Title
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MEMORANDUM
TO: Board of Supervisors
FROM: Carol J. Huchingson, County Administrative Officer
DATE: September 12, 2017
SUBJECT: FY 2017-18 Final Recommended Budget
EXECUTIVE SUMMARY:
I am pleased to present, for your consideration and direction, the FY 2017-18 Final Recommended Budget. While the State’s economic environment has improved from the bleak years of the Great Recession, Lake County’s is still challenged fiscally as a result of the wildfire disasters of 2015 and 2016, the additional costs of labor agreements (for safety) instituted in FY 2016-17 and the increase in the cost of retirement contributions. I would like to recognize the County department heads, for their willingness to collaborate in our efforts to manage the fiscal challenges we have faced and are facing, as well as the public who have been supportive of the County’s need to be fiscally conservative.
The Final Recommended Budget continues to focus on long-term solutions to addressing both budgetary and staffing challenges, by strengthening revenue streams and identifying operational efficiencies. In order to strengthen revenue, the budget emphasizes the ongoing administration of the Master Fee Schedule and provides for third-party support in evaluation of other potential revenue enhancements. The County will also need to focus on encouraging new economic growth in light of the fact that for the last five years, the growth in property tax revenue continues to be among the lowest in the State.
In order to identify operational efficiencies, the budget provides for consultant support intended to identify opportunities for improved organizational efficiencies in departments. An essential component to enhancing organizational efficiency is to upgrade technological systems. Consequently, the budget establishes a Technology Modernization Reserve funded with an initial contribution of $500,000. It is anticipated that an ad hoc committee will be established to oversee the allocation of this funding in accordance with policies that will be authorized by your Board.
In addition to strengthening revenue streams and identifying operational efficiencies, planning for the future also necessitates addressing future increases in the cost of retirement contributions. To that end, the budget establishes a Pension Stabilization Reserve that is funded with unassigned fund balance carryover. It is important to note that the increases in retirement contributions are expected to cost an additional $18 million over the next seven years. Consequently, absent some extraordinary increase in on-going revenue or a reduction in staffing, for the foreseeable future the only other source of funding to support such an obligation is the annual unassigned fund balance carryover. This is likely to come at the expense of funding new discretionary projects and maintenance deferments.
As required by law, the Recommended Final Budget is balanced, meaning that there is sufficient revenue to support recommended appropriations. Like the FY 2016-17 Adopted Budget, the FY 2017-18 Recommended Budget is not structurally balanced, meaning that it reflects the use of unreserved fund balance carryover to support on-going operational costs in the General Fund. However, consistent with your Board’s commitment to incrementally reduce reliance on such one-time funds, the amount of unreserved fund balance carryover used to balance the FY 2017-18 budget is less than the amount required to balance the FY 2016-17 budget.
Your County departments continue to provide high quality public programs and services, despite diminishing operational budgets and employee recruitment and retention issues. However, the challenges we face in the years to come are significant. I am, nonetheless, confident that with your Board’s thoughtful direction, and through the efforts of your dedicated department heads and staff, we can confront this fiscal year with positive momentum, a time of opportunity as well as exploration of new ways of doing business.
FISCAL IMPACT (Narrative):
Your approval of this Recommended Final Budget will enable the County to meet its statutory obligations and continue operations for FY 2017-18.
Recommended Action
RECOMMENDED ACTION:
1) Adopt the Resolution Adopting the Budget for Fiscal Year 2017-18 as detailed in the attached,
incorporating any changes desired by your Board following budget hearings.
2) Adopt the Resolution Establishing New Classifications, the Effective Date Thereof and
Amending the Position Allocation Chart for Fiscal Year 2017-18 to Conform to the
Recommended Budget.
3) Adopt the Resolution Cancelling General Reserves for the FY 2017-18 Final Recommended
Budget.
4) Approve Continuation of the Informal Hiring Freeze for General Fund departments, delegating
authority to the COA to waive as appropriate.