As it crawls out of Bankruptcy debt, higher home prices help lift Orange County budget

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Increasing housing prices are bumping up revenues in Los Angeles and Orange counties, though they're spending the money in different ways.

Orange County officials on Tuesday released a $5.7 billion projected budget for the fiscal year starting in July; that's $400 million higher than the current budget and reflects a 4 percent jump in property tax revenues.

“The fact that home prices are up does help,” said Orange County budget administrative manager Kathleen Long. “But you’re not going to see a lot of skyrocket growth simply because there aren’t enough home sales to make that happen.”

That's the other part of the rise in sales prices: Experts are pointing to tight inventory as the cause.

Still, property tax revenues are discretionary, which means officials have lots of leeway in how to spend the extra $40 million they're projecting next year.

Orange County is also forecasting a 3 percent increase in public safety sales tax revenues.

That extra money will go toward balancing budgets within public safety departments and paying for new positions. For example, the Sheriff's Department is asking for $7 million to add a crime lab worker, an emergency management worker and two positions to monitor security cameras in the jails.

Los Angeles County released its $26.9 billion proposed budget last month, which showed a second year of growth in part due to increasing property taxes as well. Officials proposed spending the largest share of the growth on increased staffing at two big, beleaguered agencies: the Department of Children and Family Services and the L.A. County Sheriff's Department. 

As Orange County crawls out of the debt from its bankruptcy, budget staff is wary of the increase in property taxes because economists forecast little growth between the years of 2017 and 2019.

"There's always a downturn at the end of a growth period," Long said. "We could be looking at decreases in revenues — some kind of decline in the economy."

But officials are proposing to dip into the county's hefty $450 million in reserves for one-time capital projects, including a year-round emergency homeless shelter and upgrades and expansions to the camera security system in the jails. The projects are estimated to cost $16 million.

“To be able to focus on some of those one-time expenditures that we had to defer during the Great Recession, is a positive for us,” said Orange County Budget Director Michelle Aguirre. But she expects to replenish the reserves during the year.

Orange County is also expecting to receive $51.8 million more next fiscal year from state and federal funding streams for social services, the food stamp program CalFresh, the welfare cash assistance program CalWorks and Medi-Cal.

Aguirre said this upcoming fiscal year is the first time the county won’t have to pay $18 million annually out of its general fund for its 1994 bankruptcy debt. The savings is being used to balance the county's budget. Orange County still owes on bankruptcy refinance programs but payments won't be coming out of the  general fund anymore.

"The budget is balanced with no use of reserves for ongoing operating costs," Aguirre said.

Orange County's proposed FY 2015-16 budget also calls for a $30.9 million draw down of reserves to pay the state $15 million for a lawsuit Orange County lost over vehicle licensing fees money the county kept. Payments to the state will continue over the next three years and will eventually total $150 million.

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