Deeper Budget Cuts Ordered in Orange County : Bankruptcy: Popejoy says department heads' proposals won't be enough. He is to announce the full scope of layoffs and other reductions today.


Dissatisfied with the cuts proposed by department heads, Orange County Chief Executive Officer William J. Popejoy on Monday ordered deeper and more substantial budget reductions as he prepared to announce today the full scope of layoffs and other cutbacks planned for the next fiscal year.

"He was not happy with the first round of (proposed) cuts," said Paul S. Nussbaum, a Wells Fargo Bank executive assisting Popejoy with the county's recovery efforts.

In previous memos to the Board of Supervisors, Popejoy indicated that the latest round of cuts could result in as many as 2,000 layoffs for the year beginning July 1.

Nussbaum said county budget officials and department heads worked over the weekend trying to figure out how to bridge a $188-million revenue shortfall anticipated for 1995-96. Popejoy has said the county may have to operate at a deficit in the 1995-96 fiscal year, with revenues expected to be only $270 million, down from the $463 million that had been expected for the current year before the Dec. 6 bankruptcy filing.

In other developments Monday:

* County officials said their former public relations firm is threatening to sue over the county's refusal to pay its bill. Supervisors have balked at paying the tab from Sitrick & Co., which specializes in bankruptcies, saying they believe the expenses were inflated.

The firm submitted nearly $250,000 in invoices for three weeks' work in December, charging as much as $350 an hour.

Michael Sitrick, president of the Los Angeles firm, declined to discuss the controversy or whether he plans to take court action against the county.

* Popejoy proposed early retirement incentives to lure an additional 200 to 400 employees out the door and save up to $22 million. Under a plan being brought to the Board of Supervisors today, employees who retire early could apply unused sick time, vacation time and compensatory time toward their pensions, earning up to two additional years of service.

* The Orange County Grand Jury requested that supervisors postpone selection of a new treasurer until they have searched thoroughly for a qualified candidate. "This act would help restore the confidence of the Orange County electorate," jury foreman Mario Lazo said in a written statement.

But the request may be ignored. A majority of supervisors have already indicated a desire to appoint accountant John M. W. Moorlach to the position. Moorlach ran unsuccessfully last June against longtime Treasurer-Tax Collector Robert L. Citron. He was the first to sound warnings of Citron's risky investment strategies. Sheriff's investigators currently are doing a background check on Moorlach.

* Orange County leaders put off an appearance before the state Assembly that Speaker Willie Brown had invited them to make to voice their concerns about legislation being considered in the wake of the bankruptcy.

Instead, county officials said they planned to send a group of business leaders and elected officials to the Capitol this afternoon to meet with Gov. Pete Wilson and possibly Treasurer Matt Fong before addressing the Assembly on Wednesday.

"The state has to understand the clear urgency of this situation," County Supervisor Marian Bergeson said.

Brown met with Bergeson and others over the weekend in Orange County and came away convinced that the entire Assembly needs to hear the presentation.

"It was a very good briefing," Brown said of his meeting Saturday at the home of Irvine Co. executive Gary Hunt. "It should be shared with this membership (of the Assembly). I offered to give them the opportunity, and that offer still stands."

Although county department heads initially were told to cut their budgets by 28%, Popejoy said they would have to do much more to meet next year's projected revenues of $270 million--about 40% less than the current fiscal year's revenues.

Privately, some department heads are grumbling over the size of the cuts they are being asked to make. Some fear that there will be little left of county government once the cuts are implemented.

Nonetheless, all the department heads are trying to meet Popejoy's budget expectations.

"There's a time to lead and a time to follow and be a good soldier, and right now I guess it's time to be a good soldier," said Health Care Agency Director Tom Uram.

Supervisor William G. Steiner said that Popejoy is proving to be a strong-willed executive intent on paring down county government.

"If department heads had any doubt about whether Popejoy is in charge or means business, they should take a look at what the Board of Supervisors have done to their own budgets last week," he said.

Steiner said that although a 10% reduction in the county's 15,000-member work force may seem like a lot of layoffs in the public sector, such numbers are fairly routine in the private sector.

Since the bankruptcy, the county has laid off slightly more than 200 employees and has eliminated another 450 vacant positions. Steiner said there are another 1,700 vacant positions that may be cut to soften the blow of layoffs expected today.

Times staff writers Jodi Wilgoren in Orange County and Eric Bailey in Sacramento contributed to this story.

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