Mendocino County Budget

By Wendy A. Roberts

The prolonged economic downturn has severely impacted county revenue and will continue to do so for the foreseeable future. More than half of the county's $220 million budget has come from state and federal funding and virtually every revenue stream from these sources has been sharply reduced or eliminated. Local property, sales, timber and transient occupancy taxes have also declined. Despite severe budget cuts and more than 275 eliminated positions over the past two years, a deficit of about $7 million is predicted through June 2011.

I have followed the budget meltdown closely since the 2009/2010 budget hearings last August. The situation has grown progressively worse. At present, another 100 positions are on the block, potentially to include the resident deputies who are so essential to public safety in our outlying rural communities.

Among the steps already taken:

• Elimination of more than 275 positions over the past two years.
• Voluntary salary reductions by management and elected officials with the exception of the District 4 and 5 Supervisors who have declined to join their colleagues in this act of leadership and fiscal responsibility.
• Voluntary salary reductions and furlough days by management personnel, many of whom continue to work a full load.
• Significant temporary wage concessions by the Unions.
• Severe cuts to retiree health benefits (see discussion below).
• Consolidation of the CEO and Clerk of the Board Offices, resulting in savings of more than $200,000.
• Reduction or elimination of a wide variety of public services.

• Slashing $4.5 million from the Sheriff's budget (an amount roughly equivalent to the salaries of the resident deputies)
• An additional 25 layoffs
• Closing the Coast Animal Shelter
• Additional consolidations of administrative functions

Budget Impact of Accumulated Debt:

Our current financial situation is burdened by millions of dollars in annual interest payments on the county's previously accumulated debt and by policies that allow liabilities to continue to grow. The two dominant types of debt are pension fund obligations and a program called the Teeter Fund.

Most noteworthy among the county's liabilities is the rapidly growing unfunded pension obligation for current and future county retirees. Mendocino County Farm Bureau members began blowing the whistle on the debt situation nearly a year ago. I was invited to attend a series of briefing sessions with county and retirement board officials and the more I heard, the more convinced I became that management of this fund has failed both the retirees and the taxpayers. This assessment has now played out in the loss of retiree health care benefits that the county had been paying for from earnings on the pension fund. The actuarial audit that is now underway is likely to reveal the situation as even more severe than is currently recognized. There is no "fix." All we can do is take steps to control the damage. The first step, is to reconstitute the retirement board membership so that it is not dominated by individuals who stand to receive its benefits. The taxpayers and pensioners all deserve capable, impartial leadership of this fund. A second step is to shift from a defined benefit program, where pension amounts are guaranteed, to a defined contribution program in which employees and employers invest specified amounts and the ultimate payout depends on the market return.

The second major source of debt is the Teeter Fund. This is basically a complex shell game in which counties have been allowed to take low interest loans against anticipated property tax revenues. It works to smooth cash flows as long as the borrowed funds are repayed from the realized revenues. Past boards, instead, have elected to allow the debt to accumulate. It is now approximately $11 million, and with property taxes in sharp decline, debt service on this amount will continue to burden the budget for many years to come.

Public involvement, entrepreneurial thinking and government transparency have never been more important. Taxpayers deserve and need to know how our dollars are being spent. We need to have a say in the tough decision-making ahead and to understand where and why cuts are being made. Public input from the more remote areas of the county is particularly vital to protect essential health and safety-related services.

It is particularly critical that budget balancing include both belt-tightening and strategic management to get our economy moving again. Even in these painfully constrained times, we must invest in the future. We cannot continue to ignore outdated planning documents that constrain economic revitalization by stalling job producing projects.

Improved telecommunications infrastructure is an essential step toward more cost-effective delivery of public services as well as economic development. The recently upgraded microwave communication system is enabling our Sheriff's Office to serve the county with the same level of staffing that existed nearly thirty years ago. The Court is now providing limited legal services to outlying areas via video-conferencing. The Community Foundation of Mendocino County has recently adopted a focus on extending broadband access throughout the county. The BOS responded by passing a resolution in support of this objective. Federal funding for further broadband infrastructure development should be explored as a cost-effective way to provide such services to remote areas and to support job development in the private sector.