O.C., Cities Face Cuts of $66 Million : Impact: Unless numbers change, state budget effects will be less dramatic than originally feared.

Orange County and its cities braced Tuesday for possible cuts in the state budget totaling about $66 million in losses.

The cuts, however, contained in a budget that was still under consideration late Tuesday night, did not appear to be as dramatic as previously feared, officials said.

“Trying to sort this all out is like being blindfolded in a fun house,” said William Hodge, executive director of the League of California Cities, Orange County division. “This generally represents an improvement of what we first thought, but these numbers could vanish in a couple of hours.”

According to figures provided by the league, the state would take an estimated $17.1 million in additional property tax revenue from local cities and raid their redevelopment agency funds for $19.4 million more to help close California’s mammoth budget gap.

Although the numbers show sizable losses for cities already struggling through a crippling recession, the totals represent a $5-million reduction from earlier estimates.

“The level of difficulty is significant, but we’re still optimistic,” Hodge said.

County officials, bracing for possible losses of more than $30 million, tracked developments in Sacramento virtually by the hour Tuesday, but weren’t ready to draw any final conclusions.

“Until we see (the budget) in print and signed by the governor, we’ll always wonder if it will change,” said County Budget Director Ronald S. Rubino. “Things have changed so fast in the last few weeks.”

The county originally estimated its share of cuts at $70 million. Under the budget plans being considered Tuesday, county officials predicted that the local courts could lose up to $6 million in funding. The county’s general fund--used for a range of health care, law enforcement and other services--could lose more than $10 million, and so-called special districts regulated by the county--including libraries, flood control and fire protection--stood to lose more than $20 million, officials said.

The losses will probably mean increased fees in some areas, such as higher costs for filing lawsuits and for services such as water and sewage. But county officials say they will still be looking for other areas to cut.

“The whole process has been grueling,” Rubino said. “You can’t let your guard down. Something can get slipped in (to a bill) right on the floor, and cost us millions of dollars. We have to be on full alert.”

Like their county colleagues, city leaders were already formulating strategies to deal with projected losses.

In Santa Ana, possible state-mandated reductions were estimated at $5 million to $6 million and represented the largest of all city projections. However, earlier forecasts had set losses at $13.8 million.

City Manager David N. Ream said that in anticipation of state cuts, Santa Ana had developed some preliminary options on spending. However, as part of a 1991 budget compromise between the City Council and the Santa Ana Chamber of Commerce, he is required to first present the plan to the business group before disclosing it publicly.

A list of possible budget options Ream released in June included the elimination of municipal library services and recreation activities.

But Ream said Tuesday, “I think it would be premature to speculate at this point” what finally will be cut.

“This is just one more big bite out of our revenues. . . . It’s very disappointing,” Ream said.

Laguna Beach officials, meanwhile, were talking taxes in light of their anticipated $768,000 in losses.

“We’ll be listing about 20 possible new revenue sources: new fees, raising fees, raising taxes,” City Manager Kenneth C. Frank said of his city’s strategy. “At the same time, we’ll be coming back with cuts in the hundreds of thousands of dollars.”’

One likely source of funds is the city’s hotel occupancy tax, which could be raised from its current 8%, Frank said.

“I’m almost certain the council will raise some fees or taxes between now and July 1 of next year,” he said. “I would say everybody’s going to feel it to a little extent.”

City officials in Orange, who are grappling with possible property tax losses of $942,538, have considered a City Hall shutdown every Friday.

In Garden Grove, City Manager George Tindall said he would have to consider additional cuts in police and fire services if the city is forced to absorb $616,255 in property tax losses.

Earlier this year, the cash-strapped city cut 14 positions in the Police Department as part of a $45-million budget that “under normal conditions would be a $50-million budget,” Tindall said.

“We’ve already done all the shell games,” he said. Referring to possible layoffs and service cuts, he added: “We’ve done everything else, we don’t know what else we can do.”

Times staff writer Gebe Martinez and correspondents Shelby Grad and Leslie Earnest contributed to this story.