Sneaking in a day ahead of a state deadline, the county Board of Supervisors on Oct. 1 unanimously approved a balanced budget for the 2019-20 fiscal year, but officials stressed more effort is needed to ensure the county’s financial stability.
The $497.7 million budget was built through months of trimming and tightening. It included a hiring freeze and across-the-board cuts to general-fund departments in an effort to avoid tapping into diminishing reserve accounts that for years had been used to balance the bottom line.
The final budget, which included a lean general fund of $218.2 million, was due to the state by Oct. 2 in accordance with the County Budget Act.
“We’re required to produce a budget and we met the deadline. (But) it’s a living document. We’ll be taking additional looks at it throughout the year,” board Chairman Ryan Kelley said following the meeting.
Supervisor Jesus Escobar, who has been outspoken in his concern about the county’s financial footing since taking office in January, voted to move the budget forward but with caveats. He called for his fellow board members to support “strategic planning” efforts to address the county’s finances and for the development of a five-year budget outlook to be brought to the board within 30 days.
“I don’t want to kick the can year over year over year,” Escobar said after the meeting. “We need to take it (addressing the county’s finances) to the next level. That’s why I requested the five-year budget outlook. … We can’t be screwing around with our employees and stakeholders.
“We have to provide a certain level of service. If we’re broke, how can we provide that level of service? We need to focus on our long-term objectives, which is to balance the budget and replenish our reserves,” Escobar continued.
Kelley agreed that “we need to do some work,” adding that starting to look at the budget going forward five years was a last-minute addendum to the vote but “is well worth the effort.”
General-Fund Budget Shortfalls
The general-fund budget has been the source of much heartburn over the past several months. Budget shortfalls going back years had been covered by raiding the county’s rainy-day funds, specifically its two general-reserve accounts, which have been at $6.9 million for at least three years, according to information provided by county budget officer Mayra Widmann.
Earlier this summer, Widmann said the county had successfully found a way to overcome an $18.1 million deficit to its general fund without siphoning off the general-fund reserves. Total reserves for the entire budget are around $12 million, Widmann has said, adding that common practice for governmental agencies of similar size to Imperial is to carry total reserves of about $32 million.
Widmann said the county had previously found a way to balance the proposed budget for this year, but that utilized a series of budget cuts to the general fund. They included instituting a hiring freeze for general-fund departments, leaving about 20 vacant positions unfilled and unfunded, transferring over millions of dollars in one-time funding, transferring funding that was carried over from fiscal 2018-19’s general fund and, finally, further dipping into general-fund reserves to the tune of $2.9 million.
The general fund pays for departments such as Social Services, Public Works, public safety departments, the District Attorney’s and Public Defender’s offices, Planning and Building, and several more. Departments such as Behavioral Health, Public Health and the Air Pollution Control District are funded through other dedicated revenue streams such as federal and state funding and grants, Widmann has said.
This previous balancing plan was unveiled in late June, just days ahead of the June 30 end of the 2018-19 fiscal year. But Widmann said on Aug. 20, that once the county closed the books on fiscal 2018-19, the Department of Social Services in reconciling some of its accounts discovered a couple million more dollars in one-time funding that was carried over into the proposed 2019-20 budget.
“We initially thought we were going to carryover $9 million to $10 million,” Widmann said in August. “But we found after closing the books that number went up to $13.9 million.”
That eliminated the county’s need to use the nearly $3 million in reserves under the balancing plan from June, Widmann said.
General-Fund Deficit Mitigation
Back in May, the board approved a three-year general-fund deficit mitigation plan meant to end tens of millions in projected general-fund deficits and put an end to the raiding of the general fund’s reserves. In addition to the hiring freeze and leaving positions unfilled, the mitigation plan includes a 20-percent reduction in out-of-county travel, a 10-percent reduction in miscellaneous department expenses, and a five-percent reduction in the use of professional services.
The total final budget for fiscal 2019-20 is $485.1 million in projected revenues vs. $497.7 million in projected expenditures. The general fund budget is at $218.2 million in projected expenditures vs. $200.1 million in projected revenues.
The 2019-20 general-fund budget, while considered lean, is a $6.6 million increase in expenditures over the previous year due to 2.2 percent salary increases for nearly all employee bargaining units, with the exception of the union covering the Public Defender’s office and attorneys for Child Support Services. Widmann said there were also 5.5-percent merit increases approved and $2.7 million that had to be transferred from the general fund to the Human Resources Department for a workers’ compensation reserve account.
Meanwhile, several department heads interviewed say the cuts made so far may not be readily apparent to the public, but if the financial instability remains, further belt tightening could rear its head in any number of ways.
County’s Inability to Fund Urgent Needs
While not directly linked to this year’s budget, Assistant District Attorney Deborah Owen said in early September that the county’s inability to fund the D.A. office’s urgent need for competitive salaries to attract or retain more prosecutors and reduce overwhelming caseloads resulted in the office not prosecuting some low-level offenses.
Owen said that in March her office sent out a letter to law enforcement agencies saying that offenses like invalid driver’s licenses, driving on a suspended or revoked license, possession of drug paraphernalia, being under the influence of a controlled substance, trespassing, and drunk-in-public offenses would not be prosecuted by her office.
Instead, she said, agencies were told they should be filed as infractions.
“The goal is, that once we are back up to being fully staffed, we will revisit that,” Owen said. “I would say that is directly related to the budget and paying lawyers.”
County Clerk-Recorder Chuck Storey in late August/early September was told he had a position frozen that forced him to end holding civil-marriage ceremonies due to time and staffing constraints. However, the ceremonies have since resumed following his appeal to the county board in mid-September to restore one of his vacant positions.
Budget cuts not immediately noticeable
Assessor Robert Menvielle said Sept. 19 that the public would not immediately notice the budget cuts that his office has experienced. He said internally it has cut down on travel for his staff, and thusly, training at conferences.
Still, he thinks if the hiring freeze remains in place for too long and he loses staff due to allowable lateral movements to other departments, the public would begin to notice it in loss of services.
Public Works Director John Gay agreed that if the county’s current financial trends continue, the public might begin to see the scaling back of some services under his purview. Thanks to a reorganization last year, Public Works also oversees county parks and recreation efforts. He said that is where the public might stand to see changes in loss of amenities or maintenance of facilities and parks.
“We’ve been able to stay within our line item budget,” Gay said in late September. “But it all depends on what happens in two or three years.”