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Council grills finance staff over one‑time revenue and proposed FY26 cuts as July 3 event deadline looms
Summary
Finance staff told council FY25 midyear revenues totaled about $58.4M and proposed FY26 revenues of roughly $145.6M; after recommended reductions of about $13M proposed expenditures fall to $150.6M, leaving a $1.2M operating deficit. Council focused on reliance on one‑time transfers (CR&R road mitigation), vacancy budgeting, and near‑term decisions on community events facing deposit deadlines.
Finance Director Michelle Winn presented the City of Orange’s FY25 midyear report and the City’s FY26 general fund study session, warning the council that the city’s current projections depend heavily on one‑time transfers and budget reductions.
"At the midway point of fiscal year '25, operating revenues totaled approximately $58,400,000," Winn said during the presentation. She reported midyear operating expenditures of about $71,900,000 and an FY25 year‑end estimate near $149.5 million in revenue versus $149.3 million in expenditures, producing a modest estimated operating surplus when factoring transfers. For FY26, staff proposed operating revenues of about $145.6 million (excluding transfers) and initial proposed expenditures of roughly $163.6 million; after recommending about $13 million in reductions the proposed expenditure total was $150.6 million and the estimated operating deficit was roughly $1.2 million.
Why it matters: multiple councilmembers warned that relying on non‑recurring transfers would mask structural deficits. Council Member Barrios and others repeatedly urged conservative planning: "Would it be fair . . . that we budget as if we don't have that?" Barrios asked, urging staff to model scenarios that treat CR&R and similar transfers as one‑time money.
Key revenue and assumptions: staff said property tax and sales tax make up roughly 70% of midyear receipts, with sales tax showing timing variability; transient occupancy tax and short‑term rental revenues were discussed separately. Staff estimated vehicle/parking citations around $1.6 million in FY26 as street‑sweeping enforcement and ticketing ramp up. Staff also clarified an accounting adjustment (GASB 31) that affected investment revenue reporting. The presentation showed proposed vacancy savings and hiring freezes that account for much of the $13 million in proposed reductions: 73 vacancies existed at the time of the report, with staff recommending 24 positions remain frozen and others budgeted at partial funding until recruitment timing is known.
Event funding and deadlines: council debated whether to fund the July 3 fireworks and related activities. Staff said last year’s total expense for July 3 was about $195,000 with ticket revenue near $45,000 and warned that deposits for pyrotechnics and AV vendors could create a near‑term $60,000 exposure if the city cancels. Several council members proposed community‑sponsored or scaled‑down alternatives.
What happens next: staff will return with more detailed scenarios and longer‑range projections (council requested a five‑year look). Council voted to accept the midyear report and the budget study session information for discussion and directed staff to continue work on preliminary FY26 documents ahead of the May/June adoption timetable.
