SANTA ANA, Calif.—Orange County officials May 22 released a proposed $9.5 billion budget for the 2024-25 fiscal year, marking a slight increase from the current year’s $9.3 billion spending plan.
The general fund budget, which is the more flexible part of the spending plan, is $4.8 billion, down from last year’s $4.9 billion. The rest of the money in the budget is generally restricted by law, giving county officials little ability to change its use.
The 2 percent increase in the overall budget—or $182 million—is owed mostly to increasing costs for staff and infrastructure improvements, most notably at John Wayne Airport. Under the proposal, the county would eliminate 322 jobs, which are already vacant. No layoffs of staff are anticipated.
Revenue for general purpose funding is pegged at about $1.1 billion, an $89.6 million increase over last fiscal year, mostly due to a projected $60.8 million boost in property taxes.
Funding for law enforcement, which comes from the half-cent sales taxes from Proposition 172, is projected to be $438.6 million, with 80 percent going to the Orange County Sheriff’s Department and 20 percent to the District Attorney’s Office. It nets out to a 3.7 percent increase over the current fiscal-year budget, which is about on pace with the rate of inflation.
“It’s a lean budget,” Orange County CEO Frank Kim told City News Service.
Mr. Kim said the county consults with economists from Cal State Fullerton and Chapman University, and there is optimism a recession will be avoided.
“The economists we speak to don’t see a recession in this coming year,” Mr. Kim said. “They don’t see revenue growth, but they don’t see a recession.”
Orange County Supervisor Andrew Do said the county must hold the line on spending to prepare for how Prop. 1 will affect state funding for mental health programs. The proposition approved by voters in March will lead to a change in priorities when it comes to funding programs for the mentally ill, with a focus on substance abuse treatment and housing.
He said the county will “have to start planning for that eventuality” of state funding for mental health services in the county being reduced.
Funding for affordable housing wasn’t part of state funding for mental health services in the past, but now it will account for about one-third of it, Mr. Do noted. The concern is that the new proposition will reduce funding for counties’ existing mental health services programs as some of the priority shifts to housing.
The Prop. 1 effect won’t be felt until 2026, Mr. Do said.
“So what we’re doing now is basically trying to get ready to make the adjustments necessary right now to prepare for that eventuality,” Mr. Do said.
Mr. Kim noted that “the other component of it that is creating challenges” is that the amount of funding from income taxes on the wealthiest Californians has been trending down, and those funds pay for the mental health programs.
“So the overall pod of money is shrinking because there are fewer tax filers in California required to contribute the additional one percent,” Mr. Kim said.
But the county has for several years been investing in affordable housing, particularly since efforts to take down the homeless encampment along the Santa Ana riverbed led to federal litigation that was settled, Mr. Kim said.
“We’re already doing that,” Mr. Kim said. “For a long time—many years—we’ve been investing [state mental health funding] money into housing that supports our existing mental health clients in Orange County.”
A major focus of this year’s spending plan is on funding for programs to help people leaving jail to get back on their feet, because officials believe it will save money in the long run, Mr. Kim said. That is all part of the county’s OC Cares initiative, he said.
Mr. Kim noted that the new Be Well Irvine behavioral health campus planned on county property will officer help for those with substance abuse problems.
The proposed spending plan also focuses on infrastructure projects like a planned razing of the old Orange County district attorney’s offices and replacing them with various offices for other county agencies.
“We’re looking at flattening that entire block,” Mr. Kim said.
The previous district attorney office complex is “largely vacant ... and it’s in bad shape. That building probably gets demolished.”
The proposed county budget also reflects a focus on providing money for new green technologies and environmentally sustainable projects, Mr. Kim said.
“It’s important to identify the practical path to having a lighter touch on the environment,” Mr. Kim said.
County officials want to improve recycling and educate residents on how to reduce waste, given that the Brea landfill will probably be shut down in 2026, leaving only two landfills in the county. The cost of trucking waste out of the county is expensive, he said.
“Our ability to get out and meaningfully educate and drive change in behavior takes a long time and money,” Mr. Kim said.
The biggest question will be how the state budget affects the county’s spending plan, Mr. Kim said.
“We don’t want to overreact to it,” he said.
But by the fall the county will revisit the budget to reflect any changes in state funding, he said.
The county board will likely take straw votes on the budget June 11 with final approval scheduled for June 25.
