Politics & Government

Revenue Picture Called 'Weak' as O.C. Budget Approved

County services, such as food stamps, clinics for the uninsured are in great demand, budget director says.

A slow economy wasn't enough to prevent some increases to the Orange County  2011-2012 budget, including the funding of drug and alcohol treatment for ex-convicts.

The only change from staff's spending recommendations came when the county Board of Supervisors decided to fund the treatment program, which will cost about $450,000 for six months. The new fiscal year budget totals $5.6 billion, compared to last year's $5.5 billion.

Otherwise it was business as usual, with a handful of county departments asking for, and receiving, slightly more money for specific programs.

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For example, the Sheriff's Department asked the board for an additional $6 million for the  Men's Central Jail, to help keep the fourth floor of that facility open, according to Sheriff Sandra Hutchens. (That floor is shared with federal marshals and immigration agents under contract with the county.)

Deputy CEO Robert Franz said the county's revenue picture is weak during this sluggish economic recovery. He called unemployment "stubbornly high" and predicted the 2011-12 fiscal year would see "another year of flat growth."

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Also, housing prices, which largely determine the county's property tax revenue, dropped just yesterday. Between now and January, "it's unlikely that we'll see another increase in house prices," Franz said.

For the fiscal year ending June 30, the county expects to receive $231 million in sales taxes. That number is expected to climb by $5 million in 2011-12.

One positive statistic for the county's bottom line was a decrease in retired workers' pensions. The cost declined from a peak of $327 million in 2009 to $284 million this year, but is expected to rise again next year by $14 million.

And because the state currently faces a $15-billion deficit, the county expects to shoulder additional costs in the coming months and years.

The contingency reserves, meant for emergencies, should increase by $19 million next year, according to a county estimate. Orange County's reserves are higher than San Diego or Riverside counties' rainy-day funds, Budget Director Frank Kim said.

Despite a weak revenue base, county services are more in demand than ever, Kim said. Food stamps, clinics for the uninsured and other public programs are being used more than ever, he said.

"We are tied to a somewhat volatile revenue source to provide services our residents expect," Kim said.

Still, at least on paper, the new budget is balanced and requires no dipping into reserves or deficit spending.

The biggest chunk, about 40 percent, goes toward community services (which includes foster care, the public guardian and various health and social programs), followed by police and fire services, gobbling up about 20 percent of county spending, and infrastructure and environmental services (which includes John Wayne Airport, Dana Point Harbor, waste management, roads and various public works projects) using another 20 percent.


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