Budget crisis? What budget crisis?

by admin / Jun 25, 2015 / 0 comments
Caption: : 
Joe Harn

2015-06-25, 07:33:56 PLACERVILLE CA

Budget crisis? What budget crisis?

Sophocles

Part II The Pending Doom

Budget crisis? What budget crisis? This county budget crisis seems to be a manufactured opportunity for elected officials to use as a campaign tool. “Vote for the person who solved the County’s budget crisis.”  Sound familiar!  Or maybe it’s like a dysfunctional family—it’s a lot easier to create crisis to solve than tackle the real hard-to-solve problems.

There isn’t a budget crisis?

First, the 6%+ Board of Supervisor’s mandated cuts across all departments deemed necessary to balance the budget for next year are directly related to a paper change in the way the county is developing its budget. Let me explain. For at least 30 years, the County has “padded” its budget by estimating revenues at their lowest and expenses at their highest rather than doing more in depth analysis to determine what the revenues and expenses are most likely to be.  This accepted technique that has been used for 30 years is a good kind of “padding” for a county that doesn’t have the technology or the manpower to budget with a high degree of accuracy. And, since the county is in the black and doesn’t need to borrow money, there is not a big push for a statistically valid approach.  To sum it up, we under estimate our revenues and over estimate our expenditures thus “padding” our budget and giving us a substantial surplus at the end of the year.  It allows us to start the budget every year with a substantial fund balance; money “left over” from the previous year’s budget as available funding. To that the county adds the lowest revenue projections it comes up with, and matches the highest expenditure estimate it comes up with to determine the annual budget.

With the new alternative the Board chose to put the previous year’s fund balance in reserve rather than using it to budget in the upcoming year.  Given that the fund balance is usually fairly sizable—$89,748,717 total and $32,245,387 for the General Fund as of June 30, 2014 –the new approach is a big shift in the way the budget is developed. This means the funds available for budgeting are almost 15% lower just because of a change in the way the budget is put together. This alternative in depth, more sophisticated, statistically valid “new” and current approach is more expensive and requires timely information to perform the necessary analysis. Remember, according to state law, the county budget must be balanced and contain all possible expenditures, or the county isn’t legally allowed to expend the resources.

This is an exaggerated crisis. Over the past years, the county has only spent an average of 78% of the expenses budgeted. Here are some figures drawn from the County’s budgets from the past 10 years:
 
 Budgeted Expenditures Actual Expenditures Percent of Budgeted Used   

 

Budgeted Expenditures

Actual Expenditures

Percent of Budgeted Used

2013-2014

498,696,039

374,502,200

75%

2012-2013

478,021,187

397,650,018

83%

2011-2012

402,475,012

334,369,777

83%

2010-2011

413,825,562

315,478,369

76%

2009-2010

459,491,309

333,204,763

73%

2008-2009

530,385,051

375,570,769

71%

2007-2008

616,688,863

412,548,987

67%

2006-2007

477,067,422

358,523,444

75%

2005-2006

431,676,918

336,453,006

78%

2004-2005

229,075,739

283,381,611

124%

 

So, to all of those elected officials who have been saying that the county has to learn to live within its means, please look at the numbers. It is living well within its means as evidenced by the county’s financial reports. It has consistently brought in more money than it spends, except for those years in which it spent some of that reserve money to supplement capital assets, such as the animal shelter, the data center, and the “community enhancement funds” spent in 2004-05. In 2012-13, about $3 million was dedicated in one-time money to capital improvements, while in 2013-14 that number jumped to just over $18 million to address the years of neglect in the county’s buildings. If you factor in those one-time expenditures, the county actually reduced spending on ongoing costs-- like salaries and benefits—more than it did in the previous year. 

To be continued…………………..