County reports $11 million surplus entering final quarter of fiscal year

Board of Supervisors approve using the “unanticipated funds” to build a new morgue, payoff equipment for its new dispatch center and to cover the cost of the special election in the 22nd Congressional District

TULARE COUNTY – Tax revenues in Tulare County have remained strong through the pandemic including a near $11 million surplus heading into the final quarter of the current fiscal year. 

County Administrative Officer (CAO) Jason Britt delivered the good news to the Tulare County Board of Supervisors during a mid-year budget presentation on March 29. While economists are predicting a potential national recession in FY 2025-26, Britt said Tulare County property and sales tax have continued strong gains since the beginning of the Great Recession through the pandemic. Assessed value and property tax revenue have increased an average of 4.9% per year since 2015. Property tax revenue has increased $14 billion since the housing crash in 2008. Sales and use tax has increased every year since 2017 and has more than doubled to $16 million since 2012.

Revenues are outpacing current year budget projections by $10.9 million thanks to unanticipated increases in local sales and use tax and Proposition 172 funds. Approved by voters in 1993, the Local Public Safety Improvement and Protection Act replaced a previous statewide half-cent sales tax measure to fund public safety. The money can be used for the sheriff’s department, police, fire, district attorney’s office and corrections. 

“It was larger than we had anticipated being collected,” Britt said. “We’ve seen a large increase in Proposition 172 funds that our experts think are one-time monies.”

Britt asked the board to use $10.9 million in one-time monies for three, one-time projects. He recommended using $4.9 million to payoff for the fire and sheriff’s department Motorola dispatch system the county purchased a few years ago for the new dispatch center opening later this year, $5 million to construct a new county morgue after space issues during the pandemic, and $1 million to cover the cost of the upcoming special election in the 22nd Congressional District formerly held by Devin Nunes. Britt said the April 5 election to select someone to finish out the remaining months of his current term will cost between $800,000 and $850,000 “for this unanticipated special election for the congressional seat that nobody really planned on this April.”

“I appreciate using $10.9 million [for one-time costs] when that type of [one-time] money is received,” Vice Chair Dennis Townsend said. “These fiscally conservative policies have been in place for quite a while and it’s paid off in the long run and recently.”

Entering the final quarter of the fiscal year, which runs July 1 through June 30, revenues are at 36% of the budget, as most come in toward the end of summer, and expenditures are at 51% of the budget, right on track compared to previous years. Normally at this point in the year, the county has collected a little over half of its budgeted revenue, but this year the county has collected nearly two-thirds with a quarter of the year to go. 

The General Fund has grown 26% to $949 million since 2017-18 but supports fewer employees than it did five years ago as only 84% of positions are filled. Britt said the county plans to hire 46 positions this year, delete 16, reclassify 69 positions and retitle 187 others.

Supervisor Pete Vander Poel asked why the county was adding positions when it had 700 unfilled positions throughout the county. 

Britt said most of the new positions are for the Health and Human Services Agency (HHSA) to gear up for California Advancing and​ Innovating Medi-Cal (Cal AIM) implementation this summer. Cal AIM is a new, multi-year initiative by the California Department of Health Care Services to shift Medi-Cal services towards prevention and whole person care beyond hospitals and health care settings directly into California communities. Britt said CalAIM will be shifting a significant amount of work to county employees to carry caseloads expected in the state-mandated shift. 

“It requires a lot more work on the part of our case management agency and in shifting Medi-Cal to a whole person care model,” Britt said. “Adding positions now will give them time to recruit and get people staffed for what is going to be a big transition.”

As part of the mid-year budget review, Britt requested a 6% increase in salary for emergency dispatchers and dispatch supervisors and a 5% increase for the assistant sheriff position. The county is also adding 12 new dispatch positions to staff the new dispatch center for the Tulare County Sheriff’s and Tulare County Fire Department opening this year. Britt said the duties of dispatchers are being split into two positions to provide better support for the public and public safety employees.

“We are breaking up the position into a person who answers 9-1-1 calls and a person who dispatches officers as two separate positions,” Britt said. 

Other budget requests were to approve the purchase of $1.2 million in capital assets including: Two vehicles, five Jaws of Life extrication tools and fencing for the fire department; a commercial washing machine, back-up generator, ultra-low freezer and two transit vans for HHSA; a trailer for the purchasing department and a coin and cash counter for solid waste; and four ovens, a gas range burner and two washing machines for the Sheriff’s department.

Budget adjustments will take place before the end of the fiscal year on June 30, 2022. The county will begin its next budget cycle in August with final approval in September for the 2022-23 fiscal year. The supervisors unanimously approved the midyear budget report and the adjustments.

“While still being frugal, you still find a way to advance us,” Supervisor Larry Micari said. “It is pure magic.”

Britt said the biggest challenge facing county finances is inflation, which reached a 40-year high of 7.9% in February. Inflation is driving up costs which have crippled the county’s purchasing power and diminished already negotiated cost of living adjustment (COLA) increases. The county successfully negotiated agreements with the majority of its labor groups in 2021 with a 1% COLA for non-public safety personnel and a 2% COLA for public safety employees. The county’s cost to maintain its Microsoft Office 365 software has risen to $1.2 million annually. 

“The true impact and how much persistent impact we will see, is still largely unknown but we are already seeing increases in the cost of operations, diminished purchasing power and in the coming months and weeks we will be exploring ways to assist county departments and county employees,” Britt said. 

Both of those pale in comparison to the skyrocketing price of gas. Britt said a gallon of fuel has increased by $1.23 in the last year, which will mark a significant increase in fuel costs for the county’s fleet of vehicles.

“Extrapolate that times the thousands of gallons we purchase to fuel all of our fleet and just fuel costs alone are expected to take a pretty big bite out of our budget,” Britt said. 

There is also the ongoing cost of the county’s long term debt of $252 million for which pensions account for 88%. Britt said the Tulare County Employee Retirement Association (TCERA) Board has reduced the assumed rate of return on its investments, meaning the county or employees will have to pay a greater portion of cost.

Vander Poel, who represents the supervisors on the TCERA Board, said TCERA may have to revisit the issue of “smoothing,” the spreading out of gains and losses over a longer period of time and instead taking a hit over a shorter period of time “depending on where things go economically in this country.”

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