May 25, 2004

Recommended budget proposes countywide service reductions

Send your comments before June 14

By Supervisor Pete McHugh
Special to the Times

In early May, the County Executive submitted a recommended budget that solved a projected $200.3 million General Fund deficit. The budget reduces current service levels in all departments to address the county’s local deficit of $132 million. It also sets aside a one-time reserve of $50 million to buffer against anticipated state reductions. To maintain safety net services in the Mental Health and Drug and Alcohol Departments through fiscal year (FY) 2008, the budget establishes an $18.5 million reserve.

Sluggish ongoing revenue growth and accelerating staffing costs have caused our deficit. Staff estimates that total General Fund revenues will increase by $94.5 million to $1.9 billion in FY 2005. The revenue sources that will significantly contribute to the increase include $31 million in one-time funds, $22 million in charges for various departmental services and $19 million in federal revenues.

In FY 2005, state revenues are likely to increase less than 1 percent. Since state revenues equal 40 percent of the total budget, this slow growth has a major impact on funding for vital safety net services.

In response to projected deficits, employee labor groups have extended existing contracts that give up or significantly reduce expected pay increases. Even with this help, the recommended budget sets total General Fund spending at $2 billion. This amount represents a 4 percent increase over last year.

When one-time revenues are removed from the revenue total, total revenues only increase 3 percent. This 1 percent gap represents a structural deficit that the county has to solve.

To address the projected deficit, the County Executive’s recommended budget calls for $108.7 million in countywide offsets and $91.6 million in departmental reductions. The following four actions make up the countywide solutions:

- Use $56.6 million in reduced costs for liability insurance, employee health insurance and retiree health.

- Use $44.9 million in one-time funding to spread the impact of reductions over more than one year and maintain ongoing services.

- Use $5.5 million in ongoing revenue and/or reimbursements from asset or economic development efforts.

- Use $1.7 million in increased fees from various departments.

The $91.6 million in departmental reductions represent a combination of spending reductions and revenue solutions. The service impact to residents primarily results from the elimination of 436 authorized positions. This reduction represents more than 4 percent of the county’s 9,800 General Fund positions.

At the board’s direction, the County Executive has made sure that these position reductions do not unfairly protect executive managers, middle managers and supervisors at the expense of line staff.

More than 80 percent of the position reductions take place in the areas of law and justice, social services and health. Specific health services affected include HIV/AIDS programs, suicide intervention and mental health counseling for residents on welfare and special education students.

The services in the social services area identified for reduction include children’s shelter staffing and senior nutrition programs. Through proposed attrition plans, there will be fewer attorneys to prosecute and defend residents charged with crimes. The Department of Correction will close a women’s facility at Elmwood and Juvenile Probation will eliminate neighborhood accountability boards.

I encourage you to visit my Web site http://www.pmchugh.org/countybudget for more details about the County Executive’s major reductions. The board will hold formal budget hearings on June 14, 15, 16 and make final decisions on June 18.

I urge you to contact me before those dates by phone (408) 299-5030, fax (408) 298-6637 or e-mail (primo.mchugh@bos.co.scl.ca.us). I will benefit from your comments and they will help strengthen my decisions on how I vote on these items in June.