Without federal dollars, the county government would be projected to end this year in a deficit, spending more money than came in. But with a roughly $32 million stimulus check from the federal government, the county is projected to end the year with a $2.6 million surplus.
The forecast for the next few years is not so rosy. Early budget projections show a growing budget deficit, from $18.2 million in fiscal year 2022-23 to $26.4 million by 2024-25.
Despite the bleak forecast, published on March 8, supervisors appear even-keeled as they head into budget season, where the goal will be to align revenue and spending to create a balanced budget. However, recent negotiations to increase wages for some departments, a growing pension liability and slowed cannabis and property tax revenues will pose new challenges.
“This year will be particularly difficult because the cannabis tax rates have been reduced which will result in significantly less discretionary revenue… and labor groups are clamoring for increased benefits,” Supervisor John Phillips says.
The supervisors voted earlier this year to significantly reduce cannabis taxes, resulting in a roughly $6 million revenue hit. The decision essentially erased the board’s cannabis assignment fund – a discretionary pot of cannabis tax revenue they employed to finance one-time projects and expenses. Supervisor Wendy Root Askew says the cannabis decision moves the industry into the future and the wage and benefit negotiations for county employees help the county remain competitive in recruiting talent – both critical for the long-term health of local government.
Amid this year’s projected surplus, some departments are expected to end the year in a deficit, led by the Health Department at $3.3 million, the Sheriff’s Department and $2.2 million and the District Attorney’s Office at $1.7 million. Root Askew says those departments will receive “extra attention” as supervisors build next year’s budget.