Orange County’s interim CEO instructed department heads and leaders to continue a hiring freeze, slash vacant positions and make more cost-saving measures, effective March 31, to address a growing budget gap.
In January, interim CEO Michelle Aguirre directed staff in a Jan. 3 memo to freeze hiring for positions financed by the county’s general fund, to cut back on discretionary spending and to find ways to reduce services for possible savings. Those efforts, however, were not sufficient in closing a multi-million dollar budget gap, according to a March 28 memo from Aguirre to county heads obtained by The Orange County Register.
Aguirre advised in her letter to staff that the budgets submitted by departments for the next fiscal year reflect “an increase in the general fund gap between the level of appropriations required to maintain current levels of service and available resources,” she said. “Unfortunately, the gap increased by over $61 million to $139 million.”
The increased budget requests come while the county faces “uncertain funding from the state and federal governments and unknown liabilities pertaining to the Airport fire,” Aguirre added.
The county’s risk management department is reviewing more than 2,000 Airport fire liability claims submitted since the start of the 23,526-acre wildfire in September. Victims seek reimbursement for a variety of physical damages and other expenses, from food and shelter to injuries and the cost of rebuilding, as well as emotional distress, fear and annoyance. Filings range from $100 million to the cost of a night or two in a hotel during evacuations.
There are duplicate claims in that number or multiple family members filing for the same property, so it is unknown right now how many the county will end up with, but they are expected to cost the county hundreds of millions of dollars.
County staff members were directed by Aguirre to freeze all hiring as of Monday, regardless of funding status. The county’s budget and finance department will analyze vacant positions partially or fully funded by the county’s general fund. Such open roles that have been vacant for two years or longer will be deleted, her memo said. Departments are also being encouraged to end non-mandated, dual-filled and extra help positions.
“All other vacant positions will be analyzed based on the impact to the general fund, number of days the position has been vacant, number of vacant positions or dual-filled positions of that classification in the department, and the criticality of the position to the department’s operations,” the letter to department heads said. “Additional deletions may result from the analysis.”
There is also a hard freeze on annual leave and vacation payouts, overtime, large supply purchases and sponsorships, among other expenditures.
Second District Supervisor Vicente Sarmiento said past approaches to budget issues have primarily focused on “across-the-board” cuts that disrupted essential services and hurt the county’s most vulnerable residents.
“We must be creative so we can meet our responsibility to residents, using a full range of solutions that address local and state funding issues, and which will help us navigate the chaotic and uncertain federal funding decisions on vital safety net programs,” Sarmiento said.
The county is starting to learn more about how federal funding changes will start to affect local programs and resources.
In March, the U.S. Department of Housing and Urban Development informed local housing officials not to expect any additional funding for an emergency housing voucher program that helps hundreds of households afford rent. It was originally expected to be funded through 2035, however, officials said the final funding allocation should now support the program through most of next year, but not beyond that.
The county was also recently notified that the Centers for Disease Control is rescinding COVID-related grants, for which funding was ending on June 30, a county spokesperson said. This would largely affect a national initiative to address COVID-19 health disparities in underserved communities, as well as immunization and vaccines for children.
About 88% of the county’s budget comes from state and federal funding, Fifth District Supervisor Katrina Foley said.
“Every day we are getting some new notification about potential risk to certain funding, cuts to certain funding, so we are trying to be proactive,” Foley said. “We, much like families across Orange County, are concerned about the uncertainty in the economy, and so we want to make sure that we pause any unnecessary spending. It’s a prudent thing to do so that we can get a lay of the land as we’re in this uncertain time.”
County leaders are looking forward to seeing the state’s budget in May, which should shed light on what the county can anticipate regarding its state-mandated programming, she added.
“We just don’t know what to think about what’s happening at the federal level, so what we’re doing is we’re anticipating that we can’t rely on the federal funding,” Foley said. “We’re seeing a drop in sales tax dollars over the year. Law enforcement is predominantly funded by sales tax dollars, so that’s a concern.”
Foley said the County of Orange receives only 5 cents of each property tax dollar, traditionally lower than the 20 cents received by the L.A. County and 12 cents by San Diego County.
“We have to try to do more with less and we have tons of unfunded mandate pressures for 2025 related to our in-home health supportive services, which we’ve been trying to address with the state for many years, even our trial court security, which the state should be funding,” Foley said. “Some of these unfunded mandates need to be addressed and help us to right-size our share of the dollar compared to other counties.”
Cost-saving measures will be reviewed monthly to see if the county is saving sufficient funds, the CEO’s memo to staff said.
“The county has taken a proactive approach to mitigate the budget shortfall by prepping months in advance of our budget hearings in June to lower expenditures,” Fourth District Supervisor Doug Chaffee said in a statement. “We are committed to maintaining essential services for residents and our departments will continue to look for more cost-saving measures to implement.”