ORANGE COUNTY IN BANKRUPTCY : Big Cuts Still Leave ‘95-96 Budget at Least $60 Million Short

Despite massive cuts proposed for the next fiscal year, the county’s budget will fall at least $60 million short of revenue projections, top county officials said Tuesday.

“There’s certainly a pretty big hole to fill,” said Paul Sachs of Arthur Andersen & Co., chief of the county’s special accounting team.

County Health Care Agency Director Tom Uram, who was filling in as acting county administrator, acknowledged Tuesday that he proposed a $335-million discretionary general fund budget for fiscal year 1995-96, despite estimates that show the county’s revenues at $275 million. Sachs offered an even gloomier assessment, saying county revenues could be as low as $240 million.

County officials are desperately searching for ways to increase revenue and bridge the gap, Uram said.

“You name it, we’re looking at it,” Uram said. “This is the first time we’ve dealt with a budget gap.”

Closing the deficit could involve raising user fees in the county, selling assets, restructuring government and privatizing services, Uram said. He said approval of legislation aimed at granting the county relief from costly state and federal mandates would be a boon.

None of those remedies, however, seems imminent.

Raising taxes, which is one option that would help cover much of the county’s financial problems, is not being considered because the Board of Supervisors is strongly opposed to the idea.

Some county officials, however, are saying privately that a sales tax increase needs to be considered. The idea is also gaining support among some business leaders.

But even if raising taxes became an option, it is unlikely that it would be approved soon enough to help the county’s 1995-96 budget.

Some county officials, who are grappling with the cuts called for in Uram’s proposed budget, said the financial picture could get even bleaker if the state taps into tax money that traditionally goes to the county to balance its budget.

“We have to wait and see what happens in Sacramento,” said Fred Branca, the county’s budget director. “Right now we don’t really know what the impact will be.”

County department heads are already reeling from multimillion-dollar cuts forced upon them when the county declared bankruptcy after its investment pool suffered losses of $1.69 billion.

Before the Dec. 6 bankruptcy, the county was operating on a discretionary general fund budget of about $460 million. When the county’s financial situation became dire, department heads were immediately instructed to implement about $30 million in cuts. Those reductions resulted in about 700 jobs being eliminated, including 170 layoffs.

Although the Board of Supervisors has said public health and safety services remain a priority, all county departments have fallen to the budgetary ax. Among the hardest hit are probation, health care and social services.

Most departments have suspended or canceled capital improvement projects and have eliminated expenses, such as travel, conferences, training programs and memberships in professional associations.

Programs for the county’s poor and mentally ill already have been reduced, while county officials consider such unpopular actions as closing some libraries.

The budget cuts next fiscal year, which begins July 1, promise to be even more severe and involve additional layoffs, county officials said. Uram’s proposed budget for 1995-96 is about $125 million less than the current budget.

The task of closing the $60-million budgetary gap will largely fall on William J. Popejoy, the county’s newly appointed chief executive officer. Popejoy said Tuesday he has been in numerous meeting with county officials, gathering information on the magnitude of the financial collapse.

Popejoy said he plans to address the county’s budget concerns and other issues within days.