Placer County’s 2011-12 budget remains in good shape despite approximately $250,000 in mid-year revenue reductions triggered Tuesday because state revenue continues to run behind projections.
The county budget team gave the Placer County Board of Supervisors a mid-year budget update Tuesday morning just as state officials were preparing to announce automatic budget cuts triggered by the state’s below-anticipated revenue.
In a report to the board, the budget team said county expenditures and revenue remain in line with estimates in the final $765.8 million 2011-12 budget the board adopted Sept. 27.
“The county’s sound, proactive budget approach is a key reason that Placer County remains in relatively good shape despite the economic slowdown and state budget crisis,” Board Chairman Robert M. Weygandt said. “Our approach will serve us well as we deal with the new budget challenges that lie ahead for next fiscal year.”
County Finance and Budget Operations Manager Graham Knaus told the board the state budget crisis continues to take a toll on the county and that reductions in property tax revenue continue, but are tapering off.
“The stability of the fiscal year 2011-12 budget is a testament to the continued proactive approach of your board to ensure sustainable service levels within local and state-imposed fiscal constraints,” the budget team said in its report.
Placer County initially faced about $1million in budget reductions from the state’s mid-year trigger cuts. Knaus noted Tuesday that the impacts now are projected to be only about $250,000 because of proactive steps taken by the board and smart planning decisions made by departments. In some cases, for example, the county anticipated the mid-year trigger cuts by removing at-risk revenue before the board adopted the county’s final 2011-12 budget.
While developing the budget, the board also gave the county flexibility in dealing with revenue and expenditure fluctuations by increasing the county’s budget reserves and contingency funds by more than $5.5 million.
“The decisions to bolster county reserves and avoid relying on at-risk funding are in keeping with Placer County’s conservative approach to budgeting. We have worked hard to maintain the county’s fiscal stability while preserving core services to the public,” Chairman Weygandt said.
Tuesday’s discussion was a chance for Knaus to give the board an initial glimpse at budget challenges Placer County likely will face during the 2012-13 fiscal year.
Staff estimates Placer County currently is facing a $5.1 million initial deficit for the fiscal year that begins July 1, 2012, including $2.3 million in its General Fund and $2.8 million in the Public Safety Fund. The deficit reflects the continued property tax decline, as well as higher health insurance and other cost increases. The amounts are preliminary and will be adjusted over the coming months to include updated revenue and expenditure estimates and likely state impacts. Staff outlined a series of options Tuesday that could be used to eliminate the projected deficit as the county budget-development process unfolds in the coming months.
Staff anticipates Placer County may get less revenue and further increased responsibilities from the state next fiscal year because it is facing an estimated $13 billion deficit.
The main uncertainty facing the county is how soon it will need to open the new jail being built at the Bill Santucci Justice Center in Roseville. The state began shifting responsibility for many adult parolees and lower-risk criminal offenders to counties in October as part of public safety realignment.
To address the increased responsibility, the local Community Corrections Partnership is finalizing a plan on how best to manage the increased offenders. The plan is expected to be presented to the board in January.
Impacts on the workload of the Probation Department, Sheriff’s Office, Health and Human Services Department, District Attorney’s Office, public defender services and local law enforcement agencies will be assessed over the coming months as parolees and offenders are transitioned from the state to the county and the best mix of probation supervision, incarceration, alternative sentencing, and mental health and substance abuse treatment are put in place.
To the extent the increased responsibility demands higher jail capacity, it may impact how soon the new jail will be operational.
Placer County is scheduled to receive an additional $3.1 million this fiscal year to help cover the costs of its new realignment responsibilities.
Placer County is in better shape than many counties and cities in California because of cost-cutting actions approved by the board over the last few years in response to the state budget crisis and economic slowdown. They include:
A hiring freeze that has been in place since 2007;
A move to have employees pay larger shares of their pension and health insurance costs; and
Creation of a two-tier retirement system that will scale back benefits to new employees, but help ensure that benefit costs are sustainable in the future.