County is facing another shortfall

One day after disclosing plans to lay off 210 social services workers, Orange County budget officials said Thursday that they are forecasting an $84-million budget gap for the next fiscal year and are considering additional layoffs in other county departments.

The forecast underscores the bleak economic outlook for the year to come, with dwindling funds from sales and property taxes and a sharp reduction in state funds.

On Wednesday, county officials ordered deep cuts in social services -- besides the layoffs, 4,000 employees were told to take two weeks off without pay -- because of an expected $20-million reduction in state funding this fiscal year.

In a sign that more bad news may be coming, a top county Probation Department official sent an e-mail to employees saying that the county intends to eliminate “55 to 60” jobs in the Probation Department alone.

“We will be working very closely with our labor groups to discuss the layoff process and timelines to insure that the process is fair and considerate,” Chief Deputy Probation Officer Gregory J. Ronald said in the e-mail to county probation employees.

Orange County Budget Director Frank Kim said Thursday that layoffs outside the social services agency are “possible,” but that no decision has been made.

Kim said he intends to inform the Board of Supervisors of the $84-million shortfall for the upcoming fiscal year on Tuesday. He said the anticipated gap stems largely from a steep reduction in sales tax revenue.

The county has already taken significant steps to deal with a steep decline in tax money and state funding. Last month, county supervisors voted to trim $30 million from the budget by postponing purchasing and construction projects.

Despite the gloomy forecast, Orange County still expects to finish its current budget year, which ends June 30, with about $310 million in reserves.

It would be imprudent for the county to dip into its savings to avoid the planned job reductions in social services, budget officials said. The social services cuts followed a significant drop in state realignment funding, which primarily comes from sales taxes and vehicle license fees. Further reductions in state funding are looming as state lawmakers attempt to deal with their own deep budget gap.

“We know the state has to do something to balance its budget. We feel we need to protect some of our reserves for what’s coming next year,” said Robert J. Franz, the county’s chief financial officer.

Officials with the largest union for county workers have suggested that the county trim benefits for executives and dip into reserves to avoid the pending layoffs. A meeting among county and union officials is scheduled today.

The Orange County Employees Assn. has also hired a former Orange County budget director, Gary Burton, to study the county budget, reserves and spending to see if he can identify alternatives to layoffs.

“He did a great job in getting us out of bankruptcy,” the union’s general manager, Nick Berardino, said of the county’s 1994 bankruptcy, which at the time was the largest municipal bankruptcy in the nation’s history. “We think he’ll do an equally great job in helping us with this crisis.”

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stuart.pfeifer@latimes.com