The City of Orange is staring at another potential general fund deficit for the fiscal year beginning in July.
As things stand, the city is projecting an operating deficit of about $1.2 million.
That’s even after the city manager’s proposal to cut nearly $13 million relative to this year’s budget.
“The growth of revenue is infinitesimal compared to our continued expenditures, which means we continue to be upside down,” Councilmember Arianna Barrios said.
Some summer cuts are bound to take effect.
For one, the city agreed that it will not host the 3rd of July fireworks, ending a nearly 30-year tradition.
Also, the city is canceling summer day camps and many of the swimming classes at Hart Park — the large pool will be closed to recreational swimming, water exercises and rentals, according to a recent summer programing update released by the city.
Earlier this year, the city reduced library hours.
Beyond the summer, Orange plans to make do with fewer personnel.
Finance Director Trang Nguyen has recommended that the council eliminate 24 full-time-equivalent staff positions from the budget.
Those positions are currently vacant, she said.
Taking them off the books will make it more difficult for the city to increase headcount in the future, officials said.
The city has about another 50 vacant positions, according to a staff report. Most of those positions remain unfilled due to budget constraints, Nguyen said.
Despite lean staffing, Nguyen and City Manager Tom Kisela are asking the City Council to cut budgeted overtime by 60%.
Doing so would save Orange about $2.5 million in running the police and fire departments, which benefit from overtime far more than other city departments.
The city will also likely defer maintenance and equipment replacements across departments.
“Not only are these cuts in personnel, these are cuts in repairs,” Kisela said.
Notably, he and Nguyen are recommending that the City Council eliminate nearly $3 million in budgeted contributions to IT operating funds.
They’re also requesting to underfund accrued liability and workers’ compensation funds by about $2 million, which will lead to “compounding payments in future years,” a staff report says.
The city has a history of underfunding its liability accounts, the report adds.
Still, city leaders surmise that deferred contributions are a necessary step toward balancing Orange’s budget, which has had a structural deficit since the Great Recession, officials have said.
The City Council tried to rectify its budget problem last year by proposing a local half-cent sales tax that would have raised about $20 million per year, but voters narrowly defeated that initiative at the ballot box in November.
Now, as the council begins its review of next year’s budget, staff are working with Grant Thornton, a large accounting and consulting firm, to reassess City Hall’s organizational structure and find opportunities for additional budget cuts and revenue development.