Fiscal Stress in Orange County, CA

RM 215

Fiscal policies from the federal level of government aim to adjust financial conditions and economic activity for the entire country, and the role of this higher authority to use spending and taxation for the regulation of state and local activities has expanded in the face of a recessed economy. Intergovernmental fiscal relations have become more complex over the course of the last 50 years, and fiscal authority imbalances between the various levels of government not only threaten democratic efficiency but they undermine the ability of legislators to act as responsible principals charged with effectively carrying out public will in a sustainable, accountable, and transparent way. This research assesses the financial condition of a municipality, the County of Orange in Southern California, and determines the degree of fiscal stress the county currently faces. It also explains how future financial sustainability and solvency can be seriously threatened by budgetary decisions made by current officials. An explanation of how legislative reforms have shaped the current financial issues in Orange County is offered, and specific strategies are proposed which theoretically could improve the county’s long term financial health in a manner marked by enhanced equity and less risk that the strategies currently employed.