Board Of Supervisors Takes 2011-12 Budget Actions, Awaits State Impacts

The Placer County Board of Supervisors took action Tuesday to tentatively eliminate the county’s projected budget deficit for next fiscal year. The board’s actions pave the way for formal development of a 2011-12 proposed budget plan to be presented in June.

“Today’s direction will put the county in position to make the difficult, but necessary fiscal and operational changes to keep our local budget balanced,” said board Chairman Robert M. Weygandt.

At recent budget workshops, the county budget team estimated the projected 2011-12 budget deficit at $2.8 million absent state impacts, noting that it would have been much larger if not for early and continued action by the board to keep spending in line with available resources. The projected deficit was calculated after departments absorbed cost increases and reduced revenues. The budget team also assumed the continuation of existing labor adjustments, including increased employee health, dental and retirement cost sharing.

The projected $2.8 million deficit was significantly lower than the shortfalls the county faced the last two years and particularly noteworthy because the budget team expects property tax revenue, the county’s largest revenue source, to further decline by $4.8 million next fiscal year. Through next year, property tax revenue will have declined $17 million, or 17 percent, since 2008.

By Tuesday’s meeting, the county had reduced the projected deficit to $1 million.

“A $1 million shortfall is remarkable,” Supervisor Jim Holmes said, noting the board and staff have taken proactive steps to ensure a sustainable budget in the midst of the recession.

During the meeting, board members took the final step to tentatively eliminate the deficit by agreeing to redirect $1 million in capital projects funding to the county General Fund.

Board members acknowledged, however, Placer County still could face substantial revenue shortfalls and service disruptions if the state reduces funding for some mandated county programs and gives counties increased responsibility without accompanying funding.

That possibility was a key topic of discussion because of Gov. Jerry Brown’s decision Monday to sign AB 109, a bill that shifts responsibility for many low-level adult offenders, adult parolees and juvenile offenders from the state to counties. Board members and the county budget team noted the governor signed the bill even though the funding plan he proposed is not in place.

“We’ll just have to deal with it as we go forward,” Chairman Weygandt said of the potential spillover from the state budget battles.

In January, Brown proposed a realignment plan that would shift many state responsibilities to counties. His funding plan called for holding a statewide special election in June where voters would be asked to extend for five years several tax increases enacted in 2009 that are set to expire June 30. The funding plan, however, has stalled in the state Legislature.

The governor promised Monday he will not sign any legislation aimed at implementing AB 109 unless the state provides funding to go along with the increased county responsibilities.

Placer County officials are worried the state may ultimately opt for an approach that reduces state funding for some mandated county programs and gives county new responsibilities without additional funding.

In its presentation to the board Tuesday, the budget team said Placer County would be left with a substantial revenue shortfall and potentially unprecedented service disruptions.

“We don’t know what the future holds,” said Supervisor Jack Duran.

County Executive Officer Thomas M. Miller emphasized that the county needs to have a balanced budget plan in place when the new fiscal year begins July 1, but said the budget team already is making plans to handle impacts from the state budget under a range of circumstances.

“We’re prepared,” he explained. “We’re looking at different scenarios.”

The budget team is proposing to dedicate any unanticipated carryover fund balance from this fiscal year to help deal with looming impacts from the 2011-12 state budget.

The budget team estimates Placer County has $30 million to $60 million at risk from realignment and proposals to reduce state funding to counties.

Realignment could have an impact ranging from $8.4 million to $39.2 million on county public safety agencies: the Sheriff’s Office, Probation Department and District Attorney’s Office. The size of the impact will depend largely on how many additional offenders the county will be responsible for and whether the county will need to fully staff its Auburn jail and the new county jail being constructed in Roseville.

The Health and Human Services Department has more than $22 million at risk in the state budget battles. The state wants to permanently transfer to Placer County responsibility for several programs, including mental health, child protective services, adult protective services, and substance abuse treatment programs.

Board members also voted unanimously Tuesday to approve three other actions recommended by staff:

Reaffirming existing cost-cutting policies that restrict hiring, the use of extra help and overtime;
Having CEO Miller work with management and confidential employees on alternatives to unpaid furlough days for the 2011-12 fiscal year, so salary-concession parity is maintained among all employee groups; and
Delegating layoff authority to Miller, as the board has done in the past.

Chairman Weygandt told the meeting he favored the actions recommended by staff. ““I consider this to be extremely tentative under the circumstances,” he added, pointing to potential impacts from the state budget.

Supervisor Jennifer Montgomery emphasized that, while the Board of Supervisors must solve the current fiscal year budget challenges, it cannot afford to ignore ongoing priorities such as road maintenance and other basic public infrastructure.

Montgomery said, “We all understand that it is more cost-effective to appropriately maintain existing infrastructure, rather than to have to go back and rebuild it.”

Over the last three years, Placer County has laid off 17 employees due to reduced workloads or insufficient state funding. Most were land-development staff whose workloads dropped significantly in response to the construction industry slowdown.

Supervisor Kirk Uhler noted that means roughly one half of 1 percent of the county workforce has been laid off. “I’m wondering how many other government entities or private-sector businesses can say that they have suffered only one-half of one percent of layoffs in the last three years, given these economic conditions,” he said. “I am willing to bet not too many.”

A small number of layoffs may be necessary during the 2011-12 fiscal year due to reduced workloads and funding reductions. Delegating layoff authority to the CEO will help ensure a timely, flexible approach that will give affected employees as much advance notice as possible.