Wednesday Aug 19 2009
County confronts dwindling revenue
By: Gus Thomson Journal Staff Writer
Budget workshop suggests more cuts will be needed
Placer County supervisors closed off a two-day budget workshop Wednesday bracing for still more cuts to come. The final budget supervisors will consider in late September tags spending at $785 million – down 9.3 percent from last year’s final budget of $865 million. But staff and elected officials both expressed the belief that future cutbacks are coming because of dropping property-tax revenues and the muddled state financial picture. Illustrative of the dwindling pot of property-tax cash the county has to work with, the CEO’s budget analysts produced figures Wednesday showing that between May and this month, expected property-tax revenue had dropped by more than $12 million – from $94.6 million to $82.3 million. The county is balancing its budget through a series of cost-cutting measures, including decreasing wage and benefit expenditures through staff attrition, imposing mandatory furlough days for its 2,200 employees and dipping into reserves. “It is just amazingly dire out there,” said Therese Leonard, a CEO’s Office budget analyst. Leonard said Placer is probably the only one of 58 counties in the state not laying off staff this year. That comes because of promises made in negotiations for monthly furloughs that layoffs would not take place through June 30, 2010. Leonard said one of the biggest questions still unanswered is what the state will do next to shore up its shaky finances. That will mean a slower recovery in California than the rest of the nation, she said. “I don’t think we’ve hit bottom,” Leonard said. “I think we have a way to go.” With a $4 million draw expected from the county’s reserve fund, the amount of money the county has built up for hard times is due to drop from $17.8 million this year to $1.8 million by 2013-14, she said. Capital reserves, which will pay for part of the $98 million South Placer Jail that’s soon to start construction, will drop down during the same period from $61 million to $13.9 million. And after the jail opens in 2012, the county faces an initial annual operating cost of $20 million that wasn’t being budgeted before doors opened. Supervisor Jim Holmes, who represents the Auburn area, suggested that the county might want to examine the possibility of contracting out jail operations to a private sector business. CEO Tom Miller said the idea is “clearly an avenue we have to explore.” “In the next two years, we have to turn over every rock,” Miller said. Miller said that the county avoided a hard landing by building up reserves in good times and recognizing that financial conditions were changing. Instead, Placer is now adjusting to what he described as “the new normal.” Supervisor Robert Weygandt said that he’s concerned in the next few years about deferring maintenance on roads and buildings that could lead to higher costs for repairs in the future. Supervisor Jennifer Montgomery said the county should keep an eye on small cost efficiencies that could cumulatively result in larger savings. Chairman Rocky Rockholm of Roseville said the county is still facing difficult challenges ahead. “I’m not envious of what we face for the next several years,” he said. The Journal’s Gus Thomson can be reached at firstname.lastname@example.org.