Just when you thought the Board meeting would be a quiet one, there seems to be items of import for the media to cover.
Most of them appear to be on their blogs, so I’ll cover the one that made it to the front page of the OC Register.
Public safety is funded mainly by sales tax revenues as a result of the passage of Proposition 172 in 1993.
A variable (cyclical) funding source for a fixed cost, plus inflation, makes for a daunting task of smoothing the revenues through the peaks and valleys.
In good years, the Sheriff’s Department and the District Attorney’s Department set funds aside. In bad years, they dip into these funds.
During the current fiscal year, the remaining Prop. 172 reserves are being exhausted. Consequently, the “one-time revenue” is gone. And current sales tax revenues continue to decline to historically unseen levels.
So it begs the question, with public safety being subsidized by 45 percent of our General Fund and our General Fund Reserves also declining, what plans does the Sheriff have to address a $71 million hole next year?
Short of a dramatic economic recovery in the State of California, the 2010-2011 fiscal year will be a very difficult on all of our Department Heads (as if the past year or two hasn’t been rough enough).
Sheriff braces for $65 million in cuts next year
By Jennifer Muir
If you thought this year was rough for the Orange County Sheriff’s department, which has slashed it’s budget by more than $20 million this year, just wait till next year.
Sheriff Sandra Hutchens told supervisors today that she’s bracing to cut some $65 million from next year’s spending plan as $42 million in one-time revenue sources dry up and tax revenue collected under Prop. 72 decreases by some $24 million.
And if the sheriff’s department can’t secure a contract to house federal inmates by next year, the shortfall will top $70 million.
“I don’t believe your department has $71 million of waste you can cut,” Supervisor John Moorlach said. “Do you have any plans?”
Hutchens said she’s already asked her division leaders to cut their budgets by 20 percent, and her department continues to identify places to save money.
“My strategy is not hope,” Hutchens said. “I’m nervous for the county and the status of public safety in the county.”
Assistant Sheriff Mike James, who oversees jail operations, says the impact could be devastating to public safety.
“We haven’t had a negative impact to the jails yet,” James said. “We haven’t had an impact to public safety. We haven’t had to release inmates early yet.”
That will likely change if the department can’t find relief from $70 million in budget cuts, he said.
County CEO Tom Mauk said the county’s budget is in similar shape.
“We are running out of money,” Mauk said. “Everybody is faced with the kind of decision making process that Mike just described.”
James also gave a report on the state of Orange County’s jails. Among the updates:
- Training is beginning for the first class of non-sworn correctional service officers. Some 33 will be in the class.
- The sheriff’s department has provided tens of thousands of pages of documents to the U.S. Department of Justice for its ongoing investigation into civil rights violations in Orange County Jails. The investigation is expected to be concluded by April 2010, James said.
FIVE-YEAR LOOK BACKS
Seema Mehta of the LA Times also did a profile on my concerns in “Moorlach Wary of Plans to Spend Tobacco Windfall—O.C. could leverage future payments through a nonprofit agency that would sell bonds to pay for jails.” In retrospect, now that Measures G and H have returned as a news item earlier this year, one should be reminded that I did work to protect this income stream to be directed toward health care purposes. Here is a Reader’s Digest version of the article.
Moorlach wants the county to consider spending the money as it receives it—in annual installments of $30 million to $38 million starting next year—or setting up an endowment fund to conserve the money and build up the cash value.
On Wednesday, county leaders will hold a workshop where staff members will provide details on an unusual method to leverage part of the funds through a nonprofit agency. The agency would ensure that the proceeds would help pay for jail expansion and reduce the huge debts the county incurred to get out of its 1994 bankruptcy.
At the same time, health care advocates are expected to argue Wednesday that the windfall from the tobacco settlement should not be spent on anything but health care.
[Moorlach] won’t take sides on what the money should be used for, but he worries that from a financial standpoint, the tobacco industry’s annual payment is not a sure bet. He fears that companies could run dry from the payments, the pending claims in a federal lawsuit and potential foreign claims for damage.
At the moment, [Jan Mittermeier, the county’s executive officer] said, the county is fulfilling all of its legal obligations toward health care but is not meeting its duty to provide housing for inmates, a festering problem for the last 20 years.
Moorlach, though, said he is concerned about the risk involved in the county staff’s plan. The possibility of future financial problems in the tobacco industry makes the county’s proposal to sell securities based on annual payments a risky venture, he said.
The lead editorial in the OC Register was titled “Richman offers a way back from the brink—Ending defined benefit pensions for new-hire public employees is crucial to state’s fiscal future.” Five years later, and this topic is still a critical one to address.
Orange County soon could face problems because last month three irresponsible supervisors voted to spike employees’ pensions by 60 percent – despite warnings by Treasurer John Moorlach and others that doing so meant increasing county taxpayers’ liability by $300 million when the county already has a $1 billion unfunded liability.
On Dec. 6, [Assemblyman Keith] Richman [, R – Granada Hills] will introduce a constitutional amendment to gradually shift the state to defined contribution plans; he intends to hold hearings on it next year.
Mr. Richman told the Daily News that if the Legislature balks at his reform, he’d work to put it on the ballot as an initiative.
One of the fun facets of life is addressing something that you are prone to oppose in a different light.
With rare exceptions, I usually vote “no” on every statewide bond measure.
When it’s a local school bond measure, what do you do? A school district with good facilities and successful students should have an impact on home values.
If this is the case, then paying your proportionate share of the annual bond principal and interest payments, through your real estate taxes, would be more of an investment than a tax.
Voters in California approve about 90 percent of the bond measures put in front of them. Orange County is not so generous with its votes in this regard.
Then how does someone who is anti-bond, but serving as the Treasurer for the County’s school districts, provide a valuable service in this area? He grades them.
Providing five simple criteria for grading, we could grade the fiscal stewardship of the deal.
In the process, this encourages the investment bankers, financial advisors, and bond counsel to put well-structured bond deals in front of the voters.
One year later the voters of California approved Proposition 39, which included many of the criteria that we used in providing the grades.
The Huntington Beach Independent published my editorial submission on this approach in “County treasurer—Bond measure gets straight A’s.”
To help voters decide on bond measures, I have focused on five specific areas I believe each school district in the county should address:
· Set-aside fund
· Maintenance budget
· Issue debt incrementally
· Detailed schedule of use of proceeds
· An independent oversight committee
After conferring with staff and advisors, and reviewing documentation, including the General Obligation Bond Resolution included with sample ballots, Huntington Beach Union High School District’s $123-million ballot measure received an A grade.
OCTOBER 29 — THURSDAY
Join us for a tour of the Tustin Blimp Hangars. OC Parks and the U.S. Navy will be escorting us for a tour at 1:30 p.m.
Many of you have driven past or flown over the two hangars all of your life. If you would like to go inside one of them, then this outing is for you.
To whet your appetite, please go to the City of Tustin’s website at http://www.tustinca.org/ and click on “The Tustin Hangars: Titans of History.” This documentary, written and directed by Costa Mesa’s Peter Buffa, is an outstanding program on local history. It premiered on September 21st, so it is hot off the press.
The map of where to meet is attached.
We have been requested to encourage everyone to enter at the same time because the gates will be closed once we enter, so it might be difficult for latecomers to enter the hangar. We are working on a solution for those that cannot arrive at or before 1:30 p.m.
Please RSVP by responding to this e-mail.