be dealt with as part of budget deliberations, which will occupy officials for the next two months.