Transcript Report on the 2009

Report on the
2009-10 County Budget
January 27, 2009
Introduction
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Thanks to the Auditor Controller
Report :
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significant economic problems facing the County
over the next several years
Continuing State problems
Big Questions:
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How long?
How deep?
Projected County Deficit
• The report identifies a 2009-10 projected
deficit of $25 million or 21% of county costs;
and
 The report examines options to address the
deficit
Why a $25 million deficit
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Reduced revenues resulting from the
collapse of the real estate market causing:
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Reduced property taxes,
Reduced deed transfer taxes, and
Significantly reduced building and planning
revenues.
Why a $25 million deficit
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Reduced interest earnings
One time funds financing the 2008-09 budget
Decreases in Proposition 172 revenue
Decreases in sales tax
Reduced salary savings, and
Increased costs
Breakdown of the
$25 million deficit
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Decreased Fund Balance: $12.3 million
Decreased general purpose revenue and
Proposition 172 revenue $6.6 million
Increased costs for salaries and benefits:
$6.3 million, and
The deficit could worsen
The State’s Problems
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The State budget is in crisis
The State will have a significant cash crisis in
March 2009
Registered warrants?
Deferred payments to the County
Deferred State Payments
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Gas tax and Proposition 42 Funds in DPW
Medi-Cal payments in Health Services
Agency
Social Services payment in Human Services
Department
State mandate payments to local
governments
Deferred State Payments
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The County is ill equipped to serve as the
bank for the State of California
Net County Cost
2008-09 Net County Cost by Area of Government
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General Government $ 19,335,152
Public Protection
60,028,300
Health
15,439,716
Public Assistance
13,522,188
Recreation and Culture
4,081,178
Debt Service
4,592,248
Contingency
3,699,563
All Other
298,608
Total
$ 120,996,953
16.0%
49.6%
12.8%
11.2%
3.4%
3.8%
3.1%
0.2%
100.0%
2008-09 Net County Cost
Reserves
Recreation / Cultural Srvcs
Education
Debt Service
Health / Sanitation
General Government
Public Ways / Facilities
Public Assistance
Public Protection
County Obligations
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State Mandates
– The property tax system
– Health and welfare programs
– Criminal justice including
prosecution and defense
– Detention
– Agricultural inspection and weights
and measures
Unincorporated Area Services
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Police protection
Parks
Land use planning
Animal control
911
Library services
Redevelopment
% of Population Living in
Unincorporated Area
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Santa Clara County:
Monterey County:
California
Santa Cruz County:
6%
25%
20%
51%
Special Challenges
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The majority of the County’s population lives
in the unincorporated area
State mandates have first call on the General
Fund Dollar
Property Tax Apportionment
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Amount of Property Tax Dollars going to
County General Funds varies greatly.
Rates established in Proposition 13 and
Assembly Bill 8
State average of counties similar to Santa
Cruz is 20%.
Santa Cruz receives 13%.
Property Tax Apportionment
County
Percent of
Assess Value in
Unincorporated
Areas
Percent of Property
Tax to
County General
Fund
Humboldt
60%
20%
Monterey
48%
16%
Napa
47%
20%
Santa Cruz
58%
13%
Property Tax Apportionment
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If the Santa Cruz County General Fund were to
receive 20% of all property taxes, which is the
average of similar Counties, the County’s current
secured property tax revenues for FY 2007-08 would
have been $66.6 million, instead of the $43.4 million
actually received, a difference of $23.2 million.
These funds are instead apportioned to our local
special districts, the redevelopment agency and the
schools, which lessens the State’s burden to support
our schools.
Property Tax Apportionment
Deficit Reduction
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A multi year plan: 2-4 years or longer
2009-10 is the first step
CalPERS losses: 5% rate increases
projected for 2011-12. Cost: $9 million
Deficit Reduction Options
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Revenues
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County wide voter approved measures
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General taxes: majority vote,
Special purpose taxes: 2/3 vote
Departmental revenues
Fees and charges
Deficit Reduction Options
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Expenditures
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Increasing fund balances by reducing current
costs
Elimination of staffing and services
Furloughs… closing county offices
Combinations
Current Year Savings
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Hiring controls
Defer general fund road expenditures
Curtail travel
Curtail overtime
Union concessions
President Barack Obama
It is … “the selflessness of workers who
would rather cut their hours than see a friend
lose their job which sees us through our
darkest hours. ”
More Options
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Meet with the Unions to discuss:
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Expanding the use of voluntary time off
Freezing step increases
Deferring cost of living adjustments
Reducing county contributions for health care
Temporary layoffs
More Options
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Reducing costs by closing the Aptos Permit
Center
Evaluating departmental restructuring
options for consideration
Expanding economic development
Expanding the Use of Redevelopment
Projected Impacts
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Major program reductions in all areas
Estimated loss of 400 jobs
Potential closures and furloughs in services
Potential Furlough Savings
2008-09
-- Temporary Layoff of 40 hours for all units
$2,400,000
2009-10
-- Temporary Layoff of 160 hours for all units
-- Freeze Step Increases for all units
-- Defer COLA and Health Plan increases
for all units
Total Net County Cost Savings
9,600,000
900,000
3,600,000
$16,500,000
Concluding Observations
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It can get worse
The State budget problems are NOT yet
known
The recession will be with us for some time
We must and we will balance the budget
The county staff is the best there is and they
will creatively and effectively address these
enormous challenges
Recommended Actions
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Continue hiring controls
Defer the General Fund contribution to the
Road Fund in the amount of $1,400,000
Curtail all but essential travel
Eliminate all but essential overtime
expenditures
Recommended Actions
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Meet with affected bargaining units regarding
a modification to the existing AVTO program
to provide for additional voluntary reductions
in the current fiscal year
Recommended Actions
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Meet with affected bargaining units to
discuss
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freezing step increases
deferring cost of living adjustments and health
plan improvements
implementing temporary layoffs through the use
of unpaid time off during the 2008-09 fiscal year
and beyond
Recommended Actions
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Provide a 180 day notice to end the lease for
the Aptos Permit Center
Monitor events in Sacramento and report
back with recommendations when the State
has acted
Recommended Actions
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Work with County Departments on the cash
flow problems associated with the State’s
deferral of County reimbursements
Recommended Actions
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Work with County Departments on their
2009-10 budget and the reductions in
programs and services required to balance
the expenditures and available financing in
the 2009-10 General Fund Budget.
Report on the
2009-10 County Budget
January 27, 2009