Government financing is so tough these days that the county's financial experts said they are optimistic about next fiscal year's budget even though a report released Wednesday projects a shortfall of about $18 million.
The estimate is significant because it signals a reversal of a recent trend of increasingly tight budgets, they said. And it is much better than a budget forecast in March that predicted a $38-million shortfall in the fiscal year that starts July 1.
"Financing of government is always financing shortages," John Sibley, associate county administrative officer, said Wednesday. "We're obviously past the era of surpluses, but at least we're in a better position than we were in last week."
County Auditor Steven E. Lewis prepared the latest report, which projects the revenue the county expects to receive next year.
The bottom line is that the county will receive about 3.7% more income than it did in the current fiscal year, during which the budget was $2.2 billion. And the increase comes even though the government lost more than $10 million in tax revenues that will be shifted to the new cities of Mission Viejo and Dana Point.
Just last March, the auditor had predicted that the county's revenues would be less than in the current year. The difference, Lewis said, derives from several late changes by departments that now expect more revenue.
$5.5 Million More Than Expected
The county recorder's office, for example, reported that it will have $5.5 million more next year than it expected, largely because of savings on a computer purchase. And the General Services Agency found that the properties it leases will be about $4.2 million cheaper than anticipated.
There was subtle criticism in Lewis' report for the late changes by departments. "The credibility problem this surprise windfall creates for the county concerns me, but without accurate projections from departments (and) agencies, it will continue to happen," he wrote.
One of the main reasons the county is better off than last year is that the state has assumed much of the cost of operating the county courts. The new arrangement is part of the Trial Court Funding Act, which was adopted by the Legislature in January.
The county expects to save about $21 million next year because of the new program.
Despite the good news, there are still major hurdles for the county to overcome. Sibley said there are no plans at this point about how the government will make up the $18-million shortfall.
If it has to come from cutbacks, the $18 million represents several hundred possible layoffs. Last year the county was forced to consider more than 1,000 layoffs when its budget was $26 million short, although no cuts in the work force were made.
Also, all of the county's 12,000 union employees are up for new contracts in the next fiscal year, and the cost of raises is not included in the $18-million projected shortfall. Lewis' report said every 1% increase in salaries will cost the county $3 million.