A tough 2008 is likely to give way to an even worse 2009 for governments across Orange County.
Lower revenue and budget cuts prompted by a contracting economy loom for the county and city governments.
The extent of the cuts is out of local hands as legislators in Sacramento continue to face off in a special budget session.
Lawmakers are trying to come to terms with a projected two-year, $42 billion shortfall that seems to grow by the day.
The budget passed in September for the 12 months through June faces a $15 billion shortfall. A spending plan for the 12 months through June 2010 is $27 billion in the red.
Last week, the Legislature’s Republican minority was pushing for a spending cap, permanent budget cuts and an easing of regulations for businesses in exchange for considering higher taxes sought by the majority Democrats.
The wish list for businesses includes increased flexibility in work schedules to reduce overtime payments, more contracting out of state services, simplified rules on workplace meal and rest breaks, looser deadlines for greenhouse gas regulations and tax credits.
Democratic lawmakers oppose many of the proposals but need some Republican votes to pass a budget.
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Downtown Santa Ana: redevelopment spending could take a hit |
Meanwhile, the county and local cities are dealing with their own budget shortfalls as auto and other retail sales fall and property, hotel and other taxes come in lower than expected.
A $6.5 billion county budget adopted in July already is showing signs of cracking with efforts under way to cut spending, first by leaving unfilled positions empty.
County officials soon may ask workers to take a 3% across-the-board pay cut, setting up a potential fight with the Orange County Employees Association union.
Last week, county officials proposed two weeks of unpaid leave for 4,218 workers at the Social Services Agency, plus 210 job cuts.
Without the furloughs, the agency could face 625 additional layoffs.
The moves are aimed at quickly trimming $30 million in salary and services out of the current county budget.
Cities across the county have frozen hiring and are looking to cut staff through retirement.
Now they’re waiting to see what cuts they’ll have to make once Sacramento comes to terms on the state budget deficit.
“It’s hard to say,” said Catherine Standiford, assistant city manager of Santa Ana, the county’s largest city by population.
Standiford said the city is expecting to see some of the ideas floated during Sacramento’s summer budget impasse come up again, “or perhaps even worse.”
Those include a suspension of payments to cities to help meet mandates from Sacra-mento, a reduction in police money from the Citizens’ Option for Public Safety program and a diversion of gasoline sales tax revenue.
Santa Ana could have to put off spending on roads next year and redevelopment projects, including for its downtown and at Westfield MainPlace mall, a big source of tax revenue for the city, Standiford said.
In a nonelection year, how the budget plays out stands to be the biggest thing in government in 2009.
Among other issues, look for a lawsuit by the county over pension benefits to progress next year. This year, the Board of Supervisors filed suit to try to reverse expanded benefits granted to the Association of Orange County Deputy Sheriffs in 2001.
The suit could have ramifications for pensions across the state and has drawn the interest of California Attorney General Jerry Brown, who’s weighed in with the deputies.
2009 could also be a big year in legal proceedings by the U.S. Attorney’s Office in Santa Ana. Some things to watch:
n The trial of former sheriff Mike Carona appears set to wrap up before 2009. But the salacious drama won’t end there: Wife Debor-ah Carona and a former mistress, Debra Hoff-man, are set to go to trial early next year. The former sheriff faces prison if convicted of misusing his office to gain cash and gifts worth more than $700,000. Deborah Carona and Hoffman face charges for their role in the alleged conspiracy.
n The trial of Broadcom Corp. cofounder and former chief executive Henry Nicholas and former financial chief Bill Ruehle on federal fraud charges is set for April. The charges stem from backdated stock options at Irvine chipmaker Broadcom.
Broadcom’s other cofounder, Henry Sam-ueli, also awaits an appeal on a rejected plea bargain in the case.
n Possible indictments of former executives at Irvine mortgage lender New Century Financial Corp., which filed for bankruptcy in 2007, could come. A spokesman for the U.S. Attorney’s Office recently said he expects indictments in the probe, which also includes other mortgage lenders.
DEMOCRAT TO WATCH: LORETTA SANCHEZ
U.S. Rep. Loretta Sanchez, D-Garden Grove, will begin her seventh term in Congress more powerful than ever.
For the first time since she came to Washington, her party will control both houses of Congress and the White House. With President-elect Barack Obama planning a massive public works program to jumpstart the economy, Sanchez, as Orange County’s lone Democrat congressional representative, is expected to be a key conduit for OC’s share of the federal largesse.
Sanchez, whose district includes a number of military contractors, also has a say over defense appropriations as a high-ranking member on the House Armed Services Committee.
And she is vice chairman of the Committee on Homeland Security, which will oversee Obama’s expected overhaul of the Department of Homeland Security.
If talk of a new bipartisanship becomes reality, it could play to a couple of Sanchez’ strengths.
With her business background and reputation as a moderate Blue Dog Democrat, she could help to bridge party differences as Congress and Obama fashion policies to confront the recession and financial crisis.
Sanchez also could make news in state politics. She says she is continuing to look at a possible state run in 2010, either for governor or for the U.S. Senate (in the latter case, if Sen. Dianne Feinstein abandons her seat to run for governor.) In either case, Sanchez likely would find herself competing in a field of well-known Democrats.
Sanchez says, “I’m actually quite excited about the new Congress. So, hopefully, I get the opportunity to push some ideas I have through this Congress, negating the need to move from a position I really do enjoy.”
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Rick Reiff
REPUBLICAN TO WATCH: CHUCK DeVORE
Chuck DeVore just got re-elected to the state Assembly, but the Irvine Republican already has launched a much bigger undertaking: Trying to unseat three-term incumbent U.S. Sen. Barbara Boxer in 2010.
Democrat Boxer de-molished a much better-known challenger, former secretary of state Bill Jones, by 20 percentage points the last time she ran in 2004.
DeVore, who will likely need at least $20 million to be competitive, hasn’t shown much ability as a fundraiser. If Republican Gov. Arnold Schwarzenegger decides to run against Boxer, DeVore’s uphill quest would become even steeper.
The energetic DeVore is championing offshore drilling and nuclear plant construction as common-sense responses to the energy crisis.
Pro-life and a tax cutter, he could appeal to those who want the GOP to return to its conservative roots. But is he too far right for blue state California?
DeVore contends the liberal Boxer is the one who is out of touch: “I don’t think Cali-fornia can afford Barbara Boxer anymore.”
He plans to overcome his lack of money and name identification with the same type of online networking that fueled the Barack Obama campaign. DeVore is immersed in the Internet. He maintains a blog, as well as Facebook and MySpace pages. His campaign site, ChuckDeVore.com, includes calls to action, a donation box and policy discussions. The first in a series of videos takes a humorous poke at Boxer and Senate Major-ity Leader Harry Reid.
DeVore is an underdog for sure. But two years is a long time in politics. If voters wind up souring on Democratic Party dominance in Washington, maybe even an entrenched incumbent could be vulnerable to a spirited fight from an ideas-oriented, media-savvy candidate.
Rick Reiff
