Various business leaders will meet with an ad hoc committee of Orange County supervisors on Tuesday to provide input on a plan to lift some of the restrictions brought on by the coronavirus outbreak.
Orange County Board Chairwoman Michelle Steel and Supervisor Don Wagner will meet with an array of business leaders “to give us their insights on what we ought to be doing as a county government to get us open again for business and quickly — at least as quickly as responsible, and to do it in a way that does not jeopardize the gains we have seen and the price we’ve paid in a county to get where we are,” Wagner said.
County officials are eager to try to relax some restrictions when it is safe to do so as they plan to complete the budget for the 2020-21 fiscal year in June that is likely to include significant cuts.
The “largest direct funding source” for the Sheriff’s Department and District Attorney’s Office comes from sales taxes, which are down as many consumers spend more time at home in the quarantine efforts, said the county’s CEO Frank Kim.
Sales tax revenue fund much of the social safety net programs, he added.
“Assuming 10% reduction in sales tax over the next 18 months, you’re looking at revenue losses in the neighborhood of $200 million,” Kim said.
Kim predicted the “revenue impact across the county is severe.”
The county has squirreled away reserves, but, “Part of what we’re working on at this exact moment is how long does this economic crisis last?” Kim said.
Even if the economy can reopen in May, how long will it be before it is back to normal, Kim said.
“These are questions that aren’t easily answered,” he said.
Normally around this time Kim’s staff is working with department heads to estimate spending forecasts, but this year the annual budget isn’t likely to be so specific, Kim has said.
“We expect to present a preliminary budget to the board in early June,” Kim said.
The county’s budget staff has experience grappling with recessions, “But we’ve never gone through a pandemic,” particularly one that involved a shutdown order, Kim said.
“I don’t know if there is an expert out there who can say with a high degree of confidence what a recovery looks like,” Kim said. “There are a variety of opinions, so we’re going to go through that… I can absolutely tell you it will not look good.”
Kim predicted, “We will be in some level of curtailment mode, and at that point all options are on the table,” including layoffs.
“I don’t want to alarm my board members or the public, but we’ll have more clarity in the coming weeks,” Kim said.
Supervisor Andrew Do said “we are in a time of crisis, a crisis of unprecedented proportion.”
“We have to go back to probably the Great Depression before we get something of this magnitude when we’re talking about a shutdown of the economy,” Do said.
Do said it would be “unrealistic” to expect an annual budget similar to recent years.
“We just have to regroup, take a bearing on where we are and formulate a plan,” he said. “That’s what everyone is doing in America. That’s what every company is doing, and government agencies are no different.”
The biggest question is how much the federal and state governments can help, said Do and Supervisor Lisa Bartlett.
“There’s so many things unanswered at this point relative to the budget,” Bartlett said. “All counties have had to expend generous amounts of their general funds to fight COVID-19 and address all of the issues related to COVID-19.”
Bartlett noted, “We’ve had significant impact on our budget relative to the increase in public services required like social services and the health care agency.”
The request for social services “has gone up significantly,” Bartlett said.
“And we don’t know what we’re receiving from the CARES Act,” Bartlett said, referring to the federal stimulus bill.
Bartlett said many small businesses in Orange County got shut out of Small Business Administration loans in the CARES Act.
“Many small business in Orange County put in a request for funding, but by the time the request was submitted the funding was depleted,” Bartlett said.
“It is very disappointing because (big businesses) utilized some loopholes to create small businesses within their corporations to get access to those funds.”
Bartlett said the county was “in the high 90s” percentage wise in collecting property taxes.