As the San Benito County Board of Supervisors prepare to tackle
next year’s budget, it appears as though supervisors will have no
choice but to cut spending or pull over $4.8 million from the
reserve fund to cover expenses.
Hollister – As the San Benito County Board of Supervisors prepare to tackle next year’s budget, it appears as though supervisors will have no choice but to cut spending or pull over $4.8 million from the reserve fund to cover expenses.
The county’s expenditures are anticipated at about $31.5 million next year, but the county will only collect approximately $26.6 million in revenue, according to preliminary estimates. The Board of Supervisors will need to decide where to cut spending or if they will transfer money from its $14.5 million reserve fund to balance the books before the new fiscal year begins on July 1.
County Finance Director Dan Vrtis said using reserve funds will keep the county’s head above water for the next several years, but supervisors must find a way to bring spending in line with revenue without cutting needed staff or services before reserves dry up in.
“It’s very common in California to have these economic cycles in which you’re going to have these years in which you’re not going to be able to meet your expenditures,” Vrtis said. “It’s not uncommon to use reserves (to make up the difference), the question is how much do you use and for how long a time? I think that’s the issue right now, is what’s the light going to look like at the end of the tunnel?”
Vrtis said, however, the finance department has anticipated the county will need to dip into reserve accounts to balance the books for at least a couple years and the deficit of spending to revenue is nothing new for San Benito. Last year the county transferred $2 million from the reserve account after cutting funding to several programs including the Marshal’s Office and community programs such as the University of California Extension.
“The question or concern that I would have is for what length of time are we going to be using these reserves and what will be left? I think that’s paramount. I think we have a long-term economic situation where we’re going to be using reserves for the next few years,” Vrtis said.
Fortunately, Vrtis said, the county’s reserve account is still deep enough to weather the storm for at least another couple of years, but eventually supervisors will either have to find a way to increase revenue or decrease spending by cutting staff, programs and other expenditures.
“The challenge in front of the board right now is either increasing revenue or decreasing expenditures,” Vrtis said, adding he and the county staff would be encouraging the Board of Supervisors to be more fiscally conservative in the next few years until the state and county’s economic cycle turns around.
Spending didn’t always outpace revenue in San Benito County. In 2003, the county generated approximately $4.4 million more than it needed to cover expenses. Last year, spending outpaced revenue by over $6 million dollars resulting in the Board of Supervisors rolling the $4.4 million surplus from the prior year into the current budget and drawing another $1.8 million from reserves.
Vrtis said that although the county had the money to cover that budget gap, it can’t survive under current conditions much longer.
“It’s kind of like eating steak when you can only afford hamburger,” Vrtis said. “Everyone (in California) is doing it right now.”
The county’s one percent growth cap, the sewer moratorium and a poor economy are all responsible for slow growth in the county’s revenue, which makes it easy for expenses to outpace spending, Vrtis said. He also said San Benito County is among the lowest four counties on tax dollars returned from the state. For every dollar San Benito County sends to Sacramento in taxes, it receives 11 cents back, Vrtis said.
While the supervisors received a report from Management Analyst Robin Scattini about the $4.8 million budget gap, they haven’t discussed any solutions as a board, according to Board Chairman Reb Monaco.
“I know that they’re (the supervisors) all concerned about the budget,” Monaco said. “But I, for one, am not on the budget committee. Supervisors (Jaime) De La Cruz and (Don) Marcus are on that committee, but they haven’t given us any reports yet.”
De La Cruz, however, is particularly agitated by the state of the county’s finances. The District 5 supervisor recently sent a letter to all 2,000 homes in his constituency in which he states he “discovered the county is operating at $3 million in the red, each year.”
“That’s a true comment, but it’s really a known issue,” Vrtis said of the statement, adding he wasn’t sure where De La Cruz had gotten the $3 million figure. “But it really wasn’t discovered; it was planned. We had open budget hearings where we said we would be in a deficit.”
De La Cruz said he got his numbers by subtracting the county’s anticipated expenditures from the expected revenues.
“I just want the public to know that this year alone, as of right now, we are not going to meet current expenditures,” De La Cruz said Friday. “If we continue to operate the way we’re operating, in a year or two years we’re going to be depleting that (reserve) account and we’re going to have to look at (cutting) programs.”
Supervisor Anthony Botelho has a more optimistic approach to the budget struggles ahead and said he plans to defend necessary county programs from cuts.
“We just have a lot of work ahead of us, there’s no question about it, and I think that’s the case with any county,” Botelho said. “We could be behind later and we could be ahead later. Nobody has that big of a crystal ball. We’re tightening the belt buckle and will probably have to dip into the reserves this year, but there’s some vital programs that I know I will do everything I can to retain.”
Jessica Quandt covers politics for the Free Lance. Reach her at 831-637-5566 ext. 330 or at [email protected].
