LAKE COUNTY — The recommended County Budget for Fiscal Year 2010-11 was presented to the Board of Supervisors this week. County Administrative Officer Kelly Cox said the recommended budget provides for an increase in existing reserves/designations and the General Fund remains debt-free, which he said sets Lake County apart from most county governments in California.
The recommended budget was approved on a 4-1 vote with Board Chairman Anthony Farrington, District 4, voting in opposition. Recommended appropriations total $185,051,534; General Fund appropriation is $50,860,849.
Adoption of the actual budget is scheduled for Sept. 8. Cox said that pursuant to the County Budget Act, it is necessary for the BOS to consider and “approve” (not “adopt”) the recommended budget on or before June 30. Approval of the recommended budget provides the county with the ability to continue conducting business during the period of time between the beginning of the new fiscal year and date on which the actual budget is adopted.
Prior to formal adoption of the budget a public hearing will be conducted in which department heads and members of the public will be provided with the opportunity to comment.
“The local impacts of the national recession and the continuing financial crisis within California”s State government have resulted in extraordinary difficulties for local governments throughout California,” Cox said. “Discretionary revenues such as property tax, sales tax, transient occupancy tax (TOT) and property transfer taxes have been declining while the demand for public services is on an increase. This presents a budgetary challenge to all local governments but it is a challenge that our county is prepared to effectively address.”
According to Cox, the recommended budget was prepared with the following goals in mind: minimize and/or completely avoid any negative impacts on service levels provided to the public and improve services when possible; preserve the county”s general reserve and, if possible, increase the reserve designation for economic uncertainties; avoid negatively impacting the county”s employees by not imposing a large number of layoffs, work furloughs or other forms of compensation reductions in order to balance the budget; and develop a responsible, sustainable budget and budget plan that will enable the county to maintain its fiscal solvency during both the short-term and over the long-term. Cox said these goals are achieved in the recommended budget.
“Unemployment and foreclosures remain very high, which negatively impacts the county”s revenue base. Consequently, it is extremely important to continue preparing for the economic uncertainties that lie ahead,” Cox said. “This accomplished in the recommended budget by increasing county reserves and by further reducing ongoing costs. Several unfilled positions are being eliminated and other steps are being taken to reduce future expenses.”
A primary way Cox recommends maintaining solvency is through use of one-time funds, on a limited basis to help bridge a projected funding gap. “This is being done in order to retain critical services during this period of economic downturn,” Cox said. “The reason why much of the one-time funding available in past years was set aside in reserves and contingencies was so that the county would have a ?rainy day” fund when the need arose. The rainy day is here and it is the appropriate time to begin accessing those funds.”
Cox said in order to ensure that the county does not become dependent upon using one-time funds, a three-year phase-out plan is included in the recommended budget. He said the budget recommends using a maximum of $1.5 million in one-time funding to finance the current year”s general fund and sets aside another $1 million in the reserve for economic uncertainties to be used in the Fiscal Year 2011-12 and $500,000 to be used in Fiscal Year 2012-13. Cox said much of the one-time funding being utilized for this purpose is funding that was set aside in prior years for one-time purposes, such as the general fund contingencies budget, and/or special projects that have not moved forward for various reasons.
“If the economy recovers earlier, the reserves would not be accessed and could be retained for future long-term needs. If the economy does recover, the county will have three years to implement phased reductions in ongoing operational costs, primarily through attrition rather than through layoffs,” Cox said. “The phased reductions begin in this year”s recommended budget with the elimination of several vacant positions, reductions in extra help and reductions in other operating expenses.”
Supervisors Denise Rushing, Jim Comstock and Jim Brown shared similar opinions of the recommended budget and the phase-out plan. “I think that this budget accomplishes what we”ve always accomplished and then some,” Brown said. “Instead of just looking at immediate years, we”re looking three years down the line.”
Farrington conveyed the opinion that the recommended budget is not structurally sound. “There is that uncertainty that once we move into adopting an unstructurally (sic) sound budget puts us in a precarious position,” he said.
While Farrington did not advocate layoffs or staff reductions, he expressed an opinion that the board may be putting off the inevitable.
Likewise, while Supervisor Jeff Smith did not particularly advocate layoffs, he suggested the possibility of discussing voluntary furloughs. Farrington conveyed support of the notion and said that any reduction should be from the board down to every position.
Contact South County reporter Denise Rockenstein at drockenstein@clearlakeobserver.com or call her directly at 994-6444, ext. 11.
