Officials Are Optimistic County Can Avoid $24-Million Deficit

The County Administrative Office released its $2.9-billion proposed budget for fiscal 1989-90 on Thursday, showing a deficit of about $24 million--enough to be threatening except that officials are “optimistic” that it will soon be erased.

The Legislature is considering giving a grant to county governments that would add about $19.7 million to Orange County’s coffers, bringing the deficit into what officials consider a manageable range. The grant could be decided as early as next week.

“It is my opinion that it is still too early to prognosticate doom,” County Administrative Officer Larry Parrish said in a letter to the supervisors Thursday. “I prefer to concentrate our energy on . . . what we can do to present a balanced budget to your board.”

John Sibley, associate county administrative officer for the budget, said: “We’re very optimistic that we’re going to be able to manage this budget. If the $19 million doesn’t come through, obviously we’ve got a significant problem.”

The 1989-90 year begins on July 1 and the supervisors are scheduled to adopt the proposed budget on Wednesday. The county will hold hearings on the budget during the last week of July. Then the supervisors must give final approval by Aug. 30.

The awkward budget schedule--with the hearings coming after the fiscal year begins--is inherently difficult because much of the county’s budget depends on decisions at the state level that are not made by June.

Last year, the $2.3-billion budget adopted by the supervisors had a deficit of $23 million that was not resolved until January when the Legislature passed the Trial Court Funding Act, a program in which the state assumed much of the cost to operate the county’s court system.

Before the county’s budget was balanced, however, officials feared that the $23-million deficit could force the layoff of several hundred county employees.

Sibley said today’s deficit could have the same ramifications, but “we haven’t even started to look at that kind of thing.”

Parrish also said, “We have exercised restraint in communicating negative budget messages to agencies and departments in an effort to minimize the typical budget hysteria.”

But another potentially significant problem for the 1989-90 budget is the salary increases being negotiated with labor unions. The contracts for almost all of the county’s 12,000 union employees will expire this year. Four of them end with the fiscal year next Friday.

Parrish told the supervisors that there is no money in the budget for any salary increases and, if any are granted, the county’s department heads might be forced to absorb the extra costs from their existing budgets. In that case, there could still be significant cuts in county staff or programs, he said.

Sibley said a 1% salary increase for all county employees would cost the county about $5 million.

Russell Patton, the county’s personnel director, said four county unions are negotiating their contracts now. One, the 600-member Service Employees International Union, was scheduled to vote on a contract Thursday night.

The contract for the Assn. of Orange County Deputy Sheriffs is scheduled to expire in November.

Parrish began his letter to the supervisors on an upbeat tone, calling attention to the county’s accomplishments in the past year even with its precarious budget.

“We have maintained county programs in an era of fiscal restraint and at the same time, accomplished several significant tasks,” Parrish wrote.

He noted the county’s progress in expanding John Wayne Airport as well as beginning construction at a new juvenile courthouse and an expanded branch jail in Orange.

“We have accomplished these tasks within the fiscal year 88-89 in spite of the paradox of decreasing revenues and increasing demands,” he wrote.

Parrish then listed 11 areas for funding still needed in the county, including more jail beds, a new courthouse, office space for several county departments and more money for indigent medical services.

“I am sure you will agree that the needs far outdistance our financing abilities,” he said.