Placer County works on $18.6 million deficit
PLACER COUNTY ” Staring at an $18.6 million budget deficit, the Placer County Board of Supervisors met this week to address current budget being written and to provide direction to staff in future economic endeavors, as daunting as they may be.
Despite identifying and closing the gap on a $9.5 million revenue shortfall with general fund reserves and cost cutting measures ” highlighted by four days of office closures that saved $2 million ” the county still faces deficits of $13.2 million attributed to the public safety fund’s labor cost increases and revenue reductions, $3.4 million in state budget impacts, and $1.9 million in the general fund.
As for the budget being written, county staff advised board members to look at further drawing back on general fund reserves and cost cutting for the coming fiscal cycles.
“Reserves have been set aside over time to provide for unanticipated occurrences and to sustain the county during short-term economic downturns,” said Therese Leonard, Placer County Principle Management Analyst. “And, in fact, use of reserves will be of key importance to addressing the shortfall for the current and upcoming fiscal years.”
County staff recommended the use of one-time reserves in $4 to $5 million per year increments over the next three years.
That said, the board was strongly recommended to phase out the use of reserves because of their finite nature.
“In order to get to this ‘no-layoffs’ budget next year, we will need to allocate those reserve funds,” said Jennifer Montgomery, District 5 Supervisor. “And depending on the economy, we may need to allocate more funds for the next two fiscal cycles.”
But as repeated to the board throughout the recommendation, drawing down the reserve balance is “one time in nature” and will not eliminate the budget deficit in the two outlying years.
It is estimated that the implementation of the staff’s recommended budget solutions would reduce the 2010-11fiscal year deficit from $21 million to $11.3 million and the following year’s deficit from $30 million to $24.1 million.
As employee costs continue to increase each year due to labor contract agreements and benefit cost increases, labor costs represent a predominant share of the county’s budget.
Supervisors were asked to consider making labor adjustments that would affect only management and confidential employees, and that would reduce labor costs as part of a “no-layoff” plan.
The proposal emerged last month after confidential and management employees voluntarily submitted more than 200 cost-saving proposals, which were analyzed and shared in staff meetings.
Team members were surveyed regarding their preferences and more than 88 percent preferred reductions in pay to more layoffs.
Supervisors also approved the formation of an employee “cost saving task force” to analyze and develop implementation strategies for other cost reductions proposed by the managers and confidential employees.
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