Orange City Council approves first reading of 2025–26 budget, tentatively adopts matching tax-rate ordinance

The City of Orange City Council approved on first reading an ordinance adopting the city's fiscal 2025'26 budget and approved on first reading a companion tax-rate ordinance that matches the budget, during a sometimes heated Sept. 17 meeting at which members debated using reserves, cuts and promised employee raises.

The council voted by record vote to approve ordinance C, the budget package discussed at recent workshops, and then took a first reading vote on a tax-rate ordinance that corresponds to that budget. The city's staff had presented three draft ordinances (labeled A, B and C) and said ordinance C uses the tax rate discussed in the workshops and the cuts the council endorsed.

City staff and council members framed the vote as a first reading that must be followed by a second reading to finalize any ordinance. City staff advised that the city charter requires a tax rate that supports an adopted budget and that reserves generally cannot be used to balance ongoing operating expenses except in an emergency. After the votes, the council canceled a special-called meeting scheduled for Sept. 18 because the first readings had been completed.

Council debate centered on three issues: whether to use reserves to avoid raising the city's tax rate, how much of the recently proposed cuts to keep, and preserving promised pay increases for city employees. Councilmember Childs argued the package would raise the average homeowner's city tax bill by what he described as 25 percent compared with 2025 and urged the council to keep the prior year's tax rate and draw on reserves instead. "I propose that we set the budget as presented, including employee raises that we promised them. One provision we do not: we do not increase the tax rate at all from the 2025 — it will remain at 0.7595," Councilmember Childs said during public discussion.

City staff and the mayor countered that much of the city's reserves are restricted and cannot legally be used to support ongoing operations. During the meeting a staff member explained why one line item had been adjusted: "A special revenue fund has to balance. . . . I couldn't take the whole $5,000 from that fund. It was out of balance," Miss Zito said, describing a reduction in a proposed $5,000 recreation equipment line tied to the opioid settlement fund.

The mayor described portions of the reserves that the council had designated for specific projects and emergency response, and said smaller one-time projects could be paid from those funds while operating revenue must be supported by the tax rate. "We can pull it out for a few things like Navy Park's bathroom (about $150,000) or a covered pavilion (about $100,000)," the mayor said. The mayor also emphasized the city's need to keep a multi-month operating cushion for storms and other emergencies.

The council said it had already cut roughly $462,000 from an earlier proposed budget and that staff had identified roughly $3 million the mayor and staff described in the meeting as not restricted and potentially available for select one-time projects. Staff cautioned that most reserve balances are earmarked by policy or debt covenants and cannot be treated as general operating revenue.

Votes and next steps: the council held a record vote to approve ordinance C (first reading) for the budget; the transcript records the following members voting "aye": Miss Salter, Mr. Chandler, Mr. Birch, Mr. Mortimer, Mr. Childs, Miss McKenna and the mayor. The companion tax-rate ordinance (first reading, ordinance C) also passed on first reading; the roll call in the transcript shows a majority in favor with one recorded "no." City staff (Mr. Coombs) said because the first readings were completed, the special-called meeting scheduled for Sept. 18 was canceled and the council will proceed with the second reading at the next regularly scheduled meeting as required by the city charter.

The council's approval at this meeting constituted first readings only; final adoption requires the council's second reading and any statutorily required public notices. Staff repeatedly cautioned the council that the charter requires that adopted expenditures be supported by adopted revenue, and that using reserves to "balance" recurring operating costs is not typically permitted except under emergency rules.

Clarifying details the council and staff provided at the meeting include: the budget document identifies the general fund figure associated with ordinance C; staff said a $5,000 recreation-equipment line tied to an opioid settlement special revenue fund had to be reduced (the difference discussed was roughly $2,700) so the special fund would balance; the council discussed roughly $3+ million of reserve funds described at the meeting as not restricted and about $15 million representing a six-month target operating cushion; and specific one-time project estimates mentioned included a Navy Park restroom at about $150,000 and a covered pavilion at about $100,000.

The council and staff repeatedly noted that the industrial property-value losses the city has experienced (discussed in the meeting as "IP" losses) reduced expected revenue compared with prior years and were a principal cause of the current budget gap. Councilmembers expressed differing views about abatements and industrial agreements but did not adopt any changes to those policies at the meeting.

What's next: the council completed first readings of the budget and the matching tax-rate ordinance and canceled a special-called meeting that had been scheduled for Sept. 18. Staff said a second reading (final adoption) will occur at the next scheduled meeting following required notices and any additional adjustments the council makes.

(Reporting note: quotes and attributions in this article come from speakers identified on the meeting record and are taken from the council's Sept. 17 transcript.)