In his State of the county Address, Orange County Supervisor John Moorlach highlighted a local real estate market that is on the upswing, but noted that there are still several torpedoes that the county must avoid in getting the economy back on track.
In his State of the county Address, Orange County Supervisor John Moorlach highlighted a local real estate market that is on the upswing, but noted that there are still several torpedoes that the county must avoid in getting the economy back on track.
Moorlach spoke to a filled banquet room at the Old Ranch Country Club on Feb. 7, noting that after a three year drop in sales tax revenue in the county, figures show that in 2010-11 there was a 6.5 percent increase in tax revenue for the county.
But one of the biggest torpedoes that the county faces is the potential loss of vehicle license fees, that the state is attempting to take from counties to stabilize the state budget. The vehicle license fees from Orange County were supposed to pay the bankruptcy bonds from the county’s bankruptcy.
However the state passed a bill to take the license fees and the county is now fighting the state in court to retain the money. Losing that money would be a $49.5 million hit to the county.
“Should we no prevail, to take that money from the county would be a serious torpedo,” Moorlach said.
For 2012-13, there have been some unprecedented procedures to try and balance the state budget. The state is carrying over a $4.1 billion deficit and anticipating a shortfall of $5.1 billion in 2012-13. It is also assuming an expenditure reduction of $4.2 billion this fiscal year and an increase of income and sales tax revenue.
The passage of proposition 30 does give the county a revenue stream from the state.
Moorlach also noted that pension reform for county employees is a major torpedo that the county must avoid. According to Moorlach, the cost of funding pensions for county employees is anticipated to be $326 million in 2012-13. That figure is estimated to increase to $464 million by 2017-18.
Moorlach said that the county is working with employee groups to fix the problem. The county also continues to see fallout from the termination of redevelopment agencies, and were hit by some unanticipated torpedoes during the past year. The county had to deal with the arrest of former public works administrative director Carlos Bustamante for sexual battery, as well as the retirement of several top administrators.
So what are the solutions? According to Moorlach, the county must begin with pension reforms. He said the county should adopt a more manageable contribution of 2 percent similar to the private sector’s 401(k) plan. There also needs to be changes in the percentage of contributions at age 65, according to Moorlach.
But there are some signs of an agreement and Moorlach noted that he anticipates seeing those in the coming year.
Moorlach noted in his report that he anticipates a “successful collaboration with the three largest bargaining units to provide for realistic compensation, while preserving the financial viability of the County and maintaining our current level of services.” He is also hopeful that the county can become pension reform model for the rest of the state.
But the rebound of the housing market seems to be a strong indicator that things are improving for Orange County. The median house price in the county rose from about $410,000 in February of 2012 to $470,000 by December of 2012.
Some city officals were encouraged by the report. Cypress City Councilman Rob Johnson said he was pleased to hear about the rebounding housing market and liked the idea of pension reform and having everybody more responsible for contributing more to their retirement fund. He saw much of the report as a sign that things are improving.
“I think it’s turning itself around,” Johnson said of the address.
