County Braces for Gramm-Rudman Cuts

A proposal to place senior citizens arrested for shoplifting in counseling programs rather than jail looked good when Orange County supervisors unanimously approved the idea last fall.

But county officials are now asking the board to drop the program even though it would cost only about $45,000 a year.

The reason: Gramm-Rudman, the new federal deficit reduction law that bears the names of its two chief authors, U.S. Sen. Phil Gramm (R-Texas) and Rep. Warren B. Rudman (R-N.H.).

The law requires a balanced budget by 1991 through automatic spending cuts spread over the next five years unless Congress and the White House agree on other ways to eliminate the federal deficit.

No Contingency Plan

With the first round of Gramm-Rudman cuts, amounting to 4.3%, less than six weeks away, Orange County officials have still not fashioned a contingency plan for dealing with possible cash shortages in federally subsidized programs such as low-cost housing, counseling for Indochinese refugees and collection of overdue child support payments from absent parents.

“It seems that all we have is a lot of confusion right now and no facts,” said County Administrative Officer Larry Parrish. “There aren’t any specifics yet from Washington about how these cuts are going to be implemented. We are trying to pull together an analysis so that we’re not flying by the seat of our pants, but it’s going to be highly speculative.”

Parrish said it’s likely some cuts will result in staff or service reductions in some programs, but he added: “The next question is, which services and which staff, and we simply don’t know.

About $120 million of the county’s $1.1-billion budget comes directly from the federal government. Another $14 million comes from the federal revenue-sharing program which expires Sept. 30.

“The governor didn’t address the issue either in his budget or his State of the State address, so we don’t have any idea about how the state intends to handle Gramm-Rudman either,” Parrish added. “We get a lot of federal money passed to us through the state, especially for medical services for the poor.”

James McConnell, the county’s lobbyist in Washington, said he recently sent county officials a list of programs subject to Gramm-Rudman cutbacks, and those that are exempted, such as Aid to Families with Dependent Children. But since each federal agency has some discretion in how to implement the cuts, it is still not certain how specific federal grants will be affected in various counties and cities.

“We know that money already delivered doesn’t have to be repaid to the federal treasury, and we know that contracts already signed are still OK, but grants that had not been approved yet are definitely going to be reduced,” McConnell said.

Some county officials, including Orange County Transit District Manager Jim Reichert, believe federal funding for their programs will be phased out almost entirely during the next few years because Congress has given mass transit and other big-ticket items low priority recently.

But uncertainty prevails.

“Of course, I am most concerned over the long run about the Santa Ana River Flood Control project, but we’re faced with more immediate problems in terms of health and welfare programs,” Parrish said.

Although Congress recently provided engineering study funds for the $1.1-billion flood-control project, an appropriation for full construction has not been forthcoming. The county’s congressmen remain optimistic, but they also note that the flood-control plan is the biggest public works project pending in Washington, and its big price tag makes it an easy target.

More Typical Problems

More typical of the local planning problems caused by Gramm-Rudman, however, are those facing Murray Storm, director of the county Environmental Management Agency.

Just when the county is hoping to obtain federal grants for toxic waste treatment facilities, the money may dry up.

Storm’s agency also oversees the county’s low-cost housing program, which is heavily subsidized with block grants from the Department of Housing and Urban Development.

Storm said he has not yet figured out how cuts in block grants will affect the county because complex formulas are used to determine the size of grants, based on such factors as population and per capita income in communities targeted for assistance.

“There’s still a lot of discretion in how the grants are awarded,” Storm said, “so it’s possible that not every grant will be cut.”

Storm said much of the housing money is used to subsidize low-interest bank loans rather than actual construction, which further complicates attempts to project what will happen under Gramm-Rudman.

Storm said the budget cuts may force him to reduce his staff by one or two people in the next few months. But he added: “I’m not sure.”

Meanwhile, Parrish is worried about the next round of cuts, which some federal officials estimate could be as high as 25% for domestic programs. The deadline for those cuts--$50 billion nationally--is Oct. 1.