During the midyear budget update to the board on Tuesday, County Administrative Officer Kelly Cox said the cuts would be needed to keep the county's budget balanced and structurally sound.
Because of “significant” revenue shortfalls – in areas like sales and property tax – that have been more steep than even Cox and his staff could anticipate, Cox said Tuesday, “I don't think there's any possibility we'll avoid reducing staff in next year's budget because of these revenue declines.”
Board members suggested during the discussion that they might not be able to wait until this coming summer's budget hearings to begin reducing staff if the county's straits are that dire.
Chief Deputy Administrative Officer Matt Perry led the preparation and presentation of the midyear budget report, which accompanied a resolution to make adjustments to keep the budget balanced.
He said the report estimated a projected decrease of $1.2 million in general fund revenue due to falling transient occupancy tax – also known as “bed tax” from accommodations – and property tax declines.
The county is receiving $1.7 million in unanticipated revenue due to the securitization of the property tax transfer from the state. Perry said the County Administrative Office proposed that $1.2 million of that amount be used to cover the revenue shortfalls, and the remaining $500,000 be put into a fund to be used for economic uncertainties.
While that's a good start, Perry said more needed to be done to keep the budget structurally balanced.
“There will probably be some difficult decisions in the months ahead to balance the budget,” said Perry.
Among the proposed adjustments from general fund contingencies was using $35,000 to help close the county's central garage facility and remove underground storage tanks, said Perry.
Building and safety revenues are projected to come in under projections by $123,000, so staff proposed canceling $122,033 from reserves, he said.
Five Special Districts units also were proposing to cancel various reserves, Perry said. They included Middletown Sanitation, $35,000 in the capital improvements designation; Spring Valley, $15,000 in the roads, bridges and dams designations; Bonanza Springs, $52,580 in operating and maintenance; Kono Tayee, $3,656 in operating and maintenance; and Soda Bay, $21,803 from capital improvements.
Noting the cancellations in the building and safety reserves, Supervisor Denise Rushing pointed out, “We didn't have a lot left in reserves there.”
Perry said $104,000 was still left in the reserves for building and safety.
Cox said that meant that next year the county will have to make substantial budget reductions.
Rushing asked about the Mental Health Department and what it still owes the county. In recent years the department has had to borrow funds due to having to pay the state back for having received reimbursements to which it wasn't entitled.
Perry said the department still owed $1.7 million at the end of the last fiscal year.
There also was a suggestion to cancel $50,000 that the county had set aside for a Hospice Services of Lake County project which Cox said he was told is no longer being pursued.
Cox told the board that the adjustments they were making mean this year's budget no longer is structurally balanced.
In addition, he and his staff are forecasting a shortfall that's “going to be significant if things don't turn around in the economy immediately, and we don't see any signs that they're turning around immediately.”
Supervisor Jeff Smith said that after the board has had it pounded into their head for so long – by Cox – that they shouldn't use one-time funding for ongoing expenses, “I don't want to stray from that at this point,” he said, adding, “We need to tighten our belts more.”
Board Chair Anthony Farrington asked Cox if there was any way to get ahead of the situation.
“If you want to start reducing staffing levels, you can do that any time,” Cox said.
“That's the reality isn't it? Isn't that what we're looking at?” Farrington asked.
At that point Cox told the board that he didn't think they could avoid reducing staff in order to keep the county's budget structurally sound.
The current board hasn't had to take that approach, although the county was confronted with layoffs int the early 1990s and the 1980s, Cox said. “It's a very difficult thing to do.”
Farrington said county department heads have been good at keeping positions vacant when possible, and admitted that layoffs will be a hard decision, noting they've grappled with laying off even one county employee. He said they may be delaying the inevitable.
Cox said the county doesn't know for sure how the state and federal budgets to be adopted later this year will impact the county, and if the federal government's geothermal revenues aren't restored to the county, Cox anticipated an even bigger budget shortfall.
“What we're talking about right now, these issues we're dealing with, most counties dealt with it two years ago,” Cox said.
Farrington asked if they were looking at a deficit of more than $1 million.
Cox said they weren't looking at a deficit but a revenue shortfall in the coming budget year of more than $1 million. “We've never had a deficit,” he said.
Rushing said the county lagged behind other areas on the economic downturn and likely also will be a little behind in the recovery. “Even if the economy turns around it may take a little longer,” she said.
She added, “If we know staff reduction needs to happen, the longer we wait to do it, the more staff is reduced. There's a time element to that.”
Rushing offered the resolution to make the proposed adjustments, which the board approved 5-0.
E-mail Elizabeth Larson at
How to resolve AdBlock issue? 
