Rough road ahead
County budget balanced, but deficit fast approaching
In the next few years, the Butte County Board of Supervisors will have to make some difficult calls to avoid seeing red on its budget sheets.
It’s not this fiscal year that will plunge into shortfall territory—the $552 million budget pencils out to a nice round zero when all is said and done. But next year? Four years from now? That’s a different story.
Meegan Jessee, who develops the annual budget as the county’s deputy chief administrative officer, told the supervisors on Tuesday (June 26) that if the county continues operations as usual there could be a $3.2 million deficit by fiscal year 2022-23.
“Even though revenues are increasing, our costs are increasing faster,” Jessee told the CN&R leading up to the formal budget presentation.
That’s why this year the county is “making the reductions necessary to live within our means,” culling 60 positions (all unfilled except one) and making some changes at the library, despite a 3.5 percent increase in funds available over last year. More than half of the positions cut were from the Department of Employment and Social Services, reflecting decreased state and federal funding. This continues last year’s trend: In 2017, 86 (mostly vacant) positions were eliminated and the library saw $60,000 in cuts.
The county budget is largely composed of “restricted” funding sources from the state and federal government (61 percent, in fact), earmarked for specific uses like public assistance, health, sanitation and other programs. Most of the county’s discretionary budget (about $114 million) has been directed toward public safety.
When it comes to the library, the county will cut 24 operating hours per week and reduce the physical materials budget by half, to $500 a month for all branches.
Tuesday afternoon, Supervisor Larry Wahl spoke in defense of maintaining current library hours and funding. “You can spend [$500] in about 20 minutes on books for one library, probably,” he said. “I view the whole thing with concern.”
Wahl suggested drawing from the county’s general fund reserves ($8 million) or contingency ($7.2 million) to provide $200,000 to the library system, which still would allow the county to meet target reserve goals. “The loss of library hours are going back to the level that they were almost 20 years ago, and that’s pretty pathetic for a library system here in a place called California,” he added.
In response, Supervisor Maureen Kirk spoke up in support of the Boys and Girls Clubs of the North Valley, to which Wahl amended his motion to include another $100,000 for that organization. Last year, the supervisors made a tough call to drastically cut the county Probation Department’s contract with the Boys and Girls Clubs from $236,000 to $46,000, which was supplemented later by $162,400 in one-time funding. (See “Austerity wins, programs lose,” Newslines, June 29, 2017.) This year’s budget for the organization was approved for $100,000.
“Anticipating they make more money next year, huh?” Chairman Steve Lambert replied.
Wahl’s response: “The economy is wonderful, according to our governor.”
The other supervisors weren’t swayed: the vote failed 2-3.
Supervisor Bill Connelly said that he unfortunately had to be the bad guy that afternoon and say “no,” because the county is just going to have to start “making hard decisions.”
“We all need to realize we have a budget gap that’s growing, and we all have to address it,” he said. “We’re going to figure something out with a fire district and other districts so we can go forward with a balanced budget where people will actually pay for the service they desire. Sorry to say it that way, but we have to address that in the coming year, or we’re going to have troubles.”
Unfortunately, that could mean raising taxes, fees or “other words we hate in the North State or anywhere,” Lambert added. For example, the county’s residents want criminals prosecuted and they want the roads fixed, but “it all comes at a cost.”
While revenue from property and sales taxes will increase in the coming years, it won’t be able to catch up with rising costs from employee salaries and benefits (i.e., California Public Employees’ Retirement System obligations) and the county’s share of In Home Supportive Services (due to a decrease in state funding), as well as an increase in ongoing operating costs for the expanded county jail, starting in 2021.
Roughly speaking, Jessee said, the county contributes 15 percent to 31 percent to CalPERS per employee. That’s projected to increase to as much as 26 percent to 45 percent over the next 10 years. The county is paying approximately $20.4 million to pensions per year, Jessee told the CN&R, and with current projections, that could reach $36 million by 2027-28.
County staff will bring forward in-depth reports later this year regarding creating a community services district for fire and possibly other county services, as well as a presentation and discussion about options for handling CalPERS costs, which will include looking at paying up-front or investing in a trust, as the city of Chico has done.
“These are big, significant costs,” Jessee told the supervisors. “There is no magic bullet here, but there are some ways if we set up funds now that we can reduce costs in the future.”