Over 3 years, county used $15M from reserve dollars, depleting it from 15 to 6 percent of general fund
Over 3 years, county used $15M from reserve dollars, depleting it from 15 to 6 percent of general fund
A week after the San Benito County Supervisors received word that the budget for the 2012-13 year is likely to be $5.3 million short, County Administrative Officer Rich Inman brought forth an agenda item to discuss the county’s reserves Tuesday morning at the request of board Chairman Jaime De La Cruz.
Joe Paul Gonzalez, the county’s clerk-auditor-recorder, went over the reserve funds with the supervisors at the meetings. He said his office is estimating that the supervisors will have a roll forward balance of $2.6 million.
“Instead of using the full roll forward balance, I will suggest that you just use $1 million (for the general fund,)” Gonzalez said.
Since 2009-10, the reserve funds have shrunk from 15 percent of the general fund to 6 percent in 2011-12.
Supervisors Anthony Botelho and De La Cruz both asked if there were steps that could be taken to increase the rollover fund that would be available to move into the reserve fund.
“What can we do in the current year’s budget that would change that figure?” Botelho said.
Inman said some of the steps have included the hiring freeze that is in effect.
“Have we seen more people leave or are there more positions open?”
Botelho expressed concern that the figures of anticipated rollover funds might be too optimistic.
“We are in uncharted waters,” Inman said. “It is hard to look at trends because trends aren’t holding up anymore. It is very difficult to trend anything in these times.”
Gonzalez said while he and Inman were recommending that the supervisors not use more than $1 million from the anticipated $2.6 million rollover, he said that the supervisors could move more money into the reserves if they want.
“The supervisors always have the authority to increase reserves at any meeting or special meeting,” he said. “It does not require a public hearing.”
Gonzalez encouraged the supervisors to consider setting a board policy for reserves – to set a minimum percentage they want to keep in reserves. In recent years, the supervisors have borrowed from the reserves to balance the budget, leading to a use of $15 million, according to Gonzalez.
“We already know we’ve gone through this for three years,” he said. “We’ve lost our revenue base and there is no increasing it in the short run. We know anything we use now is just one-time money. We are just postponing that we need to make permanent cuts so we can operate sustainably.”
Gonzalez said the county started with a reserve of $26 million three years ago and is now down to $11 million.
“That money has seen us through and I would not be opposed to adding to those funds because they’ve been there to see us through,” said Supervisor Margie Barrios.
Supervisor Jerry Muenzer said he would want clear guidelines for when reserves can be used if the board moves to increase the balance. Gonazalez said that there is an ordinance that governs the use of the reserves, but it says that in a fiscal emergency all funds are at the disposal of the board.
Supervisor Robert Rivas said the budget committee discussed establishing a policy of setting aside a specific percentage for the reserve.
Gonzalez said many cities or counties have the percentage set at 5 percent, but the supervisors could set it at a higher number if they like.
“The board needs to adopt a percentage that doesn’t vacillate from year to year,” Gonzalez said. “It is not something we should adopt year to year. We should adopt it once.”
The supervisors directed Inman to bring the issue of setting a reserve percentage back before the board, with information of what level of services could still be offered with different percentages of reserve funds put aside.
