Santa Barbara County Supervisors got a bit of good news Tuesday — the county will have $29 million in its strategic reserve when the budget is wrapped up for the 2011-12 fiscal year, and economic indicators are looking up.
But they also got a word of a caution from Auditor-Controller Bob Geis, who told the board during his year-end report that challenges remain in the form of unmet pension liability and fiscal uncertainties at the state and federal level.
Property tax growth continues to be slow, Geis said, while sales and transient occupancy tax are showing some improvement.
“We’re still very much in the midst of a recovery,” Geis said. “Unemployment remains high and the real estate market is still struggling.”
Geis touted as a positive 10 consecutive quarters of growth in the nation’s gross domestic product with an average increase from 1950 until the present of 3.2 percent.
“If we continue at this 3 percent increase level, things will start looking much better,” he said.
County unemployment remains high, he said, but has notably declined from 8.9 percent in 2011 to 7.9 percent this year.
“I would rather see it in the 4 percent to 5 percent range,” he said.
Expenditures from the county’s governmental funds exceeded revenues for the fiscal year that ended June 30, with $752 million coming into the county and $772 million paid out, for a difference of $20 million. That number includes debt refinancing expenditures of $17.5 million, however, which makes the gap in operating funds about $2.5 million.
The county’s overall net financial position decreased by $15.5 million, with $13.1 million resulting from a transfer of cash and real estate to the successor agency for the redevelopment agency and $1.8 million in former redevelopment agency cash to be used for taxes in November this year.
Salary and benefit costs increased by $10 million for a total of $441 million — 57 percent of total county expenditures — mostly because of retirement cost increases, health insurance and overtime, incurred primarily by the public safety departments.
Cost increases included retirement costs of $13.2 million, health insurance cost increases of $1.2 million and overtime staffing, $1 million.
At the same time, staff was reduced by 213 full-time equivalent employees across all departments for a cost decrease of $6.8 million.
The county’s general fund revenues exceeded expenditures by $18.4 million, and the total general fund balance increased by $2.2 million for a total of $85.9 million.
The amount includes an unassigned fund balance of $7.6 million, which will be rolled into a strategic reserve.
First District Supervisor Salud Carbajal called the report “much more positive,” but noted that pension liability, salary costs, jail operation costs and mental health liabilities still have to be dealt with.
Third District Supervisor Doreen Farr noted that the county is trying to reach a strategic reserve of $31.2 million and the $29 million is almost there.
The county’s general revenues show a $3.5 million positive variance because of unexpected income from the dissolution of the redevelopment agencies countywide, and other higher-than-anticipated tax revenue.
Departments with positive variances include human resources with $380,000 due to expenditure savings; the Sheriff’s Department with $855,000 due mostly to salary savings; and Probation with $403,000 from the state realignment program.
The roads fund is “healthy,” with a $2 million fund balance increase, but workers compensation self-insurance has a $7.9 million deficit.
Alcohol, Drug and Mental Health Services, which is struggling with outstanding liabilities, ended the year with a $3.5 million negative variance.
Geis said that the county is still not out of the woods on property tax, but that after two years of growth in sales and hotel bed tax, that may start to change too.
After a question from Andy Caldwell, spokesman for the Coalition of Labor, Agriculture and Business, about the possibility that Moody’s would begin considering pension debt in county credit ratings, Geis agreed to talk about the issue during a 15-minute presentation of the county’s final financial statements for 2011-12.
Carbajal asked, as well, that the county retirement board give a public report on its valuation for the coming year.
Also on Tuesday, the board unanimously approved the first reading of an ordinance that would reduce the amount of time vehicles can be parked along county roads from 120 hours, or five days, to three days, or 72 hours.
The change brings the parking restriction in line with the state vehicle code and with local cities and other nearby counties including San Luis Obispo, Ventura, and Los Angeles.