New Cities Cannot Ignore County Woes : * Laguna Hills and Lake Forest Must Look Beyond Their Borders at Larger Picture

Laguna Hills and Lake Forest--which voted themselves into cityhood last March--this month took their official places alongside Orange County’s 29 other cities. Organizing municipal government will be their first task. But the bleak economic moment in which they incorporated provides an urgent reminder that these inchoate cities do not exist in a vacuum.

Even more than their predecessors, these new South County cities must immediately begin to look beyond their freshly drawn borders at the bigger picture. While they will be comfortably provided for with sales tax and other revenue, they cannot afford to cast a blind eye on the financial woes washing over the Orange County Hall of Administration. The county’s budgetary emergency--caused in part by loss of revenue brought on by incorporations such as theirs--is ignored at the peril of all.

The incorporation of Lake Forest (the name selected by voters, although there is a movement afoot to change it to El Toro) and Laguna Hills leaves only 12%--or about 275,000--of Orange County’s population in unincorporated areas. As with previous incorporations, sales tax revenue once collected by the county will now go to the new cities. While some county costs will decrease, the net loss to the county caused by the two incorporations has been estimated at $7.8 million annually. Other recent incorporations--Mission Viejo, Dana Point and Laguna Niguel--are costing the county about $10 million a year, and other new cities are on the horizon.

The county can ill afford these losses. It barely pulled together a balanced budget last summer because of recession-driven losses in sales tax and other revenue. But the budget didn’t stay balanced long in the face of the worsening economy. Recently, the Board of Supervisors got the news that the county is facing the prospect of a $15.5-million to $21-million shortfall in the fiscal year ending next June 30, and triple that in the following year. That means even more cuts in programs.

To be sure, the two new cities’ financial outlook will also be affected by dwindling sales tax collections, but most agree that this will pose little problem. Laguna Hills, especially, is more than comfortable; it is expected to be one of the county’s richest cities, based on per-capita tax revenue.

But being a wealthy island in a county that is fast losing ground is like sailing a yacht on a pond. New cities must take seriously the county’s problems, and in the future play a role in trying to solve them.