San Benito County supervisors have made significant budget cuts,
no doubt. Despite their work to eliminate millions of dollars in
spending, trends indicate they haven’t done enough to secure a
healthy fiscal future.
San Benito County supervisors have made significant budget cuts, no doubt. Despite their work to eliminate millions of dollars in spending, trends indicate they haven’t done enough to secure a healthy fiscal future.
Supervisors last week approved a budget with $33 million in general fund spending. That number is down significantly from its height two years ago of about $39 million, but the county has operated under a deficit for five years running and there is no sign of reversal anytime soon. The board does have about $10 million in reserves to work with, but what happens when those run out in two or three years? Plus, a majority of the funds are either untouchable, in legal dispute, or designated for specific uses.
Even with around $3 million in cuts this fiscal year, including the elimination of 16.3 full-time positions, the board is facing the same scenario next year and indefinitely thereafter. And this isn’t the federal government. There is no parachute. Local municipalities are legally barred from borrowing money from China or anyone else.
The bottom line is that for three consecutive years San Benito County is about $8 million in the red, and closer to $9 million in 2011-12. Supervisors must, therefore, take the lead and give more aggressive direction on both ends of the budget spectrum – by further reducing employee expenses, particularly through reduced health and retirement benefits, and by taking a more proactive approach to generating revenue and boosting local business.
The board has, to its credit, understood how bloated San Benito County’s workforce had become in relation to revenue – that it’s a primary factor in causing fiscal hardship. Supervisors have responded in the past three years through layoffs and eliminating nonessential positions once they became vacant. Astonishingly, this county of 55,000 residents not long ago employed about 480 workers, a number that has decreased to around 430 through recent moves. The county also has shown willingness for bold fiscal reform. Two recent examples include an approved contract to obtain 911 dispatch services from Santa Cruz Regional 911 and consideration of consolidation between the sheriff’s office and Hollister Police Department.
In other words, supervisors haven’t been sleeping at the switch, but they are still not closing the gap. So what more can they do in better weathering the storm and securing a healthy fiscal future for San Benito County and its residents, especially considering there will be increasing pressure to use less and less in scarce reserves? There are two obvious sides to the general equation, increasing revenue and decreasing spending.
On the spending side, beside continuing to target less-efficient and less-essential roles for elimination, supervisors must focus on health and retirement benefits, which are out of line with private-sector reality facing most taxpayers. Cutting wages has more limitations at this point than reducing benefits. They have more impact on short-term financial health for workers who must approve such reductions in negotiations. And although salaries end when employees resign, retirement benefits, at least for on an individual basis, last forever. Additionally, supervisors can chip away at long-term liabilities by auditing all employee perks and targeting those – such as sick and vacation accruals amounting to $5 million in unfunded liability – which largely favor well-compensated employee groups. They also should seek out any potential alternatives to lower health care costs that have been rising by a clip of around 15 percent annually.
On the revenue end, supervisors have to be more proactive in establishing programs and policies to attract new businesses to the county. In recent years, they have talked a big game. At the same time there has been stagnant economic movement, while county leaders basically have done nothing beyond handing over a $50,000 check each year to the Economic Development Corp. and hoping that the nonprofit’s president, Nancy Martin, comes through.
As things stand, there is no comprehensive blueprint to reverse this area’s fortunes. The most prudent approach would involve developing an “economic recovery plan” of sorts that includes a comprehensive outlook – which is lacking severely in local government – toward budget security and economic progress.
