Orange County officials discussed on Monday how they are preparing for a possible $73 million shortfall in next year’s budget.
The potential fiscal hole appeared last week when a judge ruled the county has been improperly withholding property tax revenue from the state.
The decision may have big implications for Orange County’s finances. Exactly how much is not known, yet.
Officials said they had been anticipating the judge’s unfavorable ruling for more than a year. If the preliminary ruling stands, the county will have to send the money to Sacramento.
But the new $5.4 billion budget doesn’t include the cuts the county will have to make if it has to pay the state.
“How much is it going to hurt the county budget? It’s going to hurt,” said Bob Franz, Orange County’s Chief Financial Officer. “Clearly you can’t take 11% out of your budget without it having an impact.”
Franz said every department would likely be seeing a 5 to 10 percent cutback to compensate for the ruling, but he refused to be more specific.
Increasing revenue and tapping the reserve fund are also on the table.
In more positive news, the county is expecting property and sales tax revenue to increase over the next year.
“Those are all good signs,” Franz said. “We think Orange County is leading the state out of the recession.”
The county’s final budget has to be approved by supervisors next month.