The Board of Supervisors heard the details of acting County Executive Larry Parrish’s recommendations for the 2012-2013 budget. Significant operating budget reductions and the potential for laying off 650 more county employees are distinct possibilities.
Only one quarter of the way through the fiscal year 2011-12 budget (ending June 30, 2012), Parrish already estimates that the 2012-13 fiscal year, which begins July 1, 2012, will have an $80 million deficit.
To address this problem, Parrish, who served as County Executive in 2004 at the beginning of the housing bubble, is planning a budget strategy based on limited growth characteristics since 2004-05 rather than those of the peak budget of 2007-08. He is recommending that the board consider fiscal 2004-05 as the baseline, rather than the recent budget levels based on the phenomenal and nonrecurring growth during the 2004 to 2008 period.
In those three years, county property tax revenue grew almost $250 million, or more than 80 percent. Since the 2007-08 peak, property tax revenue has fallen $116 million to $450.7 million expected this year. That is 25 percent less than four years ago but $140 million, or 45 percent, more than seven years ago.
The board concurred with Parrish’s approach of using an older baseline as a beginning point for developing next year’s budget. Consequently, the initial departmental budgets will result in 28 percent cuts to nonpublic safety organizations and three percent reductions for public safety.
Parrish’s strategy, assuming no other major surprises, will end the county’s use of reserves to balance its annual budget and begin to build reserves in 2013-14. However, Riverside county Sheriff Stan Sniff advised the supervisors that the state’s realignment of prison and jail responsibilities will probably cost much more than the state has currently allocated to counties.
This proposal, which finance officer Ed Corser described as “resetting budgets toward pre-housing bubble times,” will save $40 million. The other half of the estimated deficit will come from two sources.
Historically the County estimates that a $20 million savings will occur at the end of the fiscal year, which will be available in the next year. However, in seven of the past 10 years, the actual balance has been $40 million or more. As a result, Parrish is assuming that $20 million will be available for 2012-13.
The second $20 million savings source assumes that negotiations with county employee unions and groups will be successful. CalPERS [county retirement and health benefit] costs are projected to begin to grow substantially in 2012-13 and continue through the rest of this decade.
In his presentation to the Board on Nov. 1, Corser gave examples of how three departmental budgets would compare to this year and to fiscal year 2004-05. The auditor-controller budget would be slightly more than $4 million. In 2011-12, the budget was slightly more than $6 million and about $4.5 million in 2004-05.
Code enforcement and animal control budgets would be significantly less than last year, in which both departments were funded at twice their 2004-05 levels.