David Rudat keeps running the numbers, looking for ways to lessen the fiscal pain he knows is on the way.
Maybe he can spare libraries from cuts. But would that wipe out funds for senior centers? He might be able to maintain full police staffing -- but only if he delays road and building repairs. Rudat, who manages Orange's city government, says that almost all of his options look grim. But something has to give in this meanest of budget seasons. Or maybe everything.
"There is no easy way out of this," he said.
Not here, not anywhere in California.
The nation's most populous state is flirting with financial disaster, again. Two years after getting walloped by a long and costly energy crisis, it is now saddled with a staggering, unprecedented deficit bigger than the entire annual budget of any state except New York.
Somehow, California will have to come up with as much as $35 billion this year to balance its books without tripping up its already wobbly economy, one of the largest in the world. Many other states are trying to close deficits by reducing spending or increasing taxes, but none appears to be facing cuts as deep and widespread, or tax hikes as broad, as those being contemplated here. California's shortfall represents about one-third of the state's annual spending.
Hardly anyone will be spared as state aid to cities and towns dries up. About a half-million poor residents could lose all or part of their subsidized health care because the state says that it no longer has money. Overcrowded public schools are being forced to abandon plans to reduce class size. At least 1,900 state workers are getting pink slips. Tuition at community colleges may double. Hundreds of nursing homes are threatened with bankruptcy.
Bracing for huge budget cuts, San Francisco closed one of its jails and shifted 350 inmates to home detention. Ventura County is dismissing library workers and may soon stop delivering food to needy elderly residents. Plans to widen dangerous two-lane highways near Bakersfield have been shelved. Fresno City College has eliminated 123 courses this semester. San Diego is on the verge of closing some fire stations.
California is also taking a beating on Wall Street. On Feb. 10, its credit rating was downgraded nearly to the poorest ranking in the nation, which could force the beleaguered state to pay higher interest on its long-term debts, too.
Here in Orange, a city of about 100,000 residents near Disneyland, the strains that California's budget crisis is putting on local government and business provide a microcosm of the hardships and fears around the state.
The local school superintendent is cutting back on classroom supplies and may have to fire teachers and other employees. Vacant jobs at City Hall are not being filled. Merchants are starting to feel a pinch because shoppers worried about tax increases seem to be reining in spending.
"People are walking around on eggshells," said Barbara deBoom, president of the Orange Chamber of Commerce. "No one wants their government services cut or new taxes, but we're realistic. We all know that something big has to happen to get out of this."
Some residents say they can hardly believe how fast things have changed. Wasn't it only yesterday that California was surfing the tech boom in Silicon Valley and had a budget surplus over $9 billion?
Back then, in the late 1990s, the state had never looked more like the golden land. It lavished teachers with bonuses, slashed fees for vehicle licenses and public parks, expanded health services to the poor, even lowered sales taxes.
"It's amazing to people," said Diane Zalay, who owns an antique store in Orange's town center. "The politicians had been rolling back all kinds of taxes, but now they have to suddenly find the money again. It kind of makes you lose confidence in what they're doing."
It will be months before California solves its financial problems. Gov. Gray Davis (D) is vowing to make $20 billion in spending cuts that will affect nearly every state program. He also wants to increase income, sales and cigarette taxes to generate an additional $8 billion. But both Democratic and Republican lawmakers are objecting to key parts of his proposal.
What's certain is that the state cannot rely on accounting gimmicks. And the stakes of the budget fight are high: California's $1.3 trillion economy, whose hot streaks and slumps often ripple across the country, cannot afford to take more lumps.
"It's hard to imagine a robust national recovery without California's economy recovering," said Stephen Levy, director of the Center for Continuing Study of the California Economy.
California is reeling from deficits for some of the same reasons as other states: The tech bust. Shriveled stock portfolios on Wall Street. Soaring health care costs. And growing federal spending demands for homeland security.
"Everything has really come together to dump on the states," said Scott Pattison, executive director of the National Association of State Budget Officers. "And those who enjoyed the boom the most are falling the hardest now."
When Silicon Valley was flourishing, California was collecting about $17 billion annually just from capital gains taxes on new Internet millionaires. The state is receiving only a fraction of that jackpot these days. And that is only one of its unusual burdens.
California depleted its treasury during the energy crisis that resulted after the state deregulated electrical utilities. It spent roughly $45 million a day for months just to avoid rolling blackouts. Ballot initiatives passed here in recent years also have mandated a certain level of government spending -- on schools, for example -- no matter the fiscal climate.
Still, the state's plight might not turn out to be as bad as it now seems. Some financial analysts contend the budget deficit could be about $6 billion less than the figure Davis is projecting. And the California economy may bounce back with more strength than anticipated because defense contractors in the state are bustling with new work for the Pentagon.
But the problem could get worse. Signs of political gridlock already are apparent. Early this month, the California Assembly passed legislation allowing state officials to help ease the deficit by tripling the annual fee for vehicle registration, but the governor is vowing to veto the bill.
Davis also wants to balance the budget by renegotiating the operating pacts Indian casinos have with the state and taking more of their profits. But if tribal leaders balk he would have to make an additional $1.5 billion in spending cuts, or propose more tax increases.
Several thousand more state employees also could lose their jobs if Davis cannot extract wage concessions from their unions. And massive layoffs could harm the state economy, which since the tech bust has been stabilized partly by public-sector job growth.
Republican leaders in California, who say Davis helped create the massive deficit by spending recklessly during his first term, are scoffing at many of the governor's remedies. His proposed tax increases, they say, would stifle consumer spending and drive businesses out of the state.
"It's absolutely counterproductive to economic growth," said Jim Brulte, the Republican leader in the state Senate.
Some political activists are so upset with how Davis is managing the state that they are launching what could be a formidable recall campaign against him.
Davis has a strong Democratic majority in the legislature, but needs at least a few Republican votes to win passage of his plan. He says a combination of tax increases and spending cuts is the only way to get California back on sound financial footing. He also is vowing not to approve the budget unless the legislature overhauls the state's fiscal structure, which he says is "painfully dependent on extremely volatile sources of revenue."
"It's high time to free ourselves from this boom-bust syndrome," Davis told lawmakers in a speech earlier this month.
But those changes may come too late to cities such as Orange.
Some residents here are still expressing California's famous easygoing optimism -- "at least it's not snowing," one merchant said on a recent bright and balmy morning. But many sound disconsolate, resigned to the likelihood that they soon will be paying hundreds of dollars more in taxes -- for fewer government services. "It's out of our control," said shopkeeper Zalay.
At City Hall, Rudat is spending hours every day trying to protect programs from cuts. The rest of the time he hopes for the best.
"There's only so much we can do because this deficit is so big," he said. "It's tough."
Special correspondent Kimberly Edds contributed to this report.