SB County raiding reserves to stay afloat

 

Santa Barbara County's revenues have tanked so low that department heads are finding that they cannot make cuts fast enough to break even.  Most are dipping into savings accounts, while others have gotten a bailout from the county's general fund or reserve funds.  And still the county's budget will be nearly $1 million in the red, according to estimates presented Tuesday to the Board of Supervisors in Santa Maria.  By law, each county fund must end the fiscal year with a balanced budget, so the supervisors have until June 30 to decide where to scrape together the funds that will back-fill the predicted budget shortfall.

In receiving the county's third-quarter financial status report, the elected leaders asked clarifying questions but refrained from saying much about the state of the 2008-09 budget.  The county's biggest problem is declining sales tax and property tax revenues, which are a symptom of the economic recession, staff said.  Four of the county's primary cash cows - supplemental property taxes, interest earnings, retail sales tax and franchise fees - are anticipated to end the year below budget, according to Jason Stilwell, assistant county CEO.  In April, sales tax receipts were 20 percent less than in April 2008, the biggest decline experienced by the county since the recession began, according to staff.

The District Attorney's Office and the Probation Department have been hit especially hard by a sharp decrease in funds from Proposition 172, a half-percent sales tax to support local public safety.  In comparing the adopted 2008-09 fiscal year budget to actual spending in the first nine months of the fiscal year, county staff estimated that the District Attorney's Office has spent $644,064 more than was budgeted.  The Probation Department is estimated to be $596,578 over budget, even though the Board of Supervisors already approved a $3 million transfer to address most of the department's shortfalls.  Other departments that show a budget shortfall or have spent less than their budget as of March 31, will most likely have a zero balance as of June 30, according to staff estimates.

However, in the effort to keep within their means, departments have been using one-time funding sources to cover service costs. Money saved by furloughing employees over the holiday season in December is also coming in handy now to avoid layoffs, Stilwell said.  The separate departments are taking a page out of the board's book.  In June 2008, the county had a strategic reserve, or rainy day fund, with an account balance of $25.3 million.  That emergency fund is now down to about $10 million that has not been allocated for other county needs, Stilwell said.  The bulk of the strategic reserve funding, $12 million, has been set aside to pay back the state in Medi-Cal and other mental health service liabilities.

The 2009-10 fiscal year budget process is already projecting across-the-board cuts in general fund compensation to staff and services.  Three days of budget hearings have been tentatively scheduled for the week of June 8. For more information, visit http://www.countyofsb.org/.

May 13, 2009