Orange County officials unveiled a $7.7 billion budget for the fiscal year 2021-22 Wednesday, which envisions spending about as much as last year.
But with state officials eyeing a variety of new programs and increasingly encouraging sales tax revenue trends, the county may be able to restore some of the hundreds of positions eliminated last year.
The general fund budget, which reflects spending that is more discretionary and outside of legally required programs, is proposed to be $4.1 billion.
Federal relief packages during the COVID-19 pandemic have helped prop up the county’s economy, Orange County CEO Frank Kim said.
“It’s a budget that maintains current levels of service,” Kim told City News Service.
The county is relying on economic forecasts of 3.5% growth in property tax revenue. A booming housing market helps explain that, Kim said, but he added that county officials were surprised by the resurgence in sales tax revenue, which can likely be chalked up to COVID-19 relief packages.
“It did fall significantly” last year, Kim said. “But then it did recover. It has been volatile.”
The stimulus checks from the federal government and unemployment extensions likely helped bolster sales tax revenue.
“Not only did we get stimulus checks, but there were business grants, a moratorium on evictions… There’s been a variety of state and federal programs that have held up the economy,” Kim said. “And that is reflected in consumer spending activity.”
The county is forecasting $358 million from the half-cent sales tax that funds Prop. 172, which funds law enforcement. The Orange County Sheriff’s Department gets 80% of that money and the District Attorney’s Office receives the rest. That represents a 12.7%, or $40.3 million, increase over last fiscal year.
The county is also anticipating a 16.2%, or $13.1 million, increase in state funding for realignment programs aimed at reducing the population of prisons.
“That funding is strong, so we’re really happy about that,” Kim said of the AB109 and Prop. 172 revenue.
The county deleted 548 vacant positions in last fiscal year’s budget to help cover shortfalls from the pandemic. The county also offered retirement incentives that 617 employees took advantage of to help delete 212 vacant jobs.
The elimination of those jobs has affected the delivery of services in the county, Kim said. But with the increased revenue expected from sales and property taxes and the state’s goals of new programs, officials may restore some of those positions, he said, adding that they would know by this fall.
The recommended budget is $152.1 million higher than last fiscal year with a decrease of 512 positions.
The Orange County Board of Supervisors will hold a hearing on the recommended budget at its June 8 meeting. The budget is expected to be adopted June 22.
That’s a stark contrast to last year, when supervisors did not adopt a fiscal year budget until September due to uncertainty caused by the pandemic.
The county is expecting to receive $308 million from the most recent federal COVID-19 relief package in the coming fiscal year. That matches what it received for the current fiscal year. OC’s cities are expected to receive $715 million over a two-year period as part of $130.2 billion in local government funds from the relief package that must be spent by the end of 2024.