Building the County budget time in a difficult year

Usually, I write about the county budget in May, but like so many other things that have been turned upside down with this pandemic, so has the budget.  

Generally, in May the Board of Supervisors holds budget workshops, with budget hearings in June. A budget for the County’s fiscal year that runs July through June is adopted before July 1 of each year. With all the unknowns around financial impact of pandemic response and declining tax revenue associated with the shutdowns, our budget has been addressed quite differently this year.

In order to continue to deliver services into the new fiscal year, on June 10 the Board approved a “baseline” recommended budget of about $2 billion. Yet, it appeared at that time we still had somewhere between $45 and $50 million to address due to the aforementioned revenue declines and the need to continue to respond to Covid-19. Not all Covid-19 response expense is eligible for federal reimbursement, so much of our response will come out of our general fund.

In late June, the Board of Supervisors and the public held budget workshops that included painful discussions on potential budget adjustments in all departments and agencies; those budget cuts are needed to arrive at a fully balanced budget before final adoption in September. The goal of the workshop was to understand how the revenue reductions will affect services provided by the County, the budget impacts of the COVID-19 pandemic, and how CARES funding and other one-time funds might potentially offset those costs.

It is important to note several highlights, or rather lowlights, of our budget challenges this year. All revenues are projected to significantly decline, including Transient Occupancy Tax by 30 percent, funds from the state for public safety and health and human services, gas taxes and general fund contingencies. Every decision in September will be very challenging and carefully discussed.

It will be recommended that these shortfalls be filled with a combination of non-staffing operation expenses and/or uses of one-time fund balances available, and a reduction in staffing. 

Upcoming challenges in fiscal year 2020-2021 will include ongoing expenses related to Covid-19 such as case management, contact tracing, testing, public lab processing, coordination of Alternate Care Site and Non-Congregate Shelter Site and hotline operations, logistical support, finance and communications, an on-site testing operator to replace the State’s provider and increase of lab capacity, all for a total of $60+ million. 

While some of this will be covered by FEMA and CARES Act (pending approval), we will still be left with about $18 million to find somewhere. And after all this there is the continued uncertainty around Covid-19’s future spread. Where is my crystal ball?

We anticipate additional information will be forthcoming from FEMA and CARES to help inform our budget decisions in September. And the Board is already discussing using part of the PG&E settlement funds (one-time) to help offset these revenue reductions and service reductions for the community. This initial conversation with our community is the August 11 Board meeting. The budget looks very gloomy, but once again we need to be resilient and flexible. 

Sometimes it seems that the burden is too great and unfair. We’ve overcome the wildfires and flooding, and now we are in the midst of a pandemic. And we are again in fire season with the prospect of Public Safety Power Shutdowns looming. But we are Sonoma Strong, so we will come out on the other side wiser, stronger, and yet maybe a bit weary of crisis.