Report on the 2009 10 county budget
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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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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

•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


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.


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


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


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


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


Deferred State Payments

  • The County is ill equipped to serve as the bank for the State of California


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% 


2008-09 Net County Cost


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


Unincorporated Area Services

  • Police protection

  • Parks

  • Land use planning

  • Animal control

  • 911

  • Library services

  • Redevelopment


% of Population Living in Unincorporated Area

  • Santa Clara County: 6%

  • Monterey County: 25%

  • California20%

  • Santa Cruz County: 51%


Special Challenges

  • The majority of the County’s population lives in the unincorporated area

  • State mandates have first call on the General Fund Dollar


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%.


Property Tax Apportionment


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.


Property Tax Apportionment


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


Deficit Reduction Options

  • Revenues

    • County wide voter approved measures

      • General taxes: majority vote,

      • Special purpose taxes: 2/3 vote

    • Departmental revenues

    • Fees and charges


Deficit Reduction Options

  • Expenditures

    • Increasing fund balances by reducing current costs

    • Elimination of staffing and services

    • Furloughs… closing county offices

    • Combinations


Current Year Savings

  • Hiring controls

  • Defer general fund road expenditures

  • Curtail travel

  • Curtail overtime

  • Union concessions


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. ”


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


More Options

  • Reducing costs by closing the Aptos Permit Center

  • Evaluating departmental restructuring options for consideration

  • Expanding economic development

  • Expanding the Use of Redevelopment


Projected Impacts

  • Major program reductions in all areas

  • Estimated loss of 400 jobs

  • Potential closures and furloughs in services


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


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


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


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


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


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


Recommended Actions

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


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. 


Report on the 2009-10 County Budget

January 27, 2009


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