June 17, 2005

Recommended county budget balances $126.3 million deficit

By District 3 Supervisor Pete McHugh
Special to the Times

The Santa Clara Country board of supervisors had its first opportunity to review the county executive’s recommended budget for fiscal year 2005-06 in mid-May. The county executive proposes to recognize $1.95 billion in General Fund revenues and approve a General Fund spending plan that totals $2.1 billion.

Compared to the budget approved last June, revenues increase by 3.2 percent and spending increases by 5.7 percent. The spending plan would support 9,226 authorized positions, which represents a 1.5 percent reduction from the number of positions the board authorized last June.

The county also accounts for spending through enterprise funds, such as Valley Medical Center, and internal service funds, such as Information Services. When these funds are combined with the General Fund, the recommended budget projects the county will receive $3.39 billion in revenues.

The county executive proposes a spending plan of $3.58 billion with an authorized work force of 15,128 positions. These amounts represent increases of 5.5 percent in revenues, 6.4 percent in spending and less than 1 percent in staffing.

These revenue and spending increases obscure the fact that the county faces its fourth straight year of budget deficits. Sluggish ongoing revenue growth and accelerating staffing costs have caused our deficits. The modest 3.2 percent growth in General Fund revenues for Fiscal Year 2006 is the net result of major increases in property taxes and federal aid as well as a significant decrease in state and miscellaneous revenues.

If the board took no actions to slow the growth in staffing costs, they would increase approximately 12 percent over last year. This gap between revenue and staffing cost growth represents a structural deficit that the county has to solve.

County staff estimates that the FY 2006 deficit caused by our local economy and the county’s operating costs equals $113.1 million. Staff anticipates a state budget impact of $13.2 million that makes the total deficit $126.3 million. The recommended budget uses the following strategies to solve the combined local and state budget impact deficit:

- $43.4 million: One-time funding for ongoing operations

- $38.2 million: Departmental reductions

- $16.5 million: Countywide savings with no service level impact

- $15.0 million: Savings from refinancing state retirement obligations

- $13.2 million: One-time reserve for state budget impacts.

The $38.2 million in departmental reductions represent a combination of spending reductions and revenue solutions. The service impacts to residents primarily result from the changes in staffing that reduce the authorized positions in all funds this spring from 15,326 positions to 15,128.

The board already deleted 261.5 vacant positions in March and April. The recommended budget deletes another 115.2 positions and adds 178.5. The proposed net reduction of 198 positions will affect the service level capacity of some departments more than others.

The departments with the greatest percentage reduction in net staffing include Alcohol and Drug Services, Child Support Services, Community Outreach, Information Services, Public Health and the Social Services Agency.

The county executive proposes to increase the net staffing in Facilities and Fleet, the Planning Department, the Probation Department and Valley Medical Center. He also restores 19.5 positions to the Department of Correction that the board deleted in March.

I encourage you to visit my Web site www.pmchugh.org/countybudget for more details about the county executive’s major reductions. The board held formal budget hearings on June 13, 14 and 15 and final decisions will be available after June 17.

If you have any questions about the county budget, contact me by phone (408) 299-5030, fax (408) 298-6637 or e-mail primo.mchugh@bos.sccgov.org.

Editor’s note: The final budget decisions were not made in time for the Evergreen Times’ June 16 print day.