Cash-strapped Orange to postpone more than $7 million in needed repair projects
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In the midst of grappling with a critical budget crisis, Orange plans to delay several key facility and infrastructure repair projects for the next fiscal year.
It is part of a larger pull back on such projects and IT equipment purchases to help balance the general fund, which has historically been the primary source for covering capital improvements.
“The general fund has a deficit when we were running through all of the numbers with revenue and expenditures,” Finance Director Trang Nguyen told the City Council on Tuesday. “The only way that we can balance [it] is to…transfer a total of $17 million from special revenue.”
Consultants warned that Orange could be at risk of bankruptcy by 2029 if city officials don’t change course. A sales tax hike is seen as a necessary part of a solution going forward.
That tally includes $10 million from the city’s capital improvement program, $3.7 million from EMT funds and $3.3 million from an IT capital fund.
Last year, city-hired consultants projected Orange to be at risk of bankruptcy by as soon as 2029. Since then, city officials have looked for a number of ways out of its current and future financial woes.
The deferral of 11 needed infrastructure projects — everything from replacing City Hall’s roof to remodeling a fire station — arose at the council meeting on Tuesday during a second study session for the 2026-27 fiscal year budget.
A $2.5-million effort to replace two existing structures at Fire Station No. 3 with a new building is the only project of the 11 deferred that has secured partial funding.
Putting the projects on hiatus frees up $7.2 million.
According to a staff report, the deferrals don’t reflect a lack of need but “represent a necessary prioritization of limited funding toward more urgent operational, safety-related, and externally leveraged capital needs.”
Under the budget proposal, the city would still invest $36 million in capital improvements.
Playground equipment replacement, road maintenance, a new water well, sewer improvements and capital projects “that can no longer be delayed due to safety concerns, operational necessity or partial grant funding” are still on the table.
“All of these [projects] have sufficient funding and fund balance,” Nguyen clarified. “There’s no general fund contribution needed.”
The lower-priority projects, however, would be deferred until Orange’s financial health improves.
Following a report that projected bankruptcy within three years, the Orange City Council is considering a revamp to its Design Review Committee to free up new developments.
“The list of deferred maintenance projects and significant needs keeps growing,” Councilmember Arianna Barrios told TimesOC after the meeting. “The amount of times we can keep robbing Peter to pay Paul has nearly run out. The bill has come due.”
At a budget study session last month, the council discussed putting a ballot initiative to increase the sales tax by 1% before voters as early as November. Consultants had highlighted the move as one that could shore up short-term revenue pitfalls.
Orange voters narrowly rejected a half-percent sales tax increase over 10 years in 2024 before a fuller picture of the city’s economic forecast emerged.
The City Council has also considered the possible benefits of becoming a charter city instead of remaining a general law city, which could increase local control and gain Orange more financial flexibility.
City staff will continue crunching the numbers on a new budget for review next month. The council is expected to adopt a budget in June.
