Supervisors Tentatively Approve $3.66-Billion Budget

A $3.66-billion budget considered the brightest since Orange County’s 1994 bankruptcy won preliminary approval Tuesday from the Board of Supervisors.

The board also instructed its attorneys to meet with representatives of school districts that lost money in the bankruptcy. At issue is who is entitled to $30 million that Merrill Lynch is paying the county as part of a settlement with the district attorney’s office to avoid bankruptcy-related criminal charges.

Attorney Bruce Bennett, who is handling the county’s bankruptcy-related litigation, said Tuesday that meetings are already being scheduled with representatives of local schools. He said he expects the talks to continue well into next month.

“There is interest from everyone to get together and work this out,” he said. “We all consider these to be very complex issues.”

Officials of other government agencies are arguing that some of the Merrill Lynch settlement should go to them under the terms of a recovery plan approved in 1995. But some county officials insist that the $30 million is not covered by the plan and should be used instead for pressing needs such as jail construction.

Some supervisors have suggested using a portion of the $30 million to help pay for a new South County courthouse, expand the Theo Lacy Branch Jail in Orange and help ease overcrowding at Orangewood Children’s Home, an emergency shelter for abandoned and abused youngsters.

The Merrill Lynch windfall is not included in the preliminary budget, which is actually 2% smaller than this year’s, thanks to lower debt payments, less demand for some welfare programs and a county reorganization that eliminated more than 200 jobs.

Board members expressed interest in boosting funding to certain programs when they consider the final budget in September.

Additional money could become available between now and September, officials said, as they “close the books” on this year’s budget and find unspent funds.

The spending plan would maintain funds at current levels for most programs and give more to public protection agencies such as the Sheriff’s Department, district attorney’s office and Probation Department.

The new budget also would reduce the county’s $800 million in bankruptcy-related debt by setting aside an additional $24 million for early repayment of bonds.

The plan includes 28 new positions and $17 million for programs designed to prevent larger social, health and law enforcement problems. Funding for tobacco use prevention, for example, would rise 80%.

Supervisors praised the budget’s focus on preventive programs that they said will save the county money in the long run.

“I think this is the direction we should be going, and I’m pleased with what we’ve done so far,” board Chairman William G. Steiner said.

Public protection agencies would be the biggest winners, gaining 272 positions and seeing their combined budget rise from $550 million to $632 million.

The money would be used to hire more attorneys to handle family support cases, increase the number of officers who supervise juvenile and adult probationers, and move forward on a new emergency communications system.