County's budget outlook:

•$86-96M general fund revenue loss for 2008-2009

•$153M for 2009-2010

In what is likely to be the final budget outlook briefing to the San Diego County Board of Supervisors before the county’s 2009-2010 budget is prepared, a February 10 presentation estimates general fund sales tax and property tax revenue for fiscal year 2008-2009 to be $86 million to $96 million below budget while predicting a $153 million shortfall in such general fund revenue for FY 2009-2010.

“That is significant because that is our discretionary money,” said Board of Supervisors chair Dianne Jacob. “It’s happened to the private sector first, and now it’s coming down to local government.”

The county’s revenue losses also include deferred or reduced state and Federal payments.

“The fiscal problems in both our country and our county have grown considerably,” said county chief administrative officer Walt Ekard. “It is not a pretty picture, and we fear that the worst is yet to come.”

The losses also include a decrease of $2.5 billion in the county’s retirement fund as of December 31, 2008, due to the worldwide financial crisis.

Although the budget presentation was an information item which did not require a vote, a separate Board of Supervisors action February 10 covered workforce reduction and resulted in some layoffs.

County chief financial officer Don Steuer believes that the use of reserves will enable the programs in the 2008-2009 budget to be funded.

“We believe that we can continue to weather the storm this fiscal year,” he said. “Next fiscal year is going to be even more challenging.”

The preparation of the 2009-2010 budget is followed by a presentation of the proposed budget to the supervisors.

That presentation has traditionally been heard in May. “The budget we propose to you will be structurally balanced,” Steuer said.

The supervisors then hold public budget hearings during June and begin budget deliberations in late June.

“We will do everything possible to mitigate the revenue challenges that we face,” Ekard said.

A county government (and its associated staff) serves two functions.

The first is as an agent of the state for both incorporated cities and unincorporated communities.

Notable roles in this capacity include the Registrar of Voters, the court and correctional systems, the tax collector, the county recorder, public health, environmental health, and the Department of Agriculture, Weights and Measures (which includes agriculture in cities as well as unincorporated areas and also assures the accuracy of scales and gas pumps throughout the county).

The county’s other function is as the substitute for a city council (and city staff) for unincorporated communities.

This includes planning and land use, roads, flood control, parks, libraries, and law enforcement.

The county also operates eight airports, two of which are in incorporated cities, and several cities contract with the county for library or law enforcement services.

The county’s role as agent of the state makes some of its funding subject to state mandates.

Additional revenues are dedicated for purposes for which they are collected, and much of the county’s discretionary funding is spent on public safety.

The predicted $153 million general fund shortfall for 2009-2010 estimates a $57 million drop in collected property taxes and a $96 million loss of sales tax revenue.

The state’s fiscal crisis has led to cuts in programs for state funding and to deferral of payments from the state for county-administered programs.

The economic hardships experienced by many citizens have created increased demand for public social services as well as greater use of public parks and libraries in lieu of more expensive activities.

The state plans to defer nearly $12 million of March payments to the County of San Diego for the CalWorks (welfare-to-work), foster care, and aid to adoptive parents programs.

Those programs serve approximately 78,000 San Diego County residents, including 63,000 children.

“Numerous hardships will be experienced by these at-risk children and families,” said Nick Macchione, the director of the county’s Health and Human Services Agency.

“Many CalWorks families will not be able to pay all of their rent and utilities,” Macchione said. “Group homes will not be able to continue paying their staffs.”

Macchione also predicted that foster children would be returned to the county if foster parents cannot afford the expenses.

“The Polinsky Children’s Center will be overwhelmed,” he said.

Supervisor Greg Cox, who is on the executive board of the California State Association of Counties, notes that some counties are operating on day-to-day funding.

“Some counties are on the brink of bankruptcy,” he said.

As the state legislature is working on a budget, Governor Schwarzenegger has proposed a trailer bill to defer state payments from February until September.

“Forcing their problems on counties in California is not the way to fix their problem,” Cox said. “We need to get a very clear message across to the governor and the state legislature that this is not any way to run a government.”

Supervisor Pam Slater-Price compared the state to a drug or alcohol addict in denial. “I think they’re just about at rock bottom,” she said.

“The very programs that they approve and create are the ones that they’re cutting off,” Slater-Price said. “Without the dollars, we can’t distribute the dollars.”

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