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Report on the 2009-10 County Budget

Report on the 2009-10 County Budget. January 27, 2009. Introduction. Thanks to the Auditor Controller Report : significant economic problems facing the County over the next several years Continuing State problems Big Questions: How long? How deep?. Projected County Deficit.

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Report on the 2009-10 County Budget

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  1. Report on the 2009-10 County Budget January 27, 2009

  2. Introduction • Thanks to the Auditor Controller • Report : • significant economic problems facing the County over the next several years • Continuing State problems • Big Questions: • How long? • How deep?

  3. Projected County Deficit • The report identifies a 2009-10 projected deficit of $25 million or 21% of county costs; and • The report examines options to address the deficit

  4. Why a $25 million deficit • Reduced revenues resulting from the collapse of the real estate market causing: • Reduced property taxes, • Reduced deed transfer taxes, and • Significantly reduced building and planning revenues.

  5. Why a $25 million deficit • Reduced interest earnings • One time funds financing the 2008-09 budget • Decreases in Proposition 172 revenue • Decreases in sales tax • Reduced salary savings, and • Increased costs

  6. Breakdown of the $25 million deficit • Decreased Fund Balance: $12.3 million • Decreased general purpose revenue and Proposition 172 revenue $6.6 million • Increased costs for salaries and benefits: $6.3 million, and • The deficit could worsen

  7. The State’s Problems • The State budget is in crisis • The State will have a significant cash crisis in March 2009 • Registered warrants? • Deferred payments to the County

  8. Deferred State Payments • Gas tax and Proposition 42 Funds in DPW • Medi-Cal payments in Health Services Agency • Social Services payment in Human Services Department • State mandate payments to local governments

  9. Deferred State Payments • The County is ill equipped to serve as the bank for the State of California

  10. Net County Cost 2008-09 Net County Cost by Area of Government • General Government $ 19,335,152 16.0% • Public Protection 60,028,300 49.6% • Health 15,439,716 12.8% • Public Assistance 13,522,188 11.2% • Recreation and Culture 4,081,178 3.4% • Debt Service 4,592,248 3.8% • Contingency 3,699,563 3.1% • All Other 298,608 0.2% • Total $ 120,996,953 100.0% 

  11. 2008-09 Net County Cost

  12. County Obligations • State Mandates • The property tax system • Health and welfare programs • Criminal justice including prosecution and defense • Detention • Agricultural inspection and weights and measures

  13. Unincorporated Area Services • Police protection • Parks • Land use planning • Animal control • 911 • Library services • Redevelopment

  14. % of Population Living in Unincorporated Area • Santa Clara County: 6% • Monterey County: 25% • California 20% • Santa Cruz County: 51%

  15. Special Challenges • The majority of the County’s population lives in the unincorporated area • State mandates have first call on the General Fund Dollar

  16. Property Tax Apportionment • Amount of Property Tax Dollars going to County General Funds varies greatly. • Rates established in Proposition 13 and Assembly Bill 8 • State average of counties similar to Santa Cruz is 20%. • Santa Cruz receives 13%.

  17. Property Tax Apportionment

  18. Property Tax Apportionment • If the Santa Cruz County General Fund were to receive 20% of all property taxes, which is the average of similar Counties, the County’s current secured property tax revenues for FY 2007-08 would have been $66.6 million, instead of the $43.4 million actually received, a difference of $23.2 million. These funds are instead apportioned to our local special districts, the redevelopment agency and the schools, which lessens the State’s burden to support our schools.

  19. Property Tax Apportionment

  20. Deficit Reduction • A multi year plan: 2-4 years or longer • 2009-10 is the first step • CalPERS losses: 5% rate increases projected for 2011-12. Cost: $9 million

  21. Deficit Reduction Options • Revenues • County wide voter approved measures • General taxes: majority vote, • Special purpose taxes: 2/3 vote • Departmental revenues • Fees and charges

  22. Deficit Reduction Options • Expenditures • Increasing fund balances by reducing current costs • Elimination of staffing and services • Furloughs… closing county offices • Combinations

  23. Current Year Savings • Hiring controls • Defer general fund road expenditures • Curtail travel • Curtail overtime • Union concessions

  24. President Barack Obama It is … “the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours. ”

  25. More Options • Meet with the Unions to discuss: • Expanding the use of voluntary time off • Freezing step increases • Deferring cost of living adjustments • Reducing county contributions for health care • Temporary layoffs

  26. More Options • Reducing costs by closing the Aptos Permit Center • Evaluating departmental restructuring options for consideration • Expanding economic development • Expanding the Use of Redevelopment

  27. Projected Impacts • Major program reductions in all areas • Estimated loss of 400 jobs • Potential closures and furloughs in services

  28. Potential Furlough Savings 2008-09 -- Temporary Layoff of 40 hours for all units $2,400,000 2009-10 -- Temporary Layoff of 160 hours for all units 9,600,000 -- Freeze Step Increases for all units 900,000 -- Defer COLA and Health Plan increases for all units 3,600,000 Total Net County Cost Savings $16,500,000

  29. Concluding Observations • It can get worse • The State budget problems are NOT yet known • The recession will be with us for some time • We must and we will balance the budget • The county staff is the best there is and they will creatively and effectively address these enormous challenges

  30. Recommended Actions • Continue hiring controls • Defer the General Fund contribution to the Road Fund in the amount of $1,400,000 • Curtail all but essential travel • Eliminate all but essential overtime expenditures

  31. Recommended Actions • Meet with affected bargaining units regarding a modification to the existing AVTO program to provide for additional voluntary reductions in the current fiscal year

  32. Recommended Actions • Meet with affected bargaining units to discuss • freezing step increases • deferring cost of living adjustments and health plan improvements • implementing temporary layoffs through the use of unpaid time off during the 2008-09 fiscal year and beyond

  33. Recommended Actions • Provide a 180 day notice to end the lease for the Aptos Permit Center • Monitor events in Sacramento and report back with recommendations when the State has acted

  34. Recommended Actions • Work with County Departments on the cash flow problems associated with the State’s deferral of County reimbursements

  35. Recommended Actions • Work with County Departments on their 2009-10 budget and the reductions in programs and services required to balance the expenditures and available financing in the 2009-10 General Fund Budget. 

  36. Report on the 2009-10 County Budget January 27, 2009

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