There’s a saying, “To retain respect for laws and sausages, one must not watch them in the making.”
After sitting through a six-hour presentation during the board of supervisors’ meeting May 17, it is a wonder that San Benito County will see a new budget by the end of June. Even one of the supervisors admitted that it’s a complicated process nearly incomprehensible to most people.
“The meeting, overall, is to help define clarity in regards to reserves and our budget,” Ray Espinosa, county CAO, told BenitoLink. “We have an operating budget we have to adhere to. We have capital projects we have to work with, as well as reserves in our coffer.”
The day’s presentations included within the budget overview and progress report, presented by Joe Paul Gonzalez, county auditor, would hopefully lead to the approval of a recommended budget for FY 16/17, which, when balanced, will be approximately $43.7 million.
“Today we are defining allocation for our future and to address our infrastructure needs,” Espinosa said. “It’s more on the capital side of things. Over the last few years, we’ve been just trying to stay afloat, operationally. We’ve put by the wayside our capital and our infrastructure.”
The discussions during the day were to determine the county’s important needs and what resources it has to work with.
“Our attention right now for the beginning of this fiscal year is going to be directed toward revenue and where we can receive more revenue, and try to infuse individuals into those departments,” Espinosa said.
The budget includes the general fund and subvented funds (money provided by the state government), such as for behaviorial health and human services. Espinosa said the topics will mainly focus on the general fund. He said there would be another public meeting to discuss the budget on June 14, which he described as a, “mock budget hearing.”
“We’re going to delve into those questions that they (supervisors) have, give them some more information, and then on June 27 there will be a special board meeting or budget hearing,” he said. “We’ll cover all the subvented groups and all of the general fund groups. Subvented groups have been going to the board as consent items because it’s not general fund money, but we still scrutinize and analyze them.”
The final vote to pass the budget could happen between June 27 to 29, depending on how long the process takes.
“Basically, it’s opened up for the week,” Espinosa said. “Three or four years ago, it took a week. Since I’ve come onboard, we’ve streamlined it. We’ve had a lot of front time. Before, they were spending this time during that week and it was really hectic, it was chaotic and they didn’t know what to do. You can’t do that. It’s like a house of cards; you move one thing and it changes others.”
Supervisor Anthony Botelho said that the process is methodical, it’s much better now than how it was done before.
“We used to sit here for days using a white board, writing down different items, erasing them and putting new ones up. It was a terrible way to do things,” he said. “It’s been much smoother since Ray (Espinosa) changed the way we do it.”
On the regular agenda, presentations and discussion took place about community-based organizations allocations, budgetary reserve funds policy, Public Agency Retirement Services (P.A.R.S.), capitalization policy, actuarial report, status of Bank of America banking services, CalPers, and budget administration policies.
In a written statement, Espinosa’s office made several recommendations to address the needs of the county and the estimated impacts of current projects each department is involved with regarding the future of the county.
- Assist those departments and supporting departments that are involved in generating revenue for the county.
- Fund the one-time fixed assets recommendations with currently available General Fund reserves
- Hold costs until more information is received. We will not have the costs/impacts/results associated with medical insurance, the comp study, and development agreements in time to address the FY 16/17 budget, or the FYE closing numbers.
- Incorporate the General Fund reserves policies goals into the FY 16/17 budget.
- Provide a mid-year review to address many of the above items and requests by the departments.
One presentation involved what is known as the Teeter Plan Fund, which is named after Desmond Teeter, a 1940s Contra Costa County auditor-controller, who devised an alternate method of tax apportionment that basically allows a county to pay, up front, property taxes that had been billed, but not yet collected, that different department expected to receive. The counties could borrow to advance the cash to each taxing jurisdiction in an amount equal to the current year’s delinquent property taxes. Then, if taxpayers were late in making payments, they could be fined 18 percent.
This was particularly lucrative for the county during the recession. As homeowners missed tax payments, they were fined, and when they lost their homes, the county still benefited once the homes were sold, even if it were years later. Over the long haul, bad times for homeowners could be good times for the county, where the Teeter Fund was concerned.
Government’s view of the benefits of the Teeter Plan are: the property tax estimation and allocation is simplified; the jurisdictions have more stable and reliable annual property tax revenues; and the plan is definitely a revenue generator.
But there are pitfalls. The primary one being that there is a huge cash requirement in order to purchase the delinquent taxes from the county, cities, special districts and schools. Another disadvantage is under the plan, when homeowners prosper the county doesn’t benefit in that while it receives its tax revenues it does not receive the hefty fines.
As one pundit in the room put it, “You and I would be arrested for doing business this way, but the county and DMV do it all the time.”
A breakdown of just a few of the General Fund revenues and expenses are:
Estimated 2017 revenues total $41.3 million
Taxes $15.9 million
Licenses, permits and franchises $1.5 million
Aid from other government funds $8 million
Charges for services $11.4 million
Estimated 2017 Expenditures total $43.7 million
Salaries and benefits $26 million
Services and supplies $10.9 million
Other $ 5.3 million