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For the past two years, Sonoma County supervisors have relied on employee concessions, reserve funds and job attrition to cover county budget deficits.

But now county leaders say job cuts, which were utilized to a lesser degree in the past, appear to be the main way out of a projected $42.3 million deficit for the budget year that starts in July.

"In the last three years, we've gone from bad to worse to devastating," Board of Supervisors Chairman Efren Carrillo said about the anticipated impact of further downsizing on the county workforce.

The Board of Supervisors began its public deliberations Tuesday on the county's current and future budget woes.

At the center of the nearly two-hour discussion was a preliminary proposal to cut county spending at all departments by 25 percent and reduce the 3,700-member workforce by as many as 500 positions.

Hundreds of layoffs could result from any final decision, which would come in June when supervisors approve a 2011-2012 spending plan.

"It's going to be a very difficult and trying time," County Administrator Veronica Ferguson said at the start of her presentation to the board.

The job cuts are an attempt to address head-on a three-year shortfall caused mainly by a historic drop in property tax revenue, rising government costs including those linked to retirement benefits and reductions in state and federal funding.

The new strategy would rely more on job cuts and less on the employee concessions and one-time special reserve funds used the past two years to solve deficits of nearly $62 million and $22 million, respectively.

Those budgets avoided large-scale layoffs by cutting mostly vacant positions, but that may have delayed the inevitable, several supervisors said Tuesday.

"I don't want to go another year of not making the necessary cuts to stop the bleeding," said Supervisor Mike McGuire. "What the county administrator is recommending today is a no-gimmick budget."

Ferguson advised the board not to tap further into the special reserves, now at nearly $29 million, or use the general fund reserves, now at $35 million.

The $377 million proposed general fund is part of the roughly $1.1 billion overall county budget, which also includes state and federal dollars.

Ferguson said cutting vacant jobs first could spare some employee layoffs. About 240 unfilled positions still exist in the county workforce, but Ferguson said not all of those open jobs would be in line for elimination.

A package of retirement incentives also could help limit layoffs. The board will discuss those incentives later this spring.

Supervisors touched briefly on the rising cost of retirement benefits. County contributions to pensions, now around $90 million annually are set to rise by millions of dollars over the next five years to account for the 2008 stock market losses and other benefit changes.

"Unless we bend that curve downwards, we're not going to make a lot of progress in the long-term," Bob Williamson, a retired Santa Rosa finance executive, told supervisors in his public comments.

Ferguson said she hopes to reach some agreement by June with employee groups about creating a lower tier of pension benefits for new employees. Because of the county's informal hiring freeze, savings from such a move would likely not help the county budget for several years, she said.

Supervisors also discussed ways to boost county revenue through tax increases on sales and hotel occupancy, or through new taxes on business licenses and utility users.

Any move in that direction would need to be clearly explained and justified to taxpayers, supervisors agreed. "I'm not sure the groundwork has been done on that yet," said Supervisor David Rabbitt.

Supervisors said they would look carefully at any plans to raise service charges levied on local agencies and fees for everything from parks to planning and building permits.

Past attempts to raise those fees and recover the full cost of county services were seen as untenable by the building community especially, Ferguson acknowledged.

McGuire called on county managers and leaders to "share in the sacrifice" made by workers, who by next fiscal year have will not have had salary increases for three consecutive years and who have given up 3 to 5 percent of their pay in three years of furloughs. Union officials in the audience Tuesday nodded their heads in agreement.

Supervisors and county managers, most of whom were in the audience, also have had pay freezes and been part of the furlough program.

After the meeting, McGuire confirmed that he has followed through on a campaign pledge to take a 30 percent pay cut, reducing his pay from the standard supervisor's salary of $134,097 to $93,864. The difference will be returned to the general fund.

County officials said they were not aware of a similar move by the other four supervisors.

Tuesday's discussions also focused on the state and federal funding reductions expected to impact health and human services and on Gov. Jerry Brown's proposal to transfer to counties some fire and emergency services, child welfare and adult protective programs and supervision of low-level state inmates and all youth offenders.

Whether that shift of state services would be accompanied by the necessary funding is a big concern for counties, supervisors said.

Gov. Brown has made the funding dependent on voter approval of a five-year extension of taxes on sales, income and vehicles.

What happens if voters don't approve those taxes, or, if they do, what happens after the five-year extension expires, supervisors asked.

"We have them promising that they'll pay five years out," said Supervisor Valerie Brown, who is leading a statewide county task force studying realignment of services. "I have huge issues that that will not come to pass."

Supervisor Shirlee Zane was not in attendance Tuesday following the death of her husband Peter Kingston last week. The board adjourned in his memory.