O.C. faces budget squeeze

Concerned about a deep decline in tax revenue, Orange County officials are trying to slash tens of millions of dollars in spending, cutbacks that could lead to layoffs and jeopardize public services such as health programs and child abuse prevention.

The move comes at a time when counties throughout Southern California are reeling from a plunge in sales and property tax revenue, and a nagging fear that the financial picture could worsen.

The squeeze on local government is expected to tighten further next year when the full impact of property tax adjustments hits.

As property values have slumped, homeowners have asked for their homes to be reassessed -- a process that will cut the government’s property tax revenue.

Belt-tightening has already begun in Riverside and San Bernardino counties, which have both been particularly hard hit by the recession.

Orange County Executive Officer Thomas Mauk has directed all departments -- from the Social Services Agency to the county librarian -- to cut a combined $44 million in spending.

He said Friday that layoffs are “a distinct possibility.”

“It will be painful. It’s very drastic,” said Bob Wilson, deputy director of the Orange County Health Care Agency, which provides a host of services, including flu shots for the elderly, healthcare for the poor and inspections of local restaurants.

Despite its above-average per capita income, Orange County has been hard hit by the economic downturn.

Median home prices in Orange County plunged 28% in July, unemployment increased to 5.7% and sales tax revenue designated for law enforcement is down 3% from 2007, Mauk said in a memorandum calling for the cutbacks.

“We have to do it because the revenues are going to be down not only this year but more dramatically next year,” said county Supervisor Bill Campbell, who helps oversee the county’s $6.6-billion budget.

“I’m thinking it may not even be a big enough cut.”

Mauk has advised all agencies to stop hiring and to report to him by Friday about how they intend to cut spending.

Agency heads said they hope to reduce spending through attrition and by cutting overtime, travel and equipment purchases.

“This is as severe as I’ve ever seen it,” Mauk said. “I’m sure we’ll close clinics, youth camps and social services. I think there’s no question that layoffs are a distinct possibility. We’re at least, without layoffs, going to eliminate several hundred positions.”

Nick Berardino, general manager of the Orange County Employees Assn., which represents more than 13,000 workers, said he and his staff are concerned about the possibility of layoffs.

He said he has asked Mauk to consider eliminating the jobs of highly paid senior managers before targeting rank-and-file workers.

“Before they even begin to think about cutting services and employees, they need to chop at the top,” Berardino said. “There’s plenty of money in that area.”

Orange County is hardly alone in its fiscal crisis.

Riverside and San Bernardino counties, which have some of the highest foreclosure rates in the nation, are in dire financial straits thanks largely to a huge reduction in property tax revenue.

In Los Angeles County, hiring for nonessential jobs has been frozen and further cuts are expected if the economy doesn’t rebound, officials said.

In the Inland Empire, foreclosures have exploded 3,500% since 2005, dragging down the local economy.

“For the first time in 10 years, we are looking at negative growth in property taxes,” said San Bernardino County spokesman David Wert.

“Property taxes are the single biggest source of revenue for the county, but if people aren’t living in their homes because of foreclosures then they aren’t paying property taxes.”

Last month, Riverside County Executive Officer Bill Luna called for a 25% spending cut over the next four years for all county programs.

In February, 40 members of the county’s Building and Safety Department were laid off, including building inspectors, engineers and supervisors.

San Bernardino County officials have imposed a hiring freeze -- except for extraordinary circumstances. The county’s chief financial officer must approve all hires.

Orange County’s Social Services Agency, which has 160 vacant positions, has been asked to trim $2.5 million from its budget at a time that its services are of particular need, said Michael Riley, the agency’s chief deputy director.

“The programs that tend to be in the greatest danger are the programs that provide preventative or early intervention services,” to prevent child abuse and domestic violence, he said.

And the programs that appear to be safe are those that are largely funded by the state and federal government, such as welfare and food stamp programs, Riley said.

The hiring freeze has affected the agency’s ability to meet the public’s needs, he said.

“Every time a social worker leaves, we cannot hire behind him or her. You can just imagine what that does, putting pressure on us,” Riley said.

“We’re doing everything we can to make sure we can still meet the demand, but I have to tell you it’s going to be very difficult to do that.”

Among the programs in jeopardy are family resource centers, through which social workers identify and assist troubled families to prevent child abuse and domestic violence before it starts, Riley said.

“It’s a significant help to us keeping families together and out of our system,” he said. “Those programs come under pressure because they’re not mandates” from the state or federal government.

Wilson said the Health Care Agency has not yet decided how to achieve Mauk’s requested cutbacks, but medical care for the indigent does not appear in jeopardy because of state and federal funding.

Orange County has no public hospital. Instead, the county reimburses private hospitals that treat the poor.

The future of community healthcare clinics is less certain.

“We have a couple of clinics and provide funding for a number of community clinics,” Wilson said. “They could be impacted.”

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stuart.pfeifer@latimes.com

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Times staff writers David Kelly and Garret Therolf contributed to this report.