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.

Worst-case scenario

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.

'What we are facing right now is a tremendous outlay of capital,' said Supervisor Lynda Hopkins, who joined the board in 2017. 'We're spending money hand over fist in an attempt to respond to this slow-burning emergency.'

The county has some lead time after property tax receipts came in strong this month, on pace to at least meet revenue from a year ago. Property tax accounts for 80% of the general fund, which largely supports criminal justice, administrative and fiscal departments. Other divisions, including health and human services, rely more heavily on state and federal dollars, while those overseeing planning, parks and other services depend more on fees.

Rivera has the month of December circled on her calendar. If that first increment of property tax payments in the next fiscal year drops, and other revenue sources continue to falter, there will be greater cause for concern.

'The worst-case scenario is that so many people lose jobs, and they can't make their December payments,' Rivera said. 'That will be an event for us to kind of re-check the pulse on that.'

Among its core services, the county has the largest single branch of law enforcement in the region with the Sheriff's Office, while also overseeing a wide array of health and human services bankrolled mostly by state and federal sources.

Priorities on safeguards

Supervisors, in interviews, said those parts of county government would be key to safeguard from cuts.

Zane, the longest serving incumbent, has been a champion for increased mental health and social safety net funding, and she plans to stick to those spending priorities while also defending dollars spent on emergency services.

'Eligibility programs, food stamps, assistance to needy families, foster care, workforce investment — there are so many services in there that really catch people so they don't fall any farther,' Zane said.

Hopkins, too, supports discretionary spending on mental health programs while also seeking to maintain funding for the Sheriff's Office and county roads. Hopkins said she wouldn't want to do anything that might jeopardize the sheriff's west county substation in Guerneville, a target of budget cuts in past years.

The Sheriff's Office was on top of Gore's priority list, as well, along with other emergency services.

'The foundation of a civilized community is public safety,' Gore said. 'So that's law enforcement, courts, fire departments, your emergency medical work, and, in our case, our emergency management division.'

But he would favor across-the-board cuts compared to having a handful of departments or programs bear the brunt of the county's coming shortfall.

'The other thing is, we have a general fund reserve,' Gore said. 'That's a rainy day fund. ... I want to make sure we use it judiciously, but we use it to support vital services.'

Gorin and Supervisor David Rabbitt said they would look to protect the Sheriff's Office and spending on roads and safety net programs.

'In terms of prioritization, it's 'Why do counties exist in the first place?' ' Rabbitt said. 'It's infrastructure, law enforcement, public safety, the safety net.'

Outside of that, Rabbitt said, 'everything is on the table going forward.'

Possible cutback areas

Given the limited financial information they have to date on how much the county may need to trim back, supervisors would specify where they would go for cuts.

Gore, like Zane, was interested in what help might be coming from the federal government. He floated the idea of a local infrastructure-centered stimulus program.

'What I'd like to see is us saying, 'OK, our inflow of money is going down, but interest rates are low; let's borrow money (for an infrastructure package),' ' Gore said.

Unlike Santa Rosa, the county has not ordered a hiring freeze. In fact, a quarter of the county employees were deemed nonessential under the stay-at-home order and have not regularly reported for work since mid-March while still being paid.

County Administrator Sheryl Bratton made the decision to continue paying those employees, just as the county has done during previous disasters, including the Kincade fire last year.

'At that time, many of us were hoping the shelter in place would be two weeks, three weeks, maybe four,' Bratton said, referring to her decision last month. 'Looking ahead, we're still going to be in this for some period of time.'

The county did not respond to an inquiry about how much had been spent to date on employees ordered not work.

Bratton said she is reviewing the decision while monitoring the way comparable counties are handling their workforce. But she added that payroll costs are already accounted for in this year's budget.

Still, Rabbitt, an architect who cut his political teeth as a Petaluma councilman during the last recession, signaled that he would urge his board colleagues and top administrators to conserve county dollars with dark clouds on the horizon.

'If you know it's coming, the smart thing right now is you've got to tighten your belt, hunker down and be wise about where your dollars are going,' he said.

You can reach Staff Writer Tyler Silvy at 707-526-8667 or at tyler.silvy@pressdemocrat.com. On Twitter @tylersilvy.