Board uses reserves to balance precarious deficit for current
year
Even as the San Benito County Board of Supervisors approved a
2011-12 budget last week that came in at about $33 million, they
already started discussing ways to trim spending this fiscal year
and for 2012-13 as well.
Board uses reserves to balance precarious deficit for current year
Even as the San Benito County Board of Supervisors approved a 2011-12 budget last week that came in at about $33 million, they already started discussing ways to trim spending this fiscal year and for 2012-13 as well.
In the final motion that approved the budget unanimously, board Chairwoman Margie Barrios asked the supervisors to take a 3 percent salary cut, to take $50,000 more from the prudent reserve instead of an unassigned fund slated for other post employment benefits, and to reduce the county counsel budget by $100,000.
Catherine Shaw, a management analyst II, shared a line graph that showed expenses and revenue from the county for the last seven years. Since 2006, expenses have exceeded revenues, though efforts have been taken since 2010 to reduce costs.
“We had a banner year in 2005 when revenue has exceeded expenses,” Shaw said, noting that since then revenue decreased.
During the recent budget hearing process, which started July 19, the supervisors met with department heads to discuss possible cuts and reductions to reduce net county costs as much as possible. The county supervisors started with requests from departments of $11,095,223 more expenses than projected revenues, and through the meetings, department managers and the supervisors came up with more than $3 million in reductions.
On Thursday before an approval, Shaw and County Auditor Joe Paul Gonzalez fielded questions from the supervisors as they explained the precarious balancing act required to fill in a total gap of $8.6 million.
“Even though we came in less than budgeted and we are lower than previous years, unfortunately, the county revenue is going down,” Shaw said.
“We have to close the gap,” said Supervisor Jerry Muenzer. “We can’t do it all this year, but we need to start doing that.”
Supervisor Robert Rivas, who served on the Ad Hoc budget committee, noted some of the issues in filling the budget deficit.
“We need to close the gap, but there are restrictions,” he said. “Half the revenue comes from out of the county and is for mandated services.”
This year’s budget proposed reduced staffing levels by 16.3 full-time employees and dipped into reserve funds. The staff also cancelled a loan to the Stonegate CSA and moved that to the capital fund, from which $1,467,000 will be paid.
The supervisors, in an act of solidarity, approved a 3 percent cut to their own salaries.
“It’s important to show employees that we share their sacrifices,” said Supervisor Anthony Botelho.
Supervisor Jaime De La Cruz asked the supervisors to invite other elected county officials to take the same cut.
“The options are limited,” Shaw said. “We can look for additional revenue. The board can look for additional cuts or dip into reserves. The option for more cuts does not seem to be on the table.”
Shaw noted that the staff found nearly $300,000 in additional revenue since the budget hearings had been continued from July 21. County Administrative Officer Rich Inman also noted that his office had received a letter from the state saying that the probation department will be receiving vehicle license fees. The VLF funding was unsure since the state had not committed to it when the budget hearings began, and the supervisors opted not to include it as revenue.
“We are actually getting more than we received last year because they used a formula based on 2007-08 expenditures,” Inman said. “What we don’t know is the specific allocation to the county.”
Inman noted that the supervisors would have to meet with Chief Probation Officer Brent Cardall and Sheriff Darren Thompson about the use of the money, adding that some of the money is slated for use in specific programs.
Barrios was most concerned about the use of $2.6 million in unassigned reserves. Gonzalez acknowledged that the funds are for other post-employment benefits, such as retirement and healthcare.
“It’s a liability and we know it,” Barrios said. “If we don’t address this now, future boards and future generations will have to deal with it. Maybe we can meet in the middle. If we have to use more reserves maybe we can.”
Inman suggested that the supervisors approve the 2011-12 budget and then allow the ad hoc budget committee, which includes supervisors Rivas and De La Cruz, to immediately begin working on the 2012-13 budget.
“If we close the hearings, we can reopen for fiscal year 2012-13 immediately,” Inman said.
Botelho spoke for an extended period, making points about efforts to cut spending in recent years as well as pointing out some issues he’d like the budget committee to pursue in the future.
“I want to recognize the amount of cutting that has taken place in the last three years,” he said.
“There are many departments working with a skeleton crew. We are working on consolidation. We completed the communications consolidation (9-1-1 services) on a regional basis. We need to look for those types of things to increase our efficiency.”
Supervisors in June approved the dispatch contract with Santa Cruz Regional 911 in a 3-2 vote. The move is expected to save the city more than $260,000 annually and the county more than $90,000 each year after the two initial years.
Botelho urged the supervisors to make vacation and sick leave accruals uniform across all bargaining units and to review the salary matrix for county employees.
At Botelho’s suggestion, the supervisors revisited a recommended cut of $100,000 from the county counsel’s office, a recommendation that they had voted against the week before.
The suggestion prompted De La Cruz to ask the supervisors to revisit all the departments for suggested staff reductions, especially for middle management positions, which he said would give them “more bang for our buck.”
“I want to note that the budgets came from the department heads,” Rivas said. “These are the positions they recommended. If we expect to alter it, they need to be here to tell us if that’s possible or not.”
County Administrative Officer Rich Inman cautioned the supervisors against making decisions without input from the department heads on what the consequences of such staff cuts would be. He also noted that all departments were asked to prepare a budget with a 20 percent reduction in expenses, and he said that the supervisors could revisit those departments that did not meet the request.
Bothelo also noted that the county owns some property that could be sold off.
“We should take into account the assets we have,” Botelho said. “We have vacant land on Flynn Road and the old hospital on Southside…We could split off that property or liquidate it.”
Gonzalez said that the supervisors could sell that property and use that money to replenish the reserve balance or the capital fund.
The supervisors met during their regular board meeting Aug. 2, at 9 a.m., to give direction to the budget committee on how they would like the committee to move forward on decreasing cost for the current fiscal year as well as 2012-13.
By the numbers:
Total deficit: $8,876,816
Additional revenue: $297,000
Roll forward fund balance: $3,230,811
Loans cancelled (moved to capital fund): $1,672,000
Unassigned fund balance (Other post employment benefits): $2,660,966
Prudent reserves: $1,016,039
Balance: $0
