Total taxable property values are down 12 percent from this time last year resulting in an estimated loss of about $77 million to Orange County’s budget. With property tax as the largest revenue source for the county government, leaders are now forced to find new ways to make up the lost revenue again this year.
Two years ago, the county collected $726 million in property taxes. Last year, that number was reduced to $641 million. This year, the number is expected to land at about $564 million.
“When your major revenues are going down by $77 million and your other revenue sources, such as sales tax, are stagnant, you have to act accordingly,” says Randy Singh, manager of the Orange County Office of Management and Budget. “If there are no additional revenue sources or tax increases, the only way to achieve the goal of a balanced budget is to cut.”
Although the next fiscal year will not begin until October 1, Singh says that the county has been anticipating and planning for the lost revenue for some time. “We’ve been in the mode of cost-cutting for the past few years so, fortunately, the fact we have to cut doesn’t come as a surprise and we were able to take certain measures earlier in the year,” he says.
Some of the “measures” the county plans on taking include cutting budgets of all their departments and outside agencies as well as releasing employees, declining salary increases and limiting the amount of capital improvement projects.
“We’re very fortunate we can maintain the tax rates without an increase and, for the most part, retain the same level of services for the citizens,” says Singh. “As a government, one of our main concerns is public safety; so the fact that the sheriff can reduce his budget by 3 percent and make a commitment that there will not be a reduction in deputies or the level of service is a tremendous accomplishment.”
The county also plans to eliminate around 160 staff positions this year, bringing the total eliminated close to 500 positions in the past two years. They’ve also asked employees to begin contributing more dollars toward their healthcare costs to lighten the burden felt in the county budget. “There’s a combination of things being put into place to get us to where we need to be as far as a balanced budget goes,” says Singh.
The 2010 tax roll values that have created the 12 percent shortfall are reflective of property sales occurring during 2009. Homesteaded property values decreased 32.8 percent, excluding new construction.
“Over 60 percent of the residential sales reviewed were bank owned properties,” says Orange County Property Appraiser Bill Donegan, whose office was responsible for compiling the information. “Every area of the county has been affected and neighborhood values have taken a beating from the fallout of foreclosures.”
Orange County’s total taxable value for 2010 is $84.1 billion, according to Donegan’s office, down 12 percent from the previous year. New construction, both residential and commercial completed in 2009 added $1.43 billion in taxable value – a notable 43 percent decrease from the prior year.
“Of course, the continued decline of values shouldn’t come as a shock to anyone,” says Donegan. “As long as the housing and commercial markets continue to fall, so will tax roll value and…recouping tax revenue will be a much, much slower process for the cities and county.”
The first draft of the county budget will be released in early July, followed by a three day work session beginning July 20 that the general public is welcome to attend. The work sessions, however, are not public hearings – those are set for September with the final budget for next year going into effect on October 1.
As Orange County develops and adapts new strategies to manage the budget and lower levels of government revenue, Singh assures one thing: “We’re stretching things as much as we can stretch them.”
Article by Corey Gehrold