A 5.3% cut across all General Fund departments will help balance a $1.85 million shortfall in Calaveras County’s budget for the 2020-21 fiscal year, local officials said in the first round of budget hearings Tuesday.
County department heads were given instructions to prepare “status quo” budgets in early March, just weeks before the economy was shut down by the state to curb the spread of the novel coronavirus, County Administrative Officer Al Alt told supervisors.
“That feels like a world ago,” Alt said.
At that time, departments were also directed to take “mitigation measures” to reduce spending, including implementing an open-position chill; ceasing discretionary spending on professional services, supplies, travel and facilities capital improvement projects not designated by the board as a priority; and holding off on fixed asset purchases not subject to a purchase order, the budget states.
For the 2020-21 fiscal year, revenues are forecast at approximately $66.6 million and expenditures are $69.6 million.
Alt said this year’s recommended budget was drafted conservatively – forecasting restricted revenues and high expenditures, given a murky economic recovery ahead.
As compared to the last fiscal year, Transient Occupancy Tax (TOT) revenues are projected to decline by 50%, due to COVID-19. Revenue projections for the county’s sales and use tax and Prop 172 are both down 25%. Some other revenue forecasts have been reduced by 33%.
In addition to the department cuts, administrative staff are recommending approximate allocations of $7 million from the Teeter Fund (an account that accumulates penalties paid on late tax payments), along with $3 million in cash carry (unspent funds from the prior year), to balance the 2020-2021 budget.
General Fund reserves would hold steady at $5.4 million, and contingencies would be at $1.5 million, based on the recommended budget.
“What I’ve recommended here is riding the brake,” Alt said. “We’re not speeding forward with reductions and not slamming on the brakes with recommendations we’ve made, but more taking a wait-and-see approach … hopefully as we get into the first quarter of the year, we’ll have far more information.”
Alt recommended the board hold a study session in mid-August to discuss any changes leading up to final adoption of the budget in September. At that time, there would be “more information regarding potential federal or state assistance for lost revenues, and other economic impacts may become more clear,” the budget reads.
Staff said they factored in a long list of unknowns into their recommendations – COVID-19, the economic recovery rate, California budget impacts, collective bargaining, COVID-19 federal and state relief, local business impacts, unemployment, tourism recovery, unfunded pension liability and more.
“Too many to list, quite frankly,” said Deputy County Administrative Officer Christa Von Latta.
In the way of revenues, the county is expecting to receive $1.1 million in Measure C (cannabis cultivation tax) funds in the new fiscal year, a figure that is subject to change, Von Latta said.
Federal reimbursement for Butte Fire clean-up should pad the General Fund with $2.2 million later this year, according to Office of Emergency Services (OES) Director John Osbourn.
How to budget reimbursements for about $9 million in disaster relief spending left the board divided in its final adoption of last year’s budget.
District 1 Supervisor Gary Tofanelli and District 4 Supervisor Dennis Mills cast dissenting votes on that budget out of concern that reimbursement would potentially not be pursued if they weren’t budgeted as forecasted revenues.
Alt reiterated in the Tuesday meeting that the decision to pull reimbursements out of the budget was part of a conservative forecasting policy, since there was no guarantee of when and whether funds would be received. The difference this year is that some disaster relief projects have been closed up and submitted to the Federal Emergency Management Agency, and OES has been in correspondence with the agency regarding the reimbursements, he said.
The board heard from department heads regarding individual budget requests Wednesday. The Enterprise will provide additional coverage throughout the week.