County Is Facing a $46-Million Shortfall : Budget: What with fund slashes in Sacramento and a rising demand here for services, the indigent seem destined to bear the brunt of the cuts.

Dramatic state cuts and a skyrocketing demand for local government services have left Orange County facing a shortfall of more than $46 million this year and could force sharp reductions in services to residents, county officials said Tuesday.

In addition, local tax and fee increases are expected, as the state has given county governments new authority to raise revenues in several different areas. New business-monitoring fees, utility taxes and other levies are likely, officials said, but they are not expected to raise more than a few million dollars, so the county would still face a gaping deficit.

That bleak assessment came Tuesday during the fourth and final public session on the county’s 1990-91 fiscal year budget, and it reflects the first local reaction to the state’s recently passed budget. Although the cuts will affect county services across the board, hardest hit will probably be programs that provide health care to poor people.

“Who’s going to be hurt the most?” Supervisor Harriett M. Wieder asked during a gloomy Board of Supervisors session Tuesday. “The ones who can least afford it: the poor.”

Supervisor Roger R. Stanton was also angered by the cuts in the state budget, which helped break a long impasse in Sacramento but passed along many of the cuts to counties and programs for the poor. “I’m very upset and starting to get a little angry at our priorities in this state,” Stanton said.

Under the state budget passed by the Legislature on Saturday and signed by Gov. George Deukmejian on Tuesday, Orange County’s Indigent Medical Services program, which pays medical bills for about 22,000 people in Orange County, could lose up to 55% of its funding, or $13.6 million of its $24.6-million budget. Most of those who use the program are working adults who lack medical insurance.

Those cuts, part of an overall $170-million reduction in the statewide program, drew sharp criticism from state Sen. Marian Bergeson (R-Newport Beach), the Republican candidate for lieutenant governor. At a press conference Tuesday, Bergeson said the reductions violated the state’s commitment to provide funding for the medically indigent.

“It’s such a disastrous hit,” said Bergeson, who vowed to fight to restore the funds when she returns to the Legislature this month. “It isn’t feasible.”

Supervisor Gaddi H. Vasquez, who chaired a health care task force with Bergeson this year, agreed, adding that the cuts have shifted local planning from efforts to improve the county’s health care system to protecting it from deterioration.

“I feel like an architect who has a great plan but has no funding to build the structures,” Vasquez said.

And officials at one Santa Ana hospital corporation that operates a trauma center said Tuesday that the cuts were cause for deep concern. Glen Kazahaya, chief financial officer of United Western Medical Centers, said hospital officials hope to keep their emergency room and trauma center open, but the fund cuts could make that difficult.

Also, he warned, “The increasing burden of under-reimbursed funds for inpatients could very well create a domino effect,” forcing closures of hospital emergency rooms and trauma centers around Orange County.

Stung by the cuts, Orange County health officials are exploring with other counties the option of filing a lawsuit against the state. A statewide “litigation strategy meeting” has been set for Aug. 9 in Sacramento, according to Karen Coker, legislative representative of the County Supervisors Assn. of California.

In addition to the losses in health-care programs, indigents needing legal defense would also come out losers, with $1 million cut from that program in the county.

Other cuts are expected to reduce funding for trial courts, contagious disease control, welfare and a variety of other social programs.

Funding for the county’s Santa Ana River Flood Control Project, a $1.4-billion undertaking designed to prevent a disastrous flood in central Orange County, was also dropped, forcing officials to consider a special district tax or bond election in November to raise money for the current portion of the program not financed by the federal government.

All told, cuts in the budget approved by the Legislature came to about $21 million in lost county funding, but that number grew even further once Deukmejian had completed his vetoes to the spending package.

Deukmejian’s line-item vetoes, signed late Tuesday along with the budget, slashed again at county-administered social programs, cutting $4 million from the county child-abuse and child-welfare program and reducing funds available for Aid to Families with Dependent Children.

Deukmejian’s action also took about $4.8 million from programs that provide mental health care to poor Orange County residents.

County officials were not able to study Deukmejian’s vetoes Tuesday, but budget analysts planned to begin reviewing them this morning.

By the time the cutting is tallied up, more than $29 million is expected to be stripped from Orange County programs, compounding the county’s already-dire financial situation. Even after a round of proposed 5% cuts, some of which are being fought by department heads, the county’s shortfall had been estimated at $17.5 million.

Cuts to the state programs thus far bring the shortfall to more than $46 million and will make balancing the county’s budget just that much more difficult, officials said.

“Everybody’s trying to figure out what went wrong and why the counties are being asked to shoulder such a huge burden,” Vasquez wondered. “It’s very sad and very, very, very unfortunate.”

Amid the bad news Tuesday, county officials did have a few promising tidbits to report. Year-end financial reports revealed that the county’s increased property assessments will net it approximately $2 million more than previously estimated in additional tax revenue. Also, the county will end the year with $6.3 million more than had been anticipated in carry-over funds.

Those two items give the county an $8.3-million leg up on meeting the shortfall but still leave at least $38 million in unfunded programs.

Despite the red ink, widespread county layoffs do not appear likely, officials said. Some departments will see their payrolls whittled away, but the cuts probably can be made by attrition rather than by firing workers, according to Ronald Rubino, assistant county administrative officer for management and budget.