June 16, 2006

County Report

Crunching the budget numbers for the 2007 fiscal year

By Supervisor Pete McHugh
Special to the Times

Each year in May the Board has its first chance to review the County Executive’s Recommended Budget for the fiscal year (FY) starting on July 1.

This year the County Executive has proposed a General Fund (GF) budget for FY 2007 that recognizes $2.11 billion in revenues and plans to spend $2.27 billion. Compared to the GF budget approved last June, revenues increase by 7.1 percent and spending increased by 6.7 percent. The proposed spending plan increases the number of authorized GF positions from June 2005 by less than one percent from 9,254 to 9,308 positions.

The County also budgets for some of its major functions in enterprise funds, such as Valley Medical Center, and in internal service funds, such as Information Services. When the County combines these funds with the GF, the Recommended Budget proposes spending $3.85 billion on all County functions with an authorized work force of 15,263 positions. These amounts represent increases from the adopted budget last June of 3.6 percent in spending and less than one percent in the number of positions.

These spending and staffing increases obscure the fact that the County faces its fifth straight year of budget deficits. The cost of providing the current level of services continues to grow faster than the increase in revenues. The County Executive has assembled a budget that closes a total operating deficit of $164.6 million. The General Fund portion totals $119.6 million and the Valley Medical Center's share equals $45 million.

For FY 2007, the County Executive proposes to use $123.8 million in one-time funds to solve 75 percent of the $164.6 million operating deficit. The strategies to close the remaining 25 percent of the deficit in FY 2007 include:

· $10.5 million in GF department ongoing solutions
· $27.5 million in VMC ongoing solutions
· $2.9 million in County-wide ongoing solutions.

Using this large amount of one-time funds allows the County to maintain the vast majority of its current service levels in FY 2007. Based on the latest five-year forecast, however, it results in the County facing a combined GF and VMC operating deficit of $161.4 million in FY 2008.

The GF departmental and VMC solutions represent a combination of spending reductions and revenue solutions. The service impacts to residents primarily result from eliminating positions from the current level authorized in March 2006. The County Executive recommends reducing the current staffing levels from 15,060 to 15,020 for a net decrease of 40 positions.

The departments with the greatest percentage reduction in current level staffing include Public Health (minus 4.3 percent), Alcohol and Drug Services (minus 3.5 percent) and the Social Services Agency (minus 3.1 percent). The Social Services Agency will lose close to 90 positions hired for the transition to a new statewide information system for welfare clients. The two health departments will have a combined net reduction of 31 positions that mostly result from the ending of grant funded programs for children and substance abusers.

Even in the midst of huge deficits, some departments have circumstances that the County Executive believes warrant increasing current level staffing. The Department of Correction will add 23 positions to operate a facility at the Elmwood Center that the Department is reopening in response to the increasing jail population. Valley Medical Center and Custody Health will add almost 48 positions that include 18.5 positions to comply with mandates and 25.2 positions to meet increasing patient volume.

I encourage you to visit the County's website http://www.sccgov.org for more details about these and other proposals in the Recommended Budget. The Board will hold formal budget hearings on June 12, 13, 14 and make final decisions on June 16. I urge you to contact me before those dates by phone (408) 299-5030, fax (408) 298-6637 or email primo.mchugh@bos.sccgov.org with your comments and suggestions.