The County has released the proposed budget fort he 2018-2019 fiscal year. The Board of Supervisors will be voting on this budget in June and I wanted share with you the highlights and ensure you have a chance to provide feedback before its adopted.
Over the last few years, the Board of Supervisors has made significant investments in public safety (increasing Sheriff’s staffing in the Aptos office), parks (opening a new park in Seacliff, updating Polo Grounds, Seascape, Aldridge and more), roads (storm damage repairs and new paving from Measure D and SB 1 funding) and health and human services to restore some of the significant cuts during the Great Recession. However, the Board has also made a significant commitment to improving our reserves to address predictable future economic downturns.
In the last few years the Board has improved the County’s bond rating by placing more in reserves (overall now at about 10 percent). This budget maintains the reserves and reduces the structural imbalance by 16 percent. It does this with a reduction in overall spending (a decrease of about $42 million in spending). But there are still some challenges facing the County.
Short Term Budget Challenges
Community challenges in behavioral health, substance abuse and homeless services will place additional short-term pressure on the budget. Storm damage requires local matching funds (approximately $20 million), which are limited. Additionally, continuing to increase contingency funding and overall reserve funding to help protect against uncertainties and economic downturns are important.
Long Term Budget Challenges
There are a lot of deferred maintenance and funding needs for capital improvements at County facilities (parks, County buildings) as well as roads, pipes and other infrastructure. The lack of affordable housing, and limited funding to help with construction of affordable housing, is putting pressures on transportation networks and the job market. Even with work done to contain health care and pension costs, the overall costs are rising faster than revenues. Modifications to how the state deals with in-home supportive services (IHSS), an essential service for some of the most vulnerable in our community, cost-shifts back to the County potentially $3-plus million/year in the coming years. Additionally, the loss of significant grant funding (as the grants come to a close) in the Probation Department and Sheriff’s Office could mean the end of important programs or the need to absorb these costs in the budget. In our local health care world, changes to federal funding for the Affordable Care Act and the federal sunset of some funding for community health centers could mean a loss of approximately $1.7 million alone for community health centers, which provide an essential safety net for our community.
Budget Improvements
Locally, sales tax, property tax and transient occupancy taxes (TOT- hotel or other vacation rental taxes) are up. Overall, these improved taxes have added about $7 million in additional revenue to the County so far this year. Much of that was committed to reserves and addressing our longer-term structural deficit. Additionally, taxes associated with cannabis dispensaries, cultivation and manufacturing are expected to increase. However, it is very difficult to predict what the actual amount will be and there are costs regarding enforcement, auditing and more that offset some of the revenue. New housing and businesses coming on line at the Aptos Village, improvements and Rancho Del Mar and improvements slated for other locations in the county are also expected to be beneficial for the budget moving forward.
Additionally, the Board is working to develop a two-year budget process with performance measures. This comes as part of the strategic plan to ensure that we are investing in the community’s priorities and also, using performance metrics, are demonstrating that we are making an impact on the areas we are investing.
Where exactly do our revenues come from that make up the budget?
About of all county revenues come from the state and federal government; a much different funding structure than cities. These funds are generally pass-through funds to provide state and federally mandated services such as health care programs. This highlights the importance of stable state and federal funding.
Approximately 26 percent of the county revenue comes from local taxes including property taxes, sales taxes and TOT. Very little of your property tax dollar goes to the County. Based on a Prop. 13 formula, for every one dollar the county collects in property taxes, our County is only allowed to keep approximately 13 cents.
So where does the rest of your property tax go to? The largest share goes to schools while the rest goes to local special districts, cities and the libraries.
How are our taxes spent?
The largest portion of the county’s discretionary spending (net County cost) is for public protection (Sheriff’s Dept., Probation, County Fire), over half of the total. Approximately 20 percent was spent on health and human services. Additional funds go toward parks, land use and other governmental functions and the reserve.
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The County budget can often be complex and I hope this provides you with a helpful overview. You can view the proposed budget at www.sccbudget.com or always feel free to call at 454-2200.