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Officials in the City of Orange want to secure the city’s financial future and generate new revenue streams as they continue to struggle to rein in what was initially projected to be a $19 million deficit.
They’re also looking to restore residents’ trust through a financial audit.
It comes after efforts to drum up more sales tax revenue failed at the ballot last year.
In November, 50.43% voters turned down Measure Z – a ballot measure that if approved would have raised the city’s sales tax from 7.75% to 8.25%
Last Tuesday, officials directed staff to bring forward an agreement with Grant Thornton – one of the largest public accounting firms in the world – to assess their budget and bring recommendations to help the city reach financial stability.
City Councilwoman Kathy Tavoularis said the assessment would help bring clarity to residents on how officials landed the city in a financial hole amid a growing public distrust.
“There doesn’t seem to be any evidence of anything nefarious. However, there is some doubt in the public, and rightfully so on how this happened,” Tavoularis said at the March 11 city council meeting.
At the Feb. 25 city council meeting, Councilmember Denis Bilodeau said the city was spending a lot on salaries to attract and retain employees while not bringing in more revenue.
“It’s a very easy answer as to where did all the money go. Over the years city councils have given pay and benefit packages that exceeded revenue growth,” he said. “Those were done because the city has to respond to market forces.”
He said the city has to keep up with surrounding cities who hand out high signing bonuses to hire and keep employees.
The assessment comes after Councilwoman Ana Gutierrez asked the council and staff to consider an investigation into the city finances during a council meeting in January this year in an effort to bring transparency to residents.
“We need to look at what works, what is not working?” she said at the March 11 meeting. “We need to dig deep and really drill down and look at what all our different departments and what our budget indicates as perhaps the reason for our shortfall and why we haven’t grown.”
At a city council meeting on Jan. 14, Mayor Dan Slater said he thinks taxpayers need some assurance and that an audit should have been done before Measure Z went on the ballot.
“I want to once and for all kill the idea that there was anything that ever happened that was less than above board. I don’t think that’s the case,” Slater said.
In order to help build back public trust, Councilman Jon Dumitru called on staff to create a webpage with information on how the city is addressing the deficit.
Studying a Path to Fiscal Sustainability
Shawn Stewart, a principal in Grant Thornton’s Risk Advisory Services, said the estimated $100,000 analysis is meant to call out poor fiscal decisions.
“This engagement really is a call for change,” Stewart said at last week’s meeting “It’s not designed to continue with the status quo, but it’s designed to bring about change, both on the revenue side and the expenditure side.”
Stewart also acknowledged that increasing revenue and economic development isn’t quick, but happens over time.
“In order to keep the residents happy, you can’t just bounce taxes up. You really need to have a sustained approach to economic development, and so you are going to have to make some tough decisions on what services you continue, what you cut back on, and how you do that,” he said.
Councilwoman Arianna Barrios said they need to make changes before they can ask residents to consider a sales tax measure again.
“If we go back out and ask people to help us with revenues, we also need to show that we have done everything in our power to improve the way we do business and this is part of that,” she said.
What is a Risk Assessment?
Stewart said that the risk assessment will allow them to look at the revenues and spending while coming up with a plan to better fund reserves and bring in more cash.
He said part of that analysis would be to conduct a stress test on the budget to see how revenues would be impacted in an economic downturn.
“We would look at what you would do in that case in order to maintain fiscal responsibility and still be able to fund the longer term needs of the city,” Stewart said at Tuesday’s meeting.
Through the stress test and a review of the budget, Grant Thornton would recommend a plan to bring in cash and make budget cuts as well as a plan to communicate their progress to city officials and residents.
“This is a sprint so we would anticipate this would be about an eight week project,” Stewart said. “The idea is to do something rapidly in order to help the city and put things back on the right course.”
He also told the council that they need to factor in what programs residents care about most.
Economic Development Plan
During Tuesday’s meeting, city staff also presented a plan to boost economic development.
Their plan included the creation of a city tourism council which began last year.
The tourism council has only had one meeting but staff said they will be moving forward with a tourism improvement district. Hoteliers will ultimately decide if they want to join a regional tourism district or have a tourism district dedicated only to Orange.
Staff is currently working with the Marriott in breaking ground early next year on West Chapman Avenue.
The city is also looking into updating filming ordinances like working with location managers to have them look at Orange as a filming location.
To encourage residents to shop local, the Chamber of Commerce and the city partnered to give residents 5% cash back for shopping in Orange. The initiative rewards users for “experiencing Orange.”
According to staff, the program has 1,262 users and has given out almost $26,000 in back in rewards.
Councilman John Gyllenhammer said those plans could end up costing the city money if officials aren’t careful.
“Great plans, but these are a lot of things that we are actually spending on as a city with the expectation that we will receive a return. And I think we feel confident that that is the case.”
Gigi Gradillas is a Voice of OC Tracy Wood Reporting Fellow. Contact her at gigi.gradillas@gmail.com or on Twitter @gigigradillas.
Hosam Elattar is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.
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