Orange County’s spending will hit $10.8 billion under a newly proposed budget released Wednesday, May 21, that officials say will maintain service levels despite uncertainty surrounding support from other levels of governments and some slowdown in revenues.
“This budget year has been one of the most difficult,” CFO Kimberly Engelby said. “Our budget is $10.8 billion, and it is developed to maintain our current level of service.”
The proposed budget is $1.2 billion larger than the current spending plan the OC Board of Supervisors adopted almost a year ago, though that budget grew over the year as county officials made adjustments.
Federal funding changes, inflation and lower-than-expected revenue “have all challenged” the county’s budget, Interim CEO Michelle Aguirre said in a letter to the OC Board of Supervisors delivering the budget proposal.
“The county’s commitment to providing essential mandated services to the community is resolute despite these challenges,” Aguirre wrote.
The budget outlines spending on OC Sheriff’s Department operations, community services ranging from public health to regional parks, and county public works, to name just a few areas.
Aguirre instituted a hiring freeze that went into effect at the end of March. Around 160 positions, primarily vacant positions, have been eliminated in the proposed budget.
The county also faces uncertainty surrounding how much it will ultimately pay out for the Airport fire, where thousands of claims have been filed, hoping to receive compensation for losses and expenses caused by the fire. The submissions include duplicates or multiple family members filing under the same property and there is still time to submit, so it is hard to know ultimately how many claims the county might face.
On a Wednesday call overviewing the spending plan for reporters, Aguirre said the budget increase includes some borrowing from future expected revenues in various accounts for the Airport fire, since the county doesn’t have specifics on how much the claims will cost in the end. The county has appropriated nearly $500 million for those possible payouts.
“The intent of that is to provide us with flexibility throughout the year as we continue to mediate with the claimants,” Aguirre said. “We want to be able to make settlements in good faith.”
“We don’t have a specific idea yet of how much that’s going to cost us. So, we have those transfers set up to provide flexibility,” she said.
The county’s general purpose revenue, the part of the budget it has more discretion over how to use, has reached $1.2 billion due largely to increases in property tax revenue, officials said.
Property taxes drive funding for much of the county’s budget, accounting for 92% of all general-purpose revenue.
Sales tax revenues for the new budget are lower than the county had projected a year ago. A one-half cent sales tax in California for public safety saw $11 million less for the county than expected.
County officials noted the budget is balanced based on the governor’s proposed budget from January, which at the time hadn’t taken into account devastating wildfires in Southern California and federal funding changes by the Trump administration.
Any adjustments caused by changes to the state or federal government funding provided to OC will be reconciled during the county’s mid-year budget reports, officials said.
The OC Board of Supervisors will hold a public hearing over the budget on June 10 and is expected to adopt it on June 24. The county is hosting virtual public budget workshops on May 29, at 3 p.m. and another at 7 p.m.
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