Sunday, February 9, 2014

County projecting large budget deficit

Posted By on Sun, Feb 9, 2014 at 4:53 PM

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It looks like the Humboldt County Board of Supervisors will have some tough decisions to make in the coming months.

The board is slated to receive its mid-year budget update Tuesday, and the news is pretty grim. According to the staff report, County Administrative Officer Phillip Smith-Hanes is expected to tell the board that the county is looking at a projected $3.6 million shortfall in the county general fund for the 2014-15 fiscal year. Smith-Hanes estimates the county will go into 2014-15 with about $3.7 million in reserves. The board approved $2.9 in spending from the account this fiscal year to pay for liability fund expenses, economic development set aside, emergency management grant purchases and ambulance service in eastern Humboldt County, which drew the reserve fund balance down to about $2.8 million. Fortunately, the county is forecasting that it will end this year with about $900,000 more in revenue than it had budgeted.

Of the projected shortfall for 2014-15, about $1.2 million is a structural deficit — meaning recurring expenditures are far outpacing annual revenue estimates. Another $2 million is due to increased health insurance, retirement and worker’s compensation costs.

Smith-Hanes is recommending that the board prepare to shave $2 million in spending from next year’s budget by cutting “non-essential services,” restructering departments, improving county processes or “community partnership development.”

In an interview with the Times-Standard, Second District Supervisor Estelle Fennell said that — given the county’s long-term economic forecast — the board should look at this budget process as the “new normal.”

“We should look at combing some departments or combining services,” Fennell said.

County staff will look for some direction from the board Tuesday so it can begin preparing a full rundown of options for the board in advance of the July 1 start of the next fiscal year. Read Smith-Hanes’ full report here, and check out the full Times-Standard story here.
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