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A year ago, Orange County officials were worried they might have to slash services and lay off staff to deal with an economic slowdown from the pandemic.
Those fears didn’t come to fruition.
In fact, the county is now eyeing a massive influx of cash – buoyed by skyrocketing housing prices and hundreds of millions in federal relief money.
Total revenues are expected to rise by $150 million – or 2 percent – compared with the pre-Covid budget, according to the county’s newly-released draft budget for the fiscal year that starts July 1.
“Near-record growth will occur in 2021,” with California rebounding “quicker than the nation,” the draft budget states, citing a UCLA economic forecast.
Just how that new money will be spent is still being worked out.
The current recommendation from county staff is to spend the bulk of extra funding – about $85 million – on the Sheriff’s Department.
The money would allow the department to maintain its existing services, officials say, amid a series of pay raises county supervisors authorized.
County officials plan to hold its public budget hearing on June 8, where any member of the public can testify if they show up in person, followed by a final budget vote by supervisors on June 22.
The budget plans on the county’s $616 million in new federal covid money under the American Rescue Plan Act – which comes this year and next – but the budget does not have a breakdown of where that money will go.
In response to questions from Voice of OC, the county’s top executive said he can provide such a breakdown next month after calculations are updated.
County officials are also anticipating a potential flood of new state money – not yet in the draft budget – coming to the county as part of Gov. Gavin Newsom’s new state budget proposal, known as the May Revise.
“If approved by the state, those programs and budget updates will come to the Board [of Supervisors for approval] sometime in the fall,” Kim said.
“[The] state is investing in new funding for housing, homelessness, and behavioral health. Services that have been of interest to the community,” he added.
The worst financial fears of county officials have not materialized – to their relief.
The county’s usual revenues – mainly from property taxes – are actually increasing by an estimated 3.5%, boosted by fast-growing housing prices that have continued to escalate during the pandemic.
“Homes in Orange County are selling for astronomical amounts – across the board,” Supervisor Katrina Foley told Voice of OC on Wednesday.
“In traditional working class communities, all the way up to our high-end expensive neighborhoods, the prices of homes are extremely high right now. And therefore that property tax [increase] is going to follow.”
And sales tax revenues – which funds a lot of of the county Sheriff’s Department and District Attorney’s Office – are also higher than expected.
“The high-end luxury shopper continued [shopping] and didn’t have an impact from Covid,” and in fact made a lot of money from investments like stock, Foley said.
Foley was the only county supervisor to return phone calls and text messages for comment on the new draft budget.
To cut costs amid a slowdown in revenues last year, county officials deleted 760 vacant jobs and offered financial incentives that got another 617 employees to retire early.
“The County of Orange’s Fiscal 21-22 Budget looks good and what a difference a year makes,” said Charles Barfield, general manager of the Orange County Employees Association, which represents about two-thirds of all county workers.
“As the pandemic took hold a year ago, there was great uncertainty as to the financial fallout. The CARES Act funding quickly allowed the County to provide much needed COVID responses and the FEMA backfill funding helped as well,” he added in a statement.
“On top of that, the County announced a Voluntary [early retirement] program resulting in over 600 workers voluntarily leaving County service. The County was able to balance its Fiscal year 20-21 Budget without using any of the savings from the separation incentive program.”
“Now, on top of that, the County is receiving $308m (1/2 of the total allotment) of their American Rescue Plan Act (ARPA) allocation along with dedicated funding for certain Health Care Agency programs totaling $137 million. Along with an early evaluation of the Governor’s May Revise; predictably, the Budget looks solid.”
As for the $600-plus million in new federal coronavirus recovery money, taxpayer advocates like Carolyn Cavecche say the county should have a public agenda item specifically about how they plan to spend it.
“We expect every local jurisdiction from the County of Orange to each city to be transparent and accountable to the taxpayers in how the monies will be spent,” said Cavecche, the president of the OC Taxpayers’ Association.
Nick Gerda covers county government for Voice of OC. You can contact him at firstname.lastname@example.org.