Orange City Council members have been warned by their accounting consultants that the city could face bankruptcy in three years without significant changes. The warning came from Grant Thornton, a consulting firm hired by the city, during a council meeting on July 22. The firm advised that Orange needs to increase sales tax, cut 12% of its general fund, and attract new businesses to avoid financial collapse. Without these changes, the city could accumulate over $40 million in debt by the end of 2031.
Shawn Stewart, a principal from Grant Thornton, emphasized the urgency of the situation, stating, “We have a Nordstrom’s appetite and we have to operate on a Walmart budget.” The study highlighted that Orange’s revenue is growing at only 3% annually, while expenses are increasing by 15%. The city’s financial problems were exacerbated when leaders used a one-time $28 million COVID bailout to hire 39 new staff members, a decision Stewart criticized as unsustainable.
The city previously attempted to pass a 0.5% sales tax increase in the 2024 election, but the measure failed due to opposition from the county’s automobile dealer’s association, which spent over $369,000 on advertising against it. Despite the setback, Bob Hawkey, another consultant from Grant Thornton, stressed the need for immediate spending cuts and new revenue to avoid bankruptcy…