The Stanislaus County Board of Supervisors approved a final budget for the 2012-2013 fiscal year on Tuesday which shows signs of a recovering economy, but still exhibits caution over looming budgetary threats.
The 2012-2013 fiscal year budget tallies $984 million in spending, a 10.4 percent larger budget than a year ago. That marks the first county budget increase in three years, though nearly half of the increase comes from a $49 million state-funded reconstruction of the Kiernan Road/State Route 99 interchange in Modesto and widening of Claribel Road.
The budget also calls for $13.3 million in extra spending to address realignment, $14.1 million in operational growth, and the addition of 23 new employees. Among the new hires will be a six-member Sheriff team, dedicated to investigating narcotics and gangs.
The enhanced spending was made possible, in part, by growing discretionary revenues, up $7 million from a year ago due to enhanced sales tax revenue. Property tax has continued to fall, however, and the county’s total discretionary revenue is nearly $33 million less than its $180 million high in 2007-2008.
County employees will see more pay cuts to balance the budget, with each union agreeing to continue a previous 5 percent salary deduction, while adding a further 1 percent cut. Employees have also shared in the cost of health insurance since Jan. 1, an effective further 2 percent salary cut.
Supervisors thanked employees for their sacrifice, allowing the county to continue to provide needed services.
“Hopefully, we are at the bottom and we're going to work our way back up from here,” Supervisor Terry Withrow said.
Despite years of cuts, the budget approved Tuesday still relies heavily on $31.6 million in reserves and one-time carryover funding to balance. That isn’t sustainable, supervisors said, and more cuts may be on the horizon should the recovery not continue.
“Today's economy is the standard,” Supervisor Dick Monteith said. “From there, we hope to build, instead of trying to Band-Aid and hold on to the past.”
But, seemingly a mirror of years past, the biggest threat to the county budget could be the State of California. Should Proposition 30 – a Gov. Jerry Brown (D)-supported ballot measure which would temporarily raise sales taxes and income taxes on wealthy earners – fail this November, the repercussions to the county could be severe.
“It's like ‘Groundhog Day’ here,” said Supervisor Vito Chiesa. “We're talking about the same thing: not knowing what the state is going to do with the November budget.”
Proposition 30 is just the state’s latest threat to Stanislaus County’s budget, Supervisor Jim DeMartini said. In 2008, California “borrowed” $7.8 million due to Stanislaus County. Though that money was due to be repaid this year, it’s expected the state will instead “repay” the money, then “borrow” it again on the same day.
“It’s nothing more than ripping off local government for almost $8 million,” DeMartini said. “On top of the realignment and in-home supportive services, this is really adding a lot of uncertainty to our budget.”
That realignment, which shifts thousands of non-violent offenders from state prisons to county jails and probation, is expected to cost the county millions next year. In-home supportive services – state mandated, county-funded in-home help for disabled persons – will add millions more.
Factor in other uncertainties, like retirement rates expected to climb 25 percent, and passing a county budget which anticipates a recovering economy was a questionable move to Supervisor Bill O’Brien.
O’Brien was the lone supervisor to vote against the budget, citing concerns with expenditures like a $2.7 million re-roofing and heating and ventilation repair on an underutilized building. Should the economy head south – or the state government step in demanding more cash – the county could regret such an optimistic budget, he said.
“I'm nervous on this one, guys,” O’Brien said. “My stomach is in knots right now. We're approaching what we see as finally hitting bottom, and I'm just nervous about some of the expenditures we're making.”