Santa Barbara County’s financial condition is stable, but staff is recommending caution in increasing spending as the Board of Supervisors begins three days of workshops on the preliminary 2023-24 fiscal year budget.
To illustrate that advice, County Executive Officer Mona Miyasato used a road sign that said “Buckle Up & Drive Carefully.”
That was based in large part on the uncertainty of the state budget deficit and the economy as a whole, as state and federal resources make up 40% of the county’s budget.
General Fund deficits are expected to appear in the 2025-26 fiscal year.
She noted that for the fifth-straight year, no service-level reductions are planned, and progress will continue on board priorities, but at the same time, no significant program expansions or new ongoing expenses supported by the General Fund are plugged into the preliminary budget.
However, various departments have requested expansions that would total 31 full-time employees, with one-time expenses pegged at almost $6.7 million and ongoing costs totaling more than $7.2 million.
High-priority requests could be funded by cutting other areas of departments’ budgets or from sources other than the General Fund, among other options.
Miyasato said key challenges will continue to be recruiting and retaining qualified staff, dealing with new and constantly changing state and federal mandates, long-term efforts to deal with homelessness given only one-time state funding and absorbing increasing insurance premiums.
Budget Director Paul Clementi said general liability and worker’s compensation premiums are among the increasing costs that will hit the county hard, rising 25.7% from last fiscal year to about $50 million in 2023-24.
Both challenges and opportunities are represented by implementing major technology and programs, including the new state Advancing and Innovating Medi-Cal program, the county’s Enterprise Resource Planning System, the Accela permitting system, launching the new Information Technology Department and the Digital Evidence Management System.
“These are incredible, these are great, these are milestone projects, but they also take time and are affecting staff resources and focus,” Miyasato said.
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In an overview of the preliminary budget, Clementi said the preliminary operating budget is $1.48 billion, with total operating revenues up about $100 million or 6.9%, General Fund operating revenues up 8.3% and discretionary general revenues up 7.9% from last fiscal year’s adopted budget.
Property taxes, which Miyasato said make up 75% to 80% of discretionary revenues, are up 10.2%, transient occupancy tax revenues climbed 15.8% and sales tax revenues edged up 5.9%.
Cannabis taxes are predicted to rise slightly, from $6.7 million estimated actual revenues in 2022-23 to $7.5 million next fiscal year, but are still far below the promising peak of $15.7 million actual revenues in 2020-21 and the optimistic $19.1 million in the 2021-22 adopted budget.
As a result, the staff on Friday will ask the board to approve using discretionary General Fund revenues to pay for one-time and ongoing expenses that have been covered by cannabis tax revenues.
Among the other revenue sources, the county expects funding for public safety from Proposition 172 to rise by $5.8 million, or 13.5%, to $48.9 million, adding to the about $1.5 million of one-time unallocated Prop. 172 balance.
Clementi said the county expects $3.7 million to be allocated to the Sheriff’s, District Attorney’s and Public Defender’s offices to cover rate increases and avoid service-level reductions and $1.3 million to go toward Northern Branch Jail operations, with about $800,000 currently unallocated.
The estimated balance for key General Fund reserves is expected to be about $130 million at the end of the current fiscal year, but recommended uses and earmarks in the preliminary 2023-24 budget would whittle that down to about $72 million.
The Strategic Reserve balance is forecast at $44 million, with $14 million moved to the Disaster Recovery Reserve for the Public Works Transportation Division to use on 2023 storm recovery projects.
Another $5 million will go to the Emerging Issues Reserve to replace one-time allocations from cannabis tax revenues.
After hearing supervisors’ direction in this week’s budget workshops, the staff will prepare a recommended budget to be presented in May, with budget hearings and adoption set for late June.