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.
City council members discussed potential partnerships with Disney and Chapman University as new revenue sources, and suggested zoning more property for commercial use. However, Councilman John Gyllenhammer expressed skepticism about the severity of the financial warnings, stating, “I see it a little bit differently.” Stewart countered, urging the council to trust the projections and make informed decisions.
The city is also working to rebuild public trust, following a failed sales tax measure last year. Councilwoman Arianna Barrios emphasized the need to demonstrate fiscal responsibility before asking residents to support another tax measure.
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