Orange Approves Deficit Reduction Plan : Budget: The city’s financial problems are being ‘aggressively addressed’ through decreases in spending and by tapping into the reserve fund.

The City Council approved a plan Tuesday that combines budget cuts and a hiring freeze with money borrowed from reserves to offset the city’s burgeoning $5.76-million deficit.

City Manager Ron L. Thompson said the plan shows that the deficit is being “aggressively addressed.” The plan, devised by city staff and the council’s management audit committee, will squeeze $1.26 million from budget reductions, maintain the current hiring freeze to save $1.68 million and borrow $2.6 million from reserve funds.

“There are a couple sacred cows (cut from the new budget) and there’s everything from paper clips to car washes in terms of detail,” said Councilman William G. Steiner, who serves on the management audit committee. The “sacred cows” include funding for city festivals, he said. “We’re taking care of the pennies in this city and we’re not apologizing for it.”

Steiner sought to reassure residents, saying that despite the deficit, the revenue shortfall, the recession and the apparent loss of $7.1 million to an alleged investment fraud scandal masterminded by Newport Beach money manager Steven Wymer, “the sky is not falling in the city of Orange.”

By combing the budget for potentially minor trims, officials have avoided layoffs. But council members warned that “hard choices” such as salary freezes or layoffs may be necessary if the economic downturn continues. The council has ordered the hiring freeze to remain “indefinitely.”

Most cuts were made by trimming expenses related to travel, meetings, conferences, supplies and equipment, consulting services, telephone usage and overtime. However, many departments cut their operating expenses by 5% or more. The City Council cut its own budget by 17%.

The budget plan will also result in:

* A 5% reduction in city support for all community promotions and certain special events and programs, resulting in a savings of $110,545. This action eliminates the 1992 May Festival and reduces the budgets for the Winter Fest and Fourth of July celebrations.

* Postponement of Civic Center remodeling, which would have cost $820,000.

* Continuation of the hiring freeze, which leaves 40 positions unfilled for a $1.68-million savings. The freeze leaves many departments short-staffed, with the library, public works and police departments particularly hard hit. Reductions in staff and other budget trims within just the fire, police and public works offices will save the city more than $1.56 million.

The council rejected a staff proposal to lay off four administrative police officers, instead opting to reassign them to field positions within the department. Essential emergency services will not be affected, according to the budget plan.

“Frills are out and essential services are in,” said Councilwoman Joanne Coontz, also an audit committee member, of the new plan.

Borrowing $2.6 million from the city’s reserves will leave about $13.8 million in the general operating and disaster fund, Thompson said.