County Budget Short $9.9 Million, Report Says

Orange County will have to dip into its reserve fund to make it through the current fiscal year but is generally on solid financial ground, according to a midyear budget report released Thursday.

The Sheriff’s Department, operating at $4.7 million in the red, leads the way among 11 county agencies that will need a total of $9.9 million more this year to cover expenses, largely because of salary increases approved but not funded by the Board of Supervisors.

Nearly all the additional funds needed to make up the deficit--about $9.2 million--will be generated by changes in the way the county and other jurisdictions divide up tax revenues. The remaining $700,000, the report said, should be taken from the county’s $15-million reserve fund.

“We are continuing to face significant shortfalls in available financing while demands for service continue to rise,” County Administrative Officer Ernie Schneider wrote in the report to the board.

“It is our intent to make every effort to . . . reverse this trend in the future and develop stable funding sources which will allow us to proceed with the financing of government on a more businesslike basis.”

Despite the midyear cash crunch, county financial planners predict that, once all revenue is in and programs are actually in place, the county will end the fiscal year on June 30 with about a $23-million surplus.

That will be more than enough to bring the reserve back to $15 million, county administrators said. The reserve is set aside to use for emergencies as well as to protect the county’s credit rating so that it can borrow money on the best terms and at the lowest rate of interest.

“I’m not overly concerned that they’re going to dip into it (the reserve),” County Auditor-Controller Steve E. Lewis said. “There’s nothing magical about $15 million or $20 million.”

Lewis has recommended that the county maintain a $20-million reserve. The board has generally maintained a reserve of $15 million but has occasionally dipped into the fund, county administrators said.

“The report is basically saying ‘Hey, we don’t have any money to do anything extra,’ ” Lewis said. “We’re going to have to save all our nickels and dimes to go into the next year . . . whether it be for new jails or salary increases that have already been approved.”

County planners also note that the $700,000 requested from the reserve fund is only a tiny fraction of the overall county budget of $2.9 billion.

“I think we’re really well pleased with our financial position,” said Murry L. Cable, assistant county administrative officer. ‘We can say to the board: The county’s in solid financial position.”

While some county agencies were able to absorb salary increases approved but not funded by the board, others were not, the midyear budget report said. Salary hikes have been the single largest cause of cost overruns this year, according to the report.

Among other unanticipated expenses were the lengthy litigation with the city of Anaheim over property taxes, a rapidly increasing caseload in the district attorney’s office and jail overcrowding.

DEPARTMENTS WITH DEFICITS

These Orange County agencies and departments have operating deficits for the fiscal year ending June 30.

Board of Supervisors administrative office $5,000

County clerk $453,000

County counsel $152,950

District attorney and family support $954,046

Juvenile Justice Commission $6,700

Marshal $321,305

Probation $1,734,801

Public defender $350,534

Sheriff-coroner $4,665,804

Social Services Agency $770,499

Utilities $44,211

Miscellaneous Expenses $441,150

Total $9.9 million

Source: County Administrative Office