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The Orange City Council meeting on May 14, 2024. Credit: ERIKA TAYLOR, Voice of OC<\/p>\nOrange officials are promising to take another hard look at the city\u2019s budget again and make more cuts if a proposed one-cent sales tax measure fails in the fall \u2013 a tax increase city hired consultants previously said was needed or the historic town could face bankruptcy.<\/p>\n
This week, city council members voted 6-1 to adopt their 2026-27 fiscal year budget after eliminating and freezing $6 million in vacant positions and transferring $15 million from three different spending buckets to balance their books.<\/p>\n
Councilwoman Arianna Barrios said it\u2019s the last budget they can transfer in money to cover deficits and the city could face the potential of bankruptcy in under two years.\u00a0<\/p>\n
She successfully called on her colleagues to include language in the budget to assure residents they would retackle the budget if voters reject their proposed sales tax measure \u2013 something they did two years ago.<\/p>\n
\u201cHope is not a strategy,\u201d Barrios said at Tuesday\u2019s city council meeting, adding later that if they do nothing they\u2019ll end up in another financial crisis.<\/p>\n
\u201cWe want to show our residents, our businesses, and our voters that we are deadly serious about \u2013 we see the problem, and we are going to do something different, we are not going to do things exactly the same way.\u201d<\/p>\n
The Orange City Council meeting on May 14, 2024. Credit: ERIKA TAYLOR, Voice of OC<\/p>\n
City staff said before any transfers in or out of the general fund, the city still faced a $4.4 million deficit but now expects to have a $1.1 million surplus with the transfers.<\/p>\n
City Manager Jarad Hilldenbrand said they can review the budget again anytime and that while bankruptcy wasn\u2019t imminent, he warned it could happen in the near future.<\/p>\n
\u201cWe\u2019re not going off the fiscal cliff tonight, tomorrow, six months from now, but it\u2019s certainly on the horizon, right. We\u2019ll pay attention to what happens in November,\u201d he said.\u00a0<\/p>\n
Councilman John Gyllenhammer, who opposed the sales taxes, was the dissenting vote and said he could not vote in favor of a deficit budget \u2013 pointing to the $4.4 million despite it being covered by transferred money.<\/p>\n
He also said the city was not nearing bankruptcy and going insolvent was a decision the council would actively have to make by not pulling back on expenditures.<\/p>\n
\u201cWe are not around the corner of bankruptcy,\u201d Gyllenhammer said. \u201cWe\u2019re still looking at a four and a half million dollar deficit and we cannot spend like that. We will spend ourselves into a need for more revenue.\u201d<\/p>\n
Councilman Denis Bilodeau, who also opposed the sales tax, also said it is not accurate to say the city is facing bankruptcy soon.<\/p>\n
\u201cThrowing around the B word, I think, is a bit much. The city is nowhere close to insolvency,\u201d Bilodeau said \u201cWe\u2019re looking at a deficit of $4.4 million so obviously we\u2019re a long way off from throwing around the bankruptcy word but that being said the council needs to be diligent.\u201d<\/p>\n
Councilman Jon Dumitru said they have been scaling back their budget for years and thanked staff for their sacrifices.<\/p>\n
\u201cI think this is the third year in a row we\u2019ve mandated reductions in budget \u2013 third or fourth maybe. It isn\u2019t something new,\u201d he said. \u201cIt is difficult for everybody and it\u2019s not lost on us.\u201d<\/p>\n
Officials are also deferring over $3 million in infrastructure projects.<\/p>\n
Sales Tax Measure & Budget Woes in OC<\/p>\n
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City of Orange\u2019s Civic Center in Orange, Calif., on April 16, 2026. Credit: Nora Grube, VOICE OF OC<\/p>\n
The vote comes after months of deliberation on a sales tax measure and other ways to generate revenue including increasing hotel tax revenue amid a long time structural deficit and threat of looming bankruptcy if officials don\u2019t bring their finances in order.\u00a0<\/p>\n
Last week, Orange City Council members quietly and narrowly approved one day after the primary election placing a one-cent sales tax measure on the November ballot that, if approved by voters, would last 13 years and bring in around $37 million annually.<\/p>\n