Transcript County Budget & Finance Issues What Counties Do County Services • Counties provide some services on a countywide basis – Human services – Criminal justice.

County Budget & Finance
Issues
1
What Counties Do
2
County Services
• Counties provide some services on a
countywide basis
– Human services
– Criminal justice services
– Property tax collection
– Other services
• Counties provide municipal services to
unincorporated areas
3
Countywide Services
• Human services
– Welfare
• CalWorks -- TANF
• Foster Care
• General Assistance
– Public health
– Mental health
– Protective services
4
Countywide Services cont.
• Criminal Justice
– Jails
– Prosecution
– Public defense
– Probation
• field services
• juvenile institutions
• court reports
5
County Municipal Services
•
•
•
•
•
Local police protection -- Sheriff
Public works
Local Parks
Fire protection
Some services may be provided by
special districts
6
Prop13 to Now
Historical Perspective
7
Role of Legislative Body
• In American system only the legislative
body (Congress, Legislature, Board, or
Council) can:
– Levy taxes
– Appropriate proceeds of taxes
– Approve spending authority for Executive
8
Counties before 1978
• Board of Supervisors used to set a
countywide property tax rate to fund
countywide services
• Counties had a greater share of the
costs of human services programs
• VLF was a much less significant
revenue source
9
Pre Prop 13 Relationship of
Taxes & Spending
• Board of Supervisors had discretion
over property tax rate & property tax
revenue
• There was a political balance between
taxing and spending.
• An elected official could gain political
credit for keeping tax rates down
10
Prop 13 & Aftermath
• Property tax rate reduce to 1%
• Base growth capped at 2%
• System forced to use growth to maintain
base spending
• AB 8 & SB 54
– Shift of property taxes from schools to local
government
– State assumes greater share of human
services
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The Fix Unravels
1991-1993
• The state’s support of local government
was withdrawn in the early 1990s
• Realignment -- share of sales tax & VLF
replace shares of support for human
service programs
• MOE required
• Base level of funding not reached for 3
years
12
ERAF
• Education Relief Augmentation Fund
• Undoing of AB 8 bailout by shifting
property tax revenue from local
government to schools
• Partial backfill for counties & cities from
Proposition 172 Public Safety Sales Tax
• How wild fires saved local government
13
ERAF -- Sacto County
• The ERAF legislation caused the shift
1/2 of Sacramento County’s current
property tax revenues
– 1993-94 $ 95 million
– 2001-02 $ 126.7 million
• Prop 172 backfill of 1/2 to 1/3 of total
• Annual loss of $40 million to $50 million
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Growth in the 1990s
• The long economic boom of the late
1990s covered over structural problems
of county finance
• Income tax revenue grew faster than
property taxes, sales tax, & VLF
• Availability of state & federal funding
• VLF rate reductions & backfill
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Current Situation
• Counties facing fiscal challenges due to
slowing economy
– Sales tax absolute reductions hit
Realignment & Prop 172 revenue
– MOE requirements not changed
– Human service & criminal justice costs
increase when economy slows
• Significant problems without state
actions
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County Financing Sources
17
Countywide Revenues
• Direct program support for human
services & criminal justice
• Welfare reimbursements
• Statewide pool revenue
– Realignment
– Proposition 172 Public Safety
• Fees & charges
• General purpose financing
18
Municipal Financing
•
•
•
•
•
•
Sales tax
Franchise fees
Utility tax
Business license tax
Fees
Property tax (county fire, park, & library
districts)
19
Sacramento County
Financial Issues
20
Unique Nature of
Sacramento County
• Large urban Unincorporated Area with
over 50% of county population
– Significant sales tax base
– Service responsibility
• Sheriff
• Public Works
• Tension & conflict between countywide &
municipal responsibilities
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General Fund Budget &
Resource Allocation
22
Budget Priorities
• Funding mandates
– County shares of state & federal programs
• Honoring contracts
– County workforce
– Debt
• Political priorities
– Some are more equal than others
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County Budget Dilemma
• A county budget is tied to local &
statewide economy
• There is an inverse, or counter-cyclical
relationship between revenue growth &
human services & criminal justice
program caseloads
• When business is good, then revenues
are bad
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The Budget Cycle
Revenue Growth
Caseloads
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Balancing the General Fund -Theory
• Requirement
– Appropriations
– Reserve
contributions
• Financing
– Fund Balance
– Revenues
– Reserve releases
26
Balancing the General Fund -Reality
• Net cost of programs is determined &
compared to general purpose financing
• Net cost is equal to program
expenditures less program revenues
• General purpose financing is not linked
to specific programs or groups of
programs
• No link between program net cost &
availability of general purpose financing
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2001-2002 Final Adopted Budget
(amounts in millions)
Appropriation
LAW AND JUSTICE
Sheriff
Courts
District Attorney
Probation
Other
Subtotal
HUMAN SERVICES
Human Assistance-Payments
Human Assistance-Admin
Health & Human Services
Child Support
Medical Systems
Subtotal
ALL OTHER
Contingencies
Subtotal Departmental
Revenue
Net
Cost
$238.7
42.4
77.4
75.2
34.6
$468.3
$139.1
6.6
48.9
40.9
2.0
$237.5
$99.6
35.8
28.5
34.3
32.6
$230.8
$334.0
295.7
372.7
0.1
66.4
$1,068.9
$291.3
267.0
340.3
0.1
57.7
$956.4
$42.7
28.7
32.4
0.0
8.7
$112.5
$139.4
$63.0
$4.5
$1,681.1
CarryOver
$4.3
1.9
(0.1)
3.2
1.4
$10.7
Percent
Allocation Allocation
$95.3
33.9
28.6
31.1
31.2
$220.1
24.3%
8.6%
7.3%
7.9%
7.9%
56.0%
5.7
$12.7
$42.7
28.7
25.4
0.0
3.0
$99.8
10.9%
7.3%
6.5%
0.0%
0.8%
25.4%
$76.4
$8.1
$68.3
17.4%
$0.0
$4.5
$0.0
$4.5
1.1%
$1,256.9
$424.2
$31.5
$392.7
100.0%
.
0.0
7.0
28
General Fund Program Support
Departmental Revenues
$1,256.5 74.8%
Carryover
$31.5 1.9%
General Purpose Financ
$392.2 23.3%
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Appropriations & Allocations
Contingency
$5 0.3%
Law & Justice
$468 27.8%
All Other
$139 8.3%
Human Services
$1,069 63.6%
Appropriations
Law & Justice
$220 56.0%
Contingency
$5 1.1%
Human Services
$100 25.4%
All Other
$68 17.4%
Allocations
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FINANCING SOURCE
Property Taxes & Related
Taxes &. Teeter Plan
Sales Tax
Vehicle License Fees
Utility Tax
Net Interest
TLS Revenue
Other Revenues & Costs
Subtotal
Fund Balance (NonDepartmental)
TLS Fund Balance
Net Reserve Changes
Subtotal
2000-01
Budget
$132.9
80.1
69.7
17.4
8.0
2000-01
Actuals
19.5
$327.6
$140.8
83.5
73.6
16.7
8.6
8.2
22.2
$353.6
$17.9
16.3
1.0
$35.2
$17.9
16.3
1.0
$35.2
2001-02
Budget
$145.4
84.2
79.0
15.5
7.3
33.5
$364.9
$26.0
1.8
$27.8
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2001-02 General Purpose Financing
Property Taxes
$145.4 37.0%
Sales Tax
$84.2 21.4%
Fund Balance / Reserve
$27.8 7.1%
VLF
$79.0 20.1%
Utility Tax
$15.5 3.9%
All Other
$40.8 10.4%
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2002-03 Budget Forecast
Departmental Expenditures
Departmental Revenues
Net Cost
Budget
2001-02
1,681.1
1,256.9
424.2
Forecast
2002-03 Change
1,737.4
56.3
1,291.5
34.6
445.9
21.7
Forecast
2003-04 Change
1,802.7
65.2
1,349.8
58.2
452.9
7.0
Carryover
31.5
23.5
(8.0)
25.0
1.5
Net Department Requirement
392.7
422.4
29.7
427.9
5.5
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Budget Forecast
General Revenues
Fund Balance
Financing Reserves
General Purpose Financing
Base Budget Balance / (Deficit)
One Time Fund Transfers & Other
Amounts from Prior Year
Budget Balance / (Deficit)
Budget Forecast
Forecast
2001-02 2002-03 Change 2003-04 Change
364.9
372.7
7.8
385.1
12.4
26.0
3.8
(22.2)
9.0
5.2
1.8
9.3
7.5
(9.3)
392.7
385.8
(6.9)
394.1
8.3
(0.0)
(36.6)
(36.6)
(33.8)
2.8
9.0
(28.4)
(27.6)
(5.3)
34
Current County Financial
Issues
Incorporations & Annexations
Retirement Benefit Enhancements
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Incorporation
• Formation of new city from portion of
the Unincorporated Area
• County issues
– Regional governance
– Fiscal impacts
– Workforce impacts
36
Incorporation Fiscal Issues
• Transfer of municipal service
responsibility & municipal revenues
• Balance between cost transfer &
revenue transfer
• Revenue neutrality
– State law requires payments back
– Negotiated structure
– Securing payments
37
Annexation
• Growth of existing cities
• Transfer of municipal service
responsibility & municipal revenues
• Property tax exchange agreements
required
• Negotiations with entity that may enter
into a binding & enforceable contract
38
Retirement Enhancements
• Issue of increasing retirement benefit for
public employees
• Issues
– Fiscal
– Ethical
– Workforce dislocation
39
Retirement Fiscal Issues
• Defined benefit plans
• Increasing benefits creates an unfunded
liability for retirement systems
• Employer, not employees, responsible
for additional cost
• $ 54 million for Sacramento County
• Offsets
40