Tulare County budget expects major increase in general fund

Tulare County budget projects a $62.8 million increase to its general fund in 2021-2022 fiscal year; state budget general fund is expected to grow its deficit into the billions for the next four years

VISALIA – Worries over the public budget impacts from COVID-19 seem to have been for not according to the county 2021-2022 budget.

Economic growth in the county has been resilient despite California’s pandemic restrictions. Steady enough, in fact, for the county to replace the money they removed from their strategic reserves. When the pandemic began in March 2020, the county budgeted a draw down of $2 million in their reserve account, taking it down from $32 million, to $30 million. Two weeks ago the Board of Supervisors agreed to replace it, and then some.

“I feel confident that with all the signs today that our economic activity will continue at a moderate pace, and that is why I’m recommending we put $3 million into it,” County Administrative Officer, Jason Britt said.

Throwing some additional money into the savings account is just the icing on the cake for Tulare County. In its entirety the 2021-2022 budget is a full $1.62 billion. That is a $165.6 million increase over the previous year thanks in part to the Americans Rescue Plan Act. Just below the surface the county’s general fund received a major influx of cash.

According to Britt’s presentation on the budget on Sept. 14 the general fund is expected to take in an extra $62.8 million over the next fiscal year, bringing its total to $949.5 million. Within that, discretionary revenues will have $8.8 million more than last year and stand at $186.9 million. The 2021-2022 fiscal year general fund unassigned fund balance will be $6.8 million more than the year before, coming up to $49.1 million.

With so much money available this year the county plans on using some of the general fund to pay for an array of projects. According to Britt the county will spend $2 million on the county’s drought response efforts; $6 million in capital improvements; $2 million for the 2020 SQF Complex Fire cleanup while searching for matching funds; $2 million for information technology (IT) projects; and $2.5 million for miscellaneous criminal justice.

Britt was also happy to report that the county’s workers compensation costs were reduced by $888,709. He said this was the first time in “many years” the county has seen a savings in that category.

Spend it while you can

Because so much of the county’s budget rests on the financial health of the state, Britt reviewed the amount of money flying out of Sacramento for this fiscal year. In total, the state’s general fund budget is $262.6 billion. In terms of Tulare County needs, the state is funding: $6 billion for broadband infrastructure, $2 billion for flexible homelessness funding, $151 million for criminal justice fee debt forgiveness, $20 million for improving juvenile justice outcomes, $121 million for county sheriff reimbursements for state-level prison intake during the pandemic, $663 million for local assistance related to drought relief and water supply, $100 million for wildfire hazard mitigation grant program, $155 million for local parks development and community revitalization program, $439 million for local library infrastructure grants, $500 million for city and county active transportation project grants.

Unfortunately, after this fiscal year counties should probably be prepared to have the spigot of money turned off. According to the California Legislative Analysts Office (LAO), there will be a series of general fund deficits for the state over the next few years. The LAO predicts that the state’s general fund will take a steep tumble from a $226 billion surplus in 2021-2022, to almost $12 billion in the red in the 2022-2023 fiscal year. By the 2024-2025 fiscal year they expect the state’s general fund to have a $16 billion deficit.

“That’s important to note because a large share of our county budget comes from state and federal funds. A lot of Health and Human Services programs all rely on state funds,” Britt told the board. “Historically, if you’ve been around the county long enough when the state gets into budget trouble, they tighten their belt in a lot of places, but including the safety net programs.”

Funding ups and downs

While the state might want to take a peek down the road to find way to raise revenue, the county is seeing almost a 5% average increase year-over-year. Total revenues from: secured property taxes, motor vehicle fees, local sales taxes, Prop 172 sales tax and all other assorted revenue sources, has risen by 4.92% over the last three budgets.

The 2019-2020 fiscal year budget penciled revenue at $176.8 million, the 2020-2021 budget was $178.1 million and this year’s budget is quite a leap over the previous year at $186.9 million. The assessed valuation of growth in the state for the 2021-2022 fiscal year is $41.9 billion. An increase of $2.2 billion, and a growth rate of 5.427%. That is also a growth rate of 4.9% since 2015.

Tulare County’s other largest funds, besides the general fund, have seen moderate growth or moderate reductions. Britt told the board that the county’s “other operations funds” saw an increase from $409.3 million in the 2020-2021 fiscal year to $511.1 million this fiscal year. That amounts to a 25.3% increase. The county’s internal service funds grew from $102.2 million in 2020-2021, to $107 million, amounting to a 4.7% increase.

The county’s enterprise funds took a slight hit over last fiscal year to now. In 2020-2021 the county’s enterprise funds were $43.9 million, but in the 2021-2022 budget the county expects those revenues to come down to $40.8 million. That is a drop of 7%.

Special districts in the county took the heaviest hit in revenues going from $8 million in 2020-2021 to $6.1 million now. A loss of $1.9 million and a 24.2% decrease.

Britt told the board that there are challenges ahead for the county. To name a few he mentioned the rising cost of providing law enforcement and fire department personnel, along with other staffing needs. He added that annual retirement contributions are becoming more expensive. As well, the county is forced to increase their financial share of mandated programs such as Health and Human Services mental health care programs, mental and medical care in jails and the costs of zones of benefits like water and waste water systems within the county.

Though, Britt stated that the county is working to stem the tide of these challenges. He said the county plans to negotiate financially stable agreements with labor, limit the amount of debt the county carries, use one-time funds for one-time expenses, continue to fund the strategic reserve, minimize retirement cost increases, minimize burdens on the general fund and encourage best business practices to expand efficiency.

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