Orange Falling Behind on Budget : Finances: Collapse of cutback plan and city manager’s illness mean council is likely to miss its July 1 deadline. No drop in services or payroll shortage seen.

The city apparently will begin its new fiscal year on July 1 without a budget.

A cost-cutting plan that backfired, and the illness of City Manager David F. Dixon, have delayed completion of the annual budget, which was to have been introduced at Tuesday’s City Council meeting.

But residents will not notice a drop in services from police, public works or any other agencies, and the city’s 624 employees will continue to be paid on time, said Fire Chief David L. Rudat, who has taken on some of the duties of the city manager during Dixon’s illness.

The City Council will consider an $11-million emergency appropriation by June 30 to keep the city operating until a budget is adopted.

City officials said there are no consequences from the state for failing to meet the city’s own deadline of June 30 to begin the new fiscal year.

This is not the first time the city has postponed a budget, Rudat said. Approval for the 1992-93 fiscal year budget was delayed for 120 days without repercussions when council members realized they were facing a large deficit, he said.

In place of a preliminary budget, Finance Director Ann Marie Gallant on Tuesday presented the council with a complicated five-year forecast that predicted steady increases in expenses but only a slight increase in revenue. She projected a $7.2-million deficit by 1997.

“I am disappointed with this budgetary process because we didn’t go from last year’s budget to this year’s. It does not give us a lot of comfort and understanding,” Mayor Joanne Coontz said at Tuesday’s meeting.

The budget for 1994-95 was $47 million, although departments collectively cut about $2.7 million during the fiscal year, revenue manager Scott Morgan said.

Gallant had projected city expenditures of up to $50 million for 1995-96.

The City Council gave tentative approval Tuesday to a seven-year, $29-million capital improvements budget because the city risked losing funds from Measure M, the 1990 half-cent sales tax approved by county voters for transportation projects. Final approval of the public works budget is expected at Tuesday’s meeting.

Council members agreed that Gallant and Morgan should come back in two weeks with projections for 1995-96 and 1996-97, along with a comparison of last year’s budget.

Councilman Mark Murphy said he considered the projections Gallant presented Tuesday as a “worst-case scenario.” He said she should project figures that assume city staff would continue reducing expenses.

“The city has been cutting back,” he said Wednesday. “I believe city government will continue saving money through efficient management.”

In April, City Manager Dixon introduced a dramatic cost-cutting plan that would have eliminated an unspecified number of middle-managers and restructured city government at a savings of about $5 million over the next 18 months.

But council members were hit with a firestorm of protest from employees. As many as 80 city workers would have lost their jobs, city staff members said.

“The game plan was to cut back on city staff,” Dixon said Wednesday. “That did not see the light of day.”

The original restructuring plan “got off to a bad start,” Councilman Mike Spurgeon said at Tuesday’s meeting. Leaks to employees about impending layoffs started a panic that council members wanted to avoid, he added.

“This is a very sensitive matter for the city family,” Spurgeon said.

Part of the budgetary delay is due to Dixon’s illness, city officials said. Dixon, 57, looking thin and pale, attended the meeting Tuesday.

Dixon has been city manager since February of 1994 and earns $138,300 per year. He confirmed Wednesday that he is being treated for cancer but said he expects to make a full recovery.

“I may not be here all the time,” he said, but insisted, “I am not going to take medical leave.”

Except for periodic appearances, he has been absent from City Hall for at least a month, city officials said.