The county is just over halfway through the fiscal year with current spending mostly on target, said County Administrative Officer Wendy Tyler, during the Board of Supervisors’ mid-year budget review, but next year’s budget is likely to be a challenge.
Tyler said when the Board adopted the county’s $90 million 2017/2018 budget last September, it was a 4.2 percent increase over the prior year, and funded all the debt service and costs associated with more than 380 full-time employees.
“Within our general fund, we see our revenue as being on track,” Tyler said.
The county’s general fund revenue comes largely from taxes, fees, permits and services, which have remained stable, Tyler said, with the exception of the agriculture department, which anticipants an additional $100,000 in revenue this year due to the increase in the cost of phytosanitary certificates for the shipment of crops within and outside the United States.
On the expenditure side of this year’s budget, the cost of doing business has also remained stable, she said.
That is soon to change, she said.
Tyler said next year’s budget will see a combination of increased spending and decreased revenue, including a drop in franchise fees.
The county, however, must fund a 2 percent pay raise for all employees in October, skyrocking state-required pension contributions, and a bump in liability insurance costs when they draw up their next budget.
Tyler said the pay raises will cost the county an additional $450,000 next year, and public employee pension costs next year will jump an additional $810,000.
The rising cost of pensions is a trend seen throughout California, Tyler said.
“It’s not just Colusa County – it’s statewide and jurisdictionwide,” she added.
The county will also see about a 3.3 percent increase in insurance costs like workers compensation and comprehensive medical coverage for jail inmates, which Tyler said is reasonable.
Other budget inflators include $800,000 over the next few years for the Maintenance of Effort (MOE) increases in the road department (General Fund) and just about $400,000 (not General Fund) next year for the In-Home Supportive Services MOE, which is nothing to what it’s going to be the following year.
“It doubles,” Tyler said. “The IHSS MOE just ramps up…at a rate I think is unsustainable.”
Tyler said she hated to be the bearer of bad news, but wanted the board to be aware of the increases, even though some will likely be offset by a total revenue increase of about 3 percent.
“I still firmly believe we are on really good solid ground,” Tyler said. “This board has done a great job of holding folks accountable, and being fiscally prudent and efficient in the decisions that (they) make. My gut is that there is just going to be a little tightening of the belt that needs to happen.”
Tyler said the county was not in dire straights, largely because they are debt free, but recommended that the board ask all departments to stay to their current budget next year, while trying to absorb some of the increases.
“There are things – kind of like that perfect storm looming – that we are facing,” she said. “I think in that spirit, I would really like to, as we move forward, in giving the departments instructions for completion of their budget for the upcoming fiscal year, that we truly holds folks to their status quo budget from last year.”
Tyler said departments should continue to be “held harmless” for salary and insurance increases, and theoretically held harmless from other contractual obligations that they can’t control, but she did recommend that for next year’s budget, departments try to anticipate increases, such as a rise in utility costs.
“We have pretty large holes to fill with general fund dollars,” she said.
Board members, however, said they wanted departments to take budgeting a step further, and try to mirror their budgets to the county.
“At some point, we have to get our expenditures in line with our revenue,” said Supervisor Denise Carter. “We’ve been using other funds to kind of make things up.”
Board members originally suggested General Fund departments develop budgets with just a 3 percent increase, taking in to account all salary and benefit increases, but decided that could be a difficult exercise using the new software for the first time this year.
Instead, they plan to ask departments to be mindful of possible scenarios in which they would deal with across-the-board cuts, should it come to that.
Departments will receive their budget instructions on March 12, and will meet with the county ad hoc budget committee sometime in May.
The Board of Supervisors is expected to approve a proposed 2018/2019 budget on June 26, with budget hearings and final budget approval expected in September.
At the same time, the Board of Supervisors said they plan to renew economic development strategies for the future, and work to adopt multi-year budgets. ■