SANTA CLARA COUNTY, CALIF.—Today, County Executive Jeffrey V. Smith released the Fiscal Year 2014 Recommended Budget for the County of Santa Clara. The Recommended $4.6 billion budget includes all services, operations, capital improvements and reserves. The County Executive’s Recommended General Fund Budget is $2.4 billion, which covers all discretionary and many mandated services for the fiscal year beginning July 1, 2013 and lays out a funding strategy to address a $67 million shortfall.
In Fiscal Year 2013, the County experienced a short respite from a decade of annual shortfalls in the $200 million range. In Fiscal Year 2014, the anticipated general fund budget shortfall is smaller ($67 million); however, it comes on top of substantial reductions which already have been made.
“The brief respite from a budget deficit that we experienced last year will be short lived as we face unprecedented levels of uncertainty from every direction - State, federal and legal,” said Smith. “We still do not know the full impacts of pending state budget decisions or federal sequestration, and voter approved Measure A, which would generate desperately needed revenue from the 1/8 cents sales tax is being challenged in court.”
The County Executive is proposing a three-part strategy to address the estimated $67 million shortfall, including $28.7 million in departmental solutions, $20 million from the Measure A 1/8 cent sales tax, and $21.7 million through labor concessions to reduce service costs.
Departmental Solutions - $28.7 million
Department solutions account for $28.7 million of the deficit. Many of these solutions focus on capitalizing on alternative revenue sources or enhancement of revenue streams and do not result in the elimination of positions or reduction in services to clients. In fact on a net basis, the total number of General Fund positions increases by 59.
For instance, the County will use AB 109 funding to support criminal justice programs to improve services for individuals who are now in County jails or under County supervision, freeing up $5.1 million in General Fund resources. The County also will be able to secure additional reimbursements for the cost of mental health services from the state.
“These changes will enable the County to close the gap in funding with little or no impact on service delivery systems,” said Smith. “Our challenge is to continuously find ways to deliver services more efficiently and effectively. We are able to add valuable services that can make a difference in the lives of those in the County’s care.”
Measure A - $45 million ($20 for General Fund Deficit)
The County Executive’s Recommended Budget also presumes that the Appeals Court will uphold Measure A. Funding from this 1/8 cent sales revenue would be allocated as follows:
· $20 million to continue to fund essential public safety, health and social services that otherwise would have to be eliminated (Countywide solution).
· A $15 million reserve is recommended to support new program initiatives, pending further analysis by the Administration and discussion in the Board’s policy committees.
· A $10 million reserve is recommended pending the outcome of healthcare reform, Medi-Cal expansion and sequestration.
If the Court finds the 1/8 sales tax approved by the voters in 2012 to be invalid, the County will have to address an additional $20 million shortfall beyond that already projected.
“If the Measure is invalidated by the Superior Court, we are at risk for the $20 million that has been used to avoid additional General Fund reductions,” said Smith. “We need to be aware of this very significant risk to almost one-third of our ongoing deficit solutions and our one-time funding for capital projects.”
Proposed Labor Concessions - $21.7 million
Although the County’s budget shortfall in FY 2014 is smaller than prior years, it points to an ongoing structural budget deficit that can only be addressed by lowering the unit cost of service. The County Executive’s Recommended Budget targets labor concessions that would yield $21.7 million in savings (two-thirds less than the level agreed upon in 2011). The goal is to increase employee contributions to offset the growing cost of benefit programs including retiree health, pension and health insurance programs.
If the County is unable to reach agreement with its labor organizations to eliminate the ongoing structural deficit and is forced to utilize the one-time funds to cover ongoing operations, the $21.7 million deficit will be delayed to FY 2015. The County has been forced to use this strategy in the past and the difficulty of getting back to a break-even point is substantial, often resulting in debilitating program reductions and stagnant wages.
“Although the FY 2014 recommended budget funds 100 percent of the normal cost of our retiree health benefit program, one of our great concerns is that we still have an unfunded liability which has grown to $1.8 billion,“ said Smith.
“The Board of Supervisors and the Administration are committed to achieving a sustainable budget,” said Smith. “Even though the economy has improved and delivered improved revenue growth, our cost of doing business continues to exceed revenue growth. We must move forward carefully and thoughtfully to find lasting strategies to reduce the cost of providing services.”
The County is required by law to balance its budget each year. The County Executive’s Recommended Budget represents the culmination of the first round of budget planning activities and signals the start of budget review workshops and hearings by the County of Santa Clara Board of Supervisors.
Next Steps – Board Budget Workshops
BUDGET WORKSHOP SCHEDULE
Board of Supervisors Budget Workshops
Board Chambers, 70 W. Hedding Street, San Jose
Tuesday, May 7, 2013 – 1:30 p.m.
· Budget Overview
· Children, Seniors and Families – Part 1: Department of Child Support Services, In Home Supportive Services
· Health and Hospital – Part 1: Custody Health Services, Drug and Alcohol Services, Community Health Services, Valley Health Plan, Public Health, Mental Health
Tuesday, May 7, 2013 - 6:30 p.m.
· Children, Seniors and Families – Part 2: Social Services Agency
· Health and Hospital – Part 2: Valley Medical Center
Wednesday, May 8, 2013 - 1:30 p.m.
· Finance and Government Operations: Special Programs and Reserves, , Contingencies, Board of Supervisors, Clerk of the Board, County Executive’s Office and LAFCO, Assessor, Procurement, County Counsel, Registrar of Voters, Information Services Department, County Communications, Facilities and Fleet, Capital Programs, County Library, Employee Services Agency, Finance Agency
Wednesday, May 8, 2013, 6:30 p.m. – only if the afternoon session is recessed to finish in an evening session
Thursday, May 9, 2013- 1:30 p.m.
· Public Safety and Justice: Office of the District Attorney, Office of the Public Defender, Office of Pretrial Services, Criminal Justice System-wide Costs, Office of the Sheriff, Medical Examiner-Coroner, Department of Correction, Probation Department
· Housing, Land Use, Environment and Transportation: Planning and Development (including Office of Affordable Housing), Agriculture and Environmental Management, Environmental Health Department, Vector Control District, Parks and Recreation, and Roads and Airports Department, County Fire Department, Los Altos Hills Fire District, South Santa Clara County Fire District.
Budget Hearings to make final decisions on the FY 2014 Budget will take place June 17-21, 2013.
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Media Contact: Gwendolyn Mitchell/Laurel Anderson, Office of Public Affairs (408) 299-5119; Mary Stephens, Budget Director (408) 299-5174
Posted: May 1, 2013