February 8, 2008

County Report

McHugh presents state of the county

By Supervisor Pete McHugh
Special to the Times

On Jan. 29, 2008, I had the privilege of presenting the annual State of the County Address. I am using my regular column to communicate my assessment of the County and present my goals for 2008.

Since I was Board Chair in 2004, the County has demonstrated exceptional organizational resiliency in the face of tremendous financial adversity. We have solved annual budget deficits that have a cumulative total of over $925 million. At the same time we have minimized the impact on critical safety net services.

Even during this period of solving significant annual deficits, the County has accomplished much for County residents. We continue to maintain the County’s Children’s Health Initiative that covers approximately 11,500 children. In 2008, we will complete five new facilities where we provide our critical community services. We will open the Morgan Hill Courthouse, the Crime Lab, the Valley Specialty Center and Valley Health Centers in Gilroy and Sunnyvale. Construction on the Valley Health Center in Milpitas began in 2007 and the Center will open in 2010. The financial markets continue to recognize our fiscal responsibility by assigning the County with the highest bond ratings of any county in California.

However, with all of our successes, the County has yet to achieve sufficient financial sustainability. The latest General Fund five-year financial forecast shows that even with planned one-time and ongoing solutions, the County is projected to have annual deficits ranging from $155 to $165 million. To avoid the dismantling of our General Fund departments, we must continue to pursue and be successful at three broad deficit reduction strategies.

Two of these strategies involve generating significant revenues independent of State or federal control. One way to generate such revenues is to increase fees and pass tax ballot measures. On Jan. 29, the Board approved the emergency response and disaster preparedness fee that staff estimates will achieve $9 million annually. At the same meeting, the Board authorized staff to develop language for a sales tax measure and recommend when to place it on the ballot.

The second way involves developing the County’s surplus land assets into other uses. In 2008, the Board must approve a developer agreement for the 136 acres at the Santa Clara County Fairgrounds that maintains sufficient space to serve as a community gathering place. The Board must also determine how to best use several small surplus land sites throughout the County to maximize revenue generation. At the Elmwood Correctional Facility site, we must sign a ground lease agreement with the third automobile dealership and have South Bay Honda begin construction of its new facility. Finally, we must reconsider the role of the 179 acres at Reid Hillview Airport in our asset development strategy.

The third strategy focuses on reducing the rate of growth in ongoing costs by making our operations more efficient and effective. In 2008, we must achieve at least $27 million in savings from the Valley Medical Center Transformation 2010 Plan. This Plan has the goal to ultimately realize an ongoing annual financial benefit of $50 to $110 million. We must also achieve at least $8 million in savings from our acute psychiatric services study and $6 million from our criminal justice system study. From the first three initiatives of our Corporate Sponsorship Program, we must realize $300,000 in revenue.

Our County remains committed to addressing our financial adversity, minimizing service reductions and enhancing the facilities in which we deliver services. The caliber of our County employees, our management team and our Board staffs make me optimistic about the upcoming year. I am confident that we will have a successful 2008.