Bolstered by extra funding from taxes and other sources, Orange County officials proposed a $5.8 billion budget Tuesday that includes the biggest revenue and spending increases since the Great Recession.
The proposed budget, which could be adjusted by the county Board of Supervisors before its final approval next month, plans for an additional $340 million in revenues and expenditures beyond the current year’s budget of $5.4 billion.
“We still have challenges, but it’s better than it was last year,” Michelle Aguirre, the county’s budget director, told reporters at a media briefing Monday.
Much of the extra spending is earmarked for one-time projects, like extending La Pata Avenue in South County and a new public safety communications system. Some is also slated for paying down debt and maintaining the current staffing levels in county jails.
The county’s overall workforce, meanwhile, is proposed to remain at roughly the same level of 18,150 budgeted employees. No layoffs are proposed, nor is an overall increase in budgeted positions.
While the overall county budget approaches $6 billion, only $723 million of it is completely under the supervisors’ control. The rest is restricted in how it can be spent and consists mainly of pass-through funds from the state and federal governments.
The vast majority of the discretionary funding comes from property tax revenues, which are projected to increase by 6.8 percent in the coming fiscal year, amounting to a nearly $41 million boost to county coffers.
Public safety agencies like the sheriff-coroner and probation departments are slated to see increases in discretionary spending totaling about $4 million.
Meanwhile, the proposed budget calls for cuts of just over $8 million in discretionary funding for departments defined as “community services,” like the Health Care Agency.
But when factoring in other revenue sources, the public safety and community services categories are expected to see increases of nearly $30 million each.
Much of the new money will go toward infrastructure projects and one-time expenditures – like upgrading the county’s central utility plant – that had to be deferred during the recession, Aguirre said.
“That’s exciting for us,” Aguirre said, noting that at one point her staff told department heads to not even submit requests for the county’s strategic financial plan.
The budget also assumes an across-the-board 1-percent increase in employee salaries beyond what’s in existing labor contracts.
That comes as the county gears up for negotiations with its largest labor group, the Orange County Employees Association, which represents about two-thirds of the county workforce.
Jennifer Muir, the union’s assistant general manager, noted that OCEA-represented employees have worked with county leaders to help reduce costs – from pension reform to creating savings in retiree medical costs – and said that ever-increasing workloads are taking a toll.
“We do more with less, and when you compare all sorts of measurables, the county workforce has fewer people to provide a high, high level of services in the community. And at some point that leads to a tipping point,” said Muir.
“The entire county workforce is very stretched, and they’ve been doing a great job because they’re professionals who really care about the community.”
County supervisors’ Chairman Todd Spitzer didn’t return messages seeking comment on the budget.
County budget officials once again noted during their presentation that Orange County’s share of property tax revenue falls far behind that of similar counties.
For example, San Diego County, which has a similar population size to Orange County, gets “double what we get,” Aguirre said. “They do have resources above and beyond what we have.”
Muir says that while it’s “absolutely” not fair that Orange County gets a smaller slice of property tax dollars, there are other opportunities for freeing up funds.
A county contract with Xerox, she noted, is already leading to millions of dollars in cost overruns due to errors on Xerox’s part. The county is “throwing millions of dollars into a black whole without getting a return on that investment,” Muir said.
Also envisioned in the proposed budget are plans to finish paying off debt from the county’s 1994 bankruptcy over the next couple of years.
The last of the debt payments from the general fund, which amount to about $18 million per year, is expected to take place by the end of June. And a further $22 million in annual bankruptcy debt payments from the OC Waste & Recycling and OC Parks departments is scheduled to end in the next couple of years, Aguirre said.
As for reserves, the county expects to draw $30.9 million from its general fund for one-time expenses, while adding $13 million to the fund.
About half of the reserve draw-down – $15 million – is slated to be used for court-ordered payments to the state stemming from a dispute over vehicle license fee revenue, known as the VLFAA suit.
That’s up from $5 million in payments during the current fiscal year, and it’s expected to grow each year until it reaches $55 million in fiscal year 2020, Aguirre said. She added that the entire $150 million needed cover the judgment is already sitting in reserves because the county never spent those funds.
The other $15.9 million in reserve draw-downs is for purchases like a new closed-circuit TV system in the county jail and operating costs of a permanent year-round homeless shelter, if one ever comes to be.
(Click here to view the proposed budget and here for the departments’ augmentation requests.)
The expected boosts to county coffers likely won’t last long, according to county budget officials.
Cycles of growth and recession last about five years, with Orange County in year seven or eight of “very slow growth,” said Kathleen Long, administrative manager at the county budget office.
“There’s always a downturn at the end of a growth period,” said Long, adding that economists are predicting a downturn in government revenues in fiscal year 2018 or 2019.
“Something is bound to happen to make it go down again.”
State law requires the Board of Supervisors to approve a budget by June 30. Public budget hearings are slated for June 9 and 10, with the adoption of a final budget scheduled for June 23.
All of those discussions are planned to take place at public meetings in the county Hall of Administration in downtown Santa Ana (333 W. Santa Ana Blvd, Santa Ana).
Residents can address county supervisors for up to three minutes per person at each of the meetings, which typically start at 9:30 a.m.
Correction: Due to an editing error, a previous version of this article stated that public safety agencies would receive the lion’s share of discretionary spending increases in the the upcoming county budget. It is not clear at this time whether the majority of spending increases will go to public safety.
Contact Nick Gerda at ngerda@voiceofoc.org or follow him on Twitter @nicholasgerda.