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County Budget & Finance Issues. What Counties Do. County Services. Counties provide some services on a countywide basis Human services Criminal justice services Property tax collection Other services Counties provide municipal services to unincorporated areas. Countywide Services.

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Presentation Transcript
county services
County Services
  • Counties provide some services on a countywide basis
    • Human services
    • Criminal justice services
    • Property tax collection
    • Other services
  • Counties provide municipal services to unincorporated areas
countywide services
Countywide Services
  • Human services
    • Welfare
      • CalWorks -- TANF
      • Foster Care
      • General Assistance
    • Public health
    • Mental health
    • Protective services
countywide services cont
Countywide Services cont.
  • Criminal Justice
    • Jails
    • Prosecution
    • Public defense
    • Probation
      • field services
      • juvenile institutions
      • court reports
county municipal services
County Municipal Services
  • Local police protection -- Sheriff
  • Public works
  • Local Parks
  • Fire protection
  • Some services may be provided by special districts
prop13 to now

Prop13 to Now

Historical Perspective

role of legislative body
Role of Legislative Body
  • In American system only the legislative body (Congress, Legislature, Board, or Council) can:
    • Levy taxes
    • Appropriate proceeds of taxes
    • Approve spending authority for Executive
counties before 1978
Counties before 1978
  • Board of Supervisors used to set a countywide property tax rate to fund countywide services
  • Counties had a greater share of the costs of human services programs
  • VLF was a much less significant revenue source
pre prop 13 relationship of taxes spending
Pre Prop 13 Relationship of Taxes & Spending
  • Board of Supervisors had discretion over property tax rate & property tax revenue
  • There was a political balance between taxing and spending.
  • An elected official could gain political credit for keeping tax rates down
prop 13 aftermath
Prop 13 & Aftermath
  • Property tax rate reduce to 1%
  • Base growth capped at 2%
  • System forced to use growth to maintain base spending
  • AB 8 & SB 54
    • Shift of property taxes from schools to local government
    • State assumes greater share of human services
the fix unravels 1991 1993
The Fix Unravels1991-1993
  • The state’s support of local government was withdrawn in the early 1990s
  • Realignment -- share of sales tax & VLF replace shares of support for human service programs
  • MOE required
  • Base level of funding not reached for 3 years
slide13
ERAF
  • Education Relief Augmentation Fund
  • Undoing of AB 8 bailout by shifting property tax revenue from local government to schools
  • Partial backfill for counties & cities from Proposition 172 Public Safety Sales Tax
  • How wild fires saved local government
eraf sacto county
ERAF -- Sacto County
  • The ERAF legislation caused the shift 1/2 of Sacramento County’s current property tax revenues
    • 1993-94 $ 95 million
    • 2001-02 $ 126.7 million
  • Prop 172 backfill of 1/2 to 1/3 of total
  • Annual loss of $40 million to $50 million
growth in the 1990s
Growth in the 1990s
  • The long economic boom of the late 1990s covered over structural problems of county finance
  • Income tax revenue grew faster than property taxes, sales tax, & VLF
  • Availability of state & federal funding
  • VLF rate reductions & backfill
current situation
Current Situation
  • Counties facing fiscal challenges due to slowing economy
    • Sales tax absolute reductions hit Realignment & Prop 172 revenue
    • MOE requirements not changed
    • Human service & criminal justice costs increase when economy slows
  • Significant problems without state actions
countywide revenues
Countywide Revenues
  • Direct program support for human services & criminal justice
  • Welfare reimbursements
  • Statewide pool revenue
    • Realignment
    • Proposition 172 Public Safety
  • Fees & charges
  • General purpose financing
municipal financing
Municipal Financing
  • Sales tax
  • Franchise fees
  • Utility tax
  • Business license tax
  • Fees
  • Property tax (county fire, park, & library districts)
unique nature of sacramento county
Unique Nature of Sacramento County
  • Large urban Unincorporated Area with over 50% of county population
    • Significant sales tax base
    • Service responsibility
      • Sheriff
      • Public Works
  • Tension & conflict between countywide & municipal responsibilities
budget priorities
Budget Priorities
  • Funding mandates
    • County shares of state & federal programs
  • Honoring contracts
    • County workforce
    • Debt
  • Political priorities
    • Some are more equal than others
county budget dilemma
County Budget Dilemma
  • A county budget is tied to local & statewide economy
  • There is an inverse, or counter-cyclical relationship between revenue growth & human services & criminal justice program caseloads
  • When business is good, then revenues are bad
balancing the general fund theory
Requirement

Appropriations

Reserve contributions

Financing

Fund Balance

Revenues

Reserve releases

Balancing the General Fund -- Theory
balancing the general fund reality
Balancing the General Fund -- Reality
  • Net cost of programs is determined & compared to general purpose financing
  • Net cost is equal to program expenditures less program revenues
  • General purpose financing is not linked to specific programs or groups of programs
  • No link between program net cost & availability of general purpose financing
current county financial issues

Current County Financial Issues

Incorporations & Annexations

Retirement Benefit Enhancements

incorporation
Incorporation
  • Formation of new city from portion of the Unincorporated Area
  • County issues
    • Regional governance
    • Fiscal impacts
    • Workforce impacts
incorporation fiscal issues
Incorporation Fiscal Issues
  • Transfer of municipal service responsibility & municipal revenues
  • Balance between cost transfer & revenue transfer
  • Revenue neutrality
    • State law requires payments back
    • Negotiated structure
    • Securing payments
annexation
Annexation
  • Growth of existing cities
  • Transfer of municipal service responsibility & municipal revenues
  • Property tax exchange agreements required
  • Negotiations with entity that may enter into a binding & enforceable contract
retirement enhancements
Retirement Enhancements
  • Issue of increasing retirement benefit for public employees
  • Issues
    • Fiscal
    • Ethical
    • Workforce dislocation
retirement fiscal issues
Retirement Fiscal Issues
  • Defined benefit plans
  • Increasing benefits creates an unfunded liability for retirement systems
  • Employer, not employees, responsible for additional cost
  • $ 54 million for Sacramento County
  • Offsets