Orange County's Creative Solution to Its Budget Woes

You might think that a county with such a colorful history of financial mismanagement would tread softly when it comes to handling money. But that's not how we roll in the OC; according to this report in the Orange County Register, the Board of Supervisors has come up with an answer to the multi-million-dollar hole that appeared in its budget after Sacramento helped itself to some $48 million in vehicle license fees to plug its own spending gap. And, well, we have to give them high marks for creativity.

As described by Supervisors' Chairman Bill Campbell, Orange County will seize $73.5 million in property tax revenues from local school districts. Because state law requires Sacramento, not the counties, to make up any funding shortfall, the move will hurt the state budget rather than the schools. According to county attorneys, section 97.70 of the state's Revenue & Taxation Code actually requires them to take this step, and it puts them on an equal footing with other counties who have taken similar offsets. Not surprisingly, the state's Department of Finance doesn't see things that way. Finance spokesman H.D. Palmer offered these fighting words, "“The county’s intended decision to withhold money owed to schools is not only misguided, but likely illegal. We are considering all of our legal options in the event that the county attempts to carry out this action."

In the short term, the move gives a reprieve to the sheriff, the district attorney, and other department heads who had protested the steep cuts the County proposed to fix the budget hole. In the longer run, we're not sure they'll be able to get away with it, insofar as it's hard to imagine the state losing a battle like this with one of its counties. Whether that settles the matter, of course, is a separate question. Representatives of Orange and other counties made a big push in September to prevent the vehicle license fee raid that started this whole kerfuffle; by litigating with Orange County, Sacramento does risk pulling this issue into the spotlight, which could lead to legislative solutions that make similar raids more difficult in the future.