The Orange City Council will hold a special budget review Tuesday as the seven-member board scrambles to address a financial crisis before a new fiscal year starts in July.
The city is facing a $19 million budget deficit, and staffers say Orange could deplete its reserves in under two years without corrective action. But in recent conversations, the council has struggled to find consensus about how to slash the gap between revenue and expenses, even as they raise the possibility of cutting cherished community events such as the annual Christmas Tree lighting and the Third of July fireworks show to maintain police and fire positions.
“Everything is on the table,” Mayor Dan Slater said during their last budget discussion on May 28, but several have also said they’ll refuse to cut public safety.
The council called for Tuesday afternoon’s 4:30 p.m. special meeting after that previous discussion lasted several hours, going past 2 a.m. the next day.
Due to the late hour, council members also decided to defer a conversation about adding a sales tax measure to November’s ballot. That conversation will resume later Tuesday during the council’s regularly scheduled 6 p.m. meeting. City staffers say a half-cent sales tax levied by the city could increase annual revenue by $19 million to $20 million, while a one cent tax could increase annual revenue by up to $40 million.
The city’s projected revenue next year is around $150 million.
At their last meeting, councilmembers agreed to initiatives that will augment revenue by about $5.7 million next year, but less than half of that is recurring. About $2.7 million will come annually from the implementation of credit card and business license fees plus Old Towne paid parking and increased parking enforcement citations. The rest — $3 million — will come in the form of a one-time CR&R reimbursement program for road mitigation.
Even with those additional revenue sources added in, the city’s deficit next year would remain more than $11 million and could balloon again in 2025-26 unless cuts are made or a tax is raised, officials said.
The council remained split on other ways to raise revenue. Councilmembers Arianna Barrios and Kathy Tavoularis supported selling the Taft Library for approximately $2.7 million, but others opposed. The council also is split on whether the city must freeze or eliminate some of 42 vacant city positions, including several police and fire officer roles.
Some of those public safety positions have never been filled, but they are currently protected in the budget. The city budgets for 170 police officers, six more than the 164 sworn officers on staff — a number that is already the city’s highest number of sworn officers ever, said Orange Police Chief Dan Adams.
None of the councilmembers said they want to cut the size of the Police Department, but some expressed concern about whether it’s prudent to safeguard never-filled positions during a budget crisis.
“We’re talking about protecting people that haven’t even been hired yet, so that’s where it gets a little tricky,” Councilmember Denis Bilodeau said.
Councilmember John Gyllenhammer put his assessment of the situation bluntly. “We can’t afford the level of service that we’re providing as a city.”
“I don’t want to reduce police headcount. I do not want to reduce fire headcount,” he said. “But if we don’t address that, then we would be putting all of this on what amounts to a much smaller total percentage of our operating budget.”
Currently, Orange spends about $59.2 million a year on police and $36.7 million on fire. Combined, those departments account for two-thirds of the city’s total general fund expenditure.
Moving forward, the city also will continue discussions on revenue generation through long-term rental and investment property fees and a hotel sales tax rebate incentive program to augment the transient occupancy tax.
The council will also weigh the possibility of levying a public safety fee on Chapman University, which some councilmembers say has benefited from Orange’s police and fire services without paying a fair share. Others have said they are skeptical the fee is warranted and concerned it could damage the city’s relationship with the university.
