Calaveras County Supervisors on Tuesday voted 4-1 to taking a calculated risk: They directed staff to prepare a final budget for the fiscal year that began in July that drains down savings accounts to hire desperately needed staff.
The budget anticipates total expenditures of $158 million and revenues of $134 million. The difference will come from fund balances.
The General Fund budget, the portion over which county officials have the most control, will have about $63 million in expenditures and $60 million in revenue. The non-General Fund portion of the budget includes federal grant funding for things like road projects and welfare payments.
The final General Fund budget for the year that began July 1 is $9.5 million larger than the preliminary General Fund budget supervisors approved in June. More than half of that increase, or $5.4 million, is due to Butte Fire recovery work, much of it funded by federal and state governments. Another $1.8 million in increase in the General Fund budget is due to the growth of the county’s new cannabis cultivation regulation program.
The changes that Calaveras County Administrative Officer Shirley Ryan said caused her heartburn, however, are not directly tied to either of those matters. Instead, they are core government services she believes are in jeopardy due to short staffing.
“I had to weigh the risk against the need,” Ryan said of why she recommends taking $5.5 million from various forms of savings to balance the budget. About $400,000 of that will go to hire eight new employees, including five correctional officers for the county jail, an appraiser in the Assessor’s Office, an account technician in the Auditor-Controller’s Office, and an animal services officer.
Usually, Ryan and other county financial departments warn against using one-time money to hire staff. That’s because the cost of an employee will continue in future years and, unless new revenue sources arise to cover those costs, the added salaries will gradually dig the county deeper financial hole.
Funding to remove hazardous trees in the Butte Fire area is an example of one-time funding. The contractors hired to take care of the job do not become permanent county employees and the county is not on the hook for permanent expenses.
Ryan said that Sheriff Rick DiBasilio has long been operating the jail with far fewer staff members than needed. She said he asked to hire more personnel. “I agreed for the safety of our officers and the inmates,” Ryan said.
The staffing shortage in the Assessor’s and Auditor’s offices pose dangers of another sort, she said. Staffing cuts and property tax roll changes due to property destruction in the Butte Fire have overwhelmed the Assessor’s Office, Ryan said. As a result, staff members have not been able to process roll changes when properties that suffered declines during the recession see increases in value. The failure to adjust the value of those properties means the county government loses the ability benefit from rising property values.
Auditor-Controller Rebecca Callen said that situation puts the county on a financial downward spiral – unable to collect revenue when property values rise and thus unable to gain the funding to provide needed services to the owners of those properties.
“All these opportunities for adding value to our rolls are not happening,” Callen said.
Meanwhile, Callen said her office has also lost staff in the last eight years at the same time that increased federal and state reporting requirements, the Butte Fire and the advent of the cannabis industry are requiring more work. “At this point I can barely afford people to take vacations or be out sick,” Callen said.
Ryan said a similar crisis is brewing in the Animal Services Division. She said there was recently a time when one of the county’s two animal services officers was on leave and the other was out sick. That meant there was no officer for several days to respond to animal emergencies. That’s why she recommends hiring a third officer.
Supervisors made only fairly small changes to Ryan’s recommendations. Among them, they directed Ryan to allocated $1,000 for each supervisor – a total of $5,000 – to go into a discretionary fund that each supervisor could use for purposes such as holding town hall meetings with constituents.
The county government had to pay an unexpected bill for video editing following an August town hall meeting on tree mortality that Supervisor Michael Oliveira organized. That bill prompted an earlier discussion on the matter. Both during the previous discussion and on Tuesday supervisors said they don’t want any strings attached to how they use the money.
Supervisor Steve Kearney proposed creating the funds for town hall meetings. “I think if we are responsible enough to get to this position, we are responsible enough to use it appropriately,” he said.
Ryan and Callen urged supervisors to increase the amount of money held in reserves. The reserves fund can only be tapped for declared emergencies. Examples of recent declared emergencies would be the Butte Fire and the tree mortality crisis.
Right now, the county has a General Fund Reserve of $2.4 million, or about 3.9 percent of appropriations. In order to satisfy credit rating agency guidelines and obtain inexpensive credit, the county reserves should be triple that amount, they said.
Ryan urged supervisors to transfer into reserves $2.5 million or $3 million that is currently in the Teeter Fund. The Teeter Fund accumulates about $1.5 million a year in penalties that accrue when property owners are late paying property taxes. The county gets to keep that money – even for taxes that are slated for fire districts and other special districts – in exchange for fronting revenue to the special districts when property owners are delinquent.
The Teeter Fund currently has about $8.7 million, but under Ryan’s plan about $4.3 million of that will be used to balance this year’s budget.
Supervisor Cliff Edson initially raised a new subject when Ryan requested the reserve transfer proposal, saying he wants money transferred from the Teeter fund to the Public Works Department so it can be used to fix a dangerous child drop-off and supply delivery area at Valley Springs Elementary School.
In the end, supervisors directed staff to report back on proposals for addressing the Valley Springs Elementary School situation and other road maintenance needs. “There are many elderly people driving around in this county who can’t see the lines,” Edson said of infrequently-painted markings on county roads.
Supervisors also directed Ryan to amend the final budget to transfer $2 million from the Teeter Fund into reserves.
The vote was 4-1 with Kearney opposed. Kearney said he does not believe the reserve fund needs to be as large as recommended by Ryan and Callen.
Ryan is scheduled to bring the final budget back to supervisors for final approval on Sept. 27.
Whether county officials can find new revenue sources to cover expanded jail staffing and other needs is an open question. Measure C, a cannabis industry tax on the November Ballot, might bring in $10 million or more a year, according to staff estimates. But voters might not approve it. It is also possible that voters next year could consider and approve a ban on cannabis cultivation. That would eliminate tax revenue from the cannabis industry as well as saddling law enforcement officers with the cost of enforcing a ban.
Ryan also noted that the nation is seven years into an economic recovery and recoveries usually don’t last that long. “My crystal ball is fuzzy,” she said.