Long gone are the days of (expensive) wine and roses in Monterey County.

Instead, county employees can look ahead to furlough days and putting money into their own retirement plan – and, likely, layoffs.

At the County Supervisors’ March 3 meeting, budget staff presented a gloomy three-year forecast: The county’s facing an $11 million shortfall by the end of fiscal year 2009-10, which will grow to $41.6 million the following year and reach $65.4 million by 2011-12.

“IF YOU REALLY ADDRESS THE PROBLEM, YOU’RE REALLY TALKING ABOUT LAYOFFS.”

“Most economists predict continued steep job losses in the months ahead as cautious employers cut payrolls, consumers rein in spending and banks tighten credit,” Rosie Pando, assistant county administrative officer, told supervisors. “The recession, already 15 months old, appears likely to last longer than the 16-month recessions of 1973 and 1981, which would make it the longest recession since World War II.”

Additionally, plummeting home values are dragging down Monterey County’s largest discretionary revenue source: Property taxes. Sales and hotel tax dollars flowing into Monterey County coffers has slowed, too, and federal and state aid is declining. (Budget staff say they’ll have a better idea of how many federal stimulus dollars the county will receive at the March 17 supervisors’ meeting. At the same meeting, finance officials will brief the board on how the state budget will affect local government, but the real hits won’t be known until after the special election on May 19 because the state spending plan relies on several yet-to-be-approved ballot measures.)

Typically, over half of the county’s general fund comes from Sacramento and the feds. This year, of the county’s $553.8 million general fund, 54 percent is state and federal aid, 28 percent is taxes, 12 percent is charges for services and the rest comes from fines, penalties, permits and other revenue. But federal and state payments are expected to remain flat through the three-year forecast period.

“Any further deterioration in state revenues would cause that gap to grow, and likely kick off another round of state budget cuts,” Pando said.

Meanwhile salaries and benefits – which account for about 80 percent of the county’s budget – continue to climb at an average annual increase of $23.6 million, or 11 percent. “Salaries and benefits,” Pando said, “continue to grow and outpace revenues… revenues are not keeping up with expenditures.”

On Wednesday, March 4, past the Weekly’s deadline, the painful task of balancing the county budget continued. At the March 4 workshop, county supervisors were slated to receive reports from each department head for 5-percent and 10-percent cost cutting scenarios and a report on various approaches to addressing the budget gap before providing direction to staff. (Archived video of the workshop is available online, monterey.granicus.com/ViewPublisher.php?view_id=5).

The county has already implemented a hiring freeze, but must look for other ways to cut spending. “Every effort must be made to preserve our number one asset: Our employees,” Pando said.

But at a budget committee meeting late last month, Supervisor Lou Calcagno sounded a grim note after hearing that Monterey County was facing a $118 million budget gap by the end of fiscal year 2012.

“What this really means, if you really address the problem, you’re really talking about layoffs,” Calcagno said, “layoffs or… salary concessions.”

To read the Monterey County three-year forecast, visit: www.co.monterey.ca.us/admin/badivision/3YR_Forecast.htm