Sonoma County government projects near-term shortfall of up to $15 million
If not for a two-hour discussion on the local response to the coronavirus, which has sickened more than 200 people in Sonoma County and wreaked havoc on the local economy, some of the business at Tuesday's Board of Supervisors meeting might have appeared routine.
Property tax revenue came in strong more than a week ago. The county water agency, the main wholesaler of local drinking water, is boosting rates by at least 5% and county leaders are pushing ahead with a number of capital projects.
While cities across the nation are poised to institute furloughs for employees and slash budgets, the immediate financial dilemma for counties like Sonoma has not been so perilous. County government is dependent on property taxes for most of its discretionary spending, and unlike the sales and hotel bed taxes that cities rely on, those have not seen precipitous drops — yet.
So Sonoma County, the largest employer in the region, is taking a wait-and-see approach, delaying final approval of its next budget to September while continuing to pore through any new economic data for clues about the potential calamity to come.
But supervisors are already sharpening their arguments for the looming budget battle this fall. Elected officials are often loath to reveal how they intend to cut services, and thereby reduce spending, but all agree that tough choices lie ahead in an inherently fraught exercise — involving county government's financial well-being, the future of hundreds of government jobs and the continuation of some public services that are more in demand than ever.
'Any time you pick priorities, it's absolutely political,' said Sonoma County Supervisor James Gore, who was first elected in 2014 and is entering his first recession-era budget process. 'It's going to be vital that people's voices are heard. That's why I'm supportive of us pushing the true budget workshops and deliberations into September.'
The deliberations over the county's now $1.79 billion budget will be unlike many in the past decade, as county officials plan to pass a status-quo spending plan in June and return to it in the fall for a more comprehensive and unsparing update.
The county has several things going in its favor. Foremost among them is the promise of federal aid for local governments, something congressional leaders have said is coming, with President Donald Trump signaling his support. As a matter of policy, the county also has sought to sustain only those programs with recurring dollars.
But with 2% of the county's $323 million general fund coming from taxes on the now-moribund tourism industry and 7% from sales tax revenues, also likely to be off because of the shutdown, there will be cuts.
'We're not going to avoid it. It's going to hurt us,' said Christina Rivera, the assistant county administrator at the helm of the budgeting process.
A back-of-the-napkin, worst-case scenario, in which the county's hotel- bed and sales tax revenue dries up, could put the county in line for general fund cuts in the neighborhood of $30 million. Such a hole would rival the financial shortfall from the Great Recession, when the county was forced to trim a total of $125 million in spending over three years by cutting 600 jobs, ordering unpaid furloughs and eliminating, downsizing or outsourcing scores of programs. Substance abuse treatment, park development, youth probation programs and county bus routes were all affected. No department, even the Sheriff's Office, was spared.
County officials, in interviews last week, wouldn't say whether they foresaw a similar overhaul amid the new 'pandemic-induced recession,' as Gov. Gavin Newsom called it Monday.
The current outlook projects something more in the range of a $5 million to $15 million hit to the general fund next fiscal year. That equates to a range of 55 to 166 jobs, based on Sonoma County payroll figures reported to a state database. The figures include total wages, health and pension costs from 2018.
Not all of the county's 4,060 positions are filled, however, and the county is sitting on reserves of $43 million, leaving some cushion for supervisors to use before cutting into the workforce.
Costly virus response
Rivera and Supervisor Shirlee Zane, who took office at the dawn of the last recession, both said they didn't think the latest downturn will be as deep or as prolonged.
'The estimates right now are $2 to $8 million on the general fund,' Zane said. 'That's nothing. We cut about $125 million out of the general fund back then.'
But county emergency officials estimate they'll spend up to $50 million just responding to the coronavirus crisis, with $21.4 million of that ineligible for state or federal refund.