A somewhat contrite County budget office is admitting to making a nearly $10 million mistake in the 2017-18 County revenue projections that take the budget from black to red ink.
County officials said instead of an estimated $3 million to $5 million surplus their new figures estimate a $2.8 million to $4.8 million deficit in FY 2018-19; at the worst case scenario, that means a $9.8 million difference.
Nevertheless, the County Administration isn’t hitting the panic button just yet. “Officials say that the County’s historical attention to fiscal responsibility has positioned it to better address such budgetary gaps,” reads a news release from the County Budget Office admitting to the mistake. “The County Administrative Office will present a revised forecast to the Board of Supervisors on Nov. 7.” For fiscal year 2017-18, the County listed a $590 million general fund budget.
County Budget Director Emily Jackson fell on her sword. “As we began preparation for the next budget cycle, we discovered that a significant portion of recently approved salary increases were inadvertently omitted in the calculations for the financial forecast reported earlier this month,” she said in a news release. “This is understandably disappointing and our office accepts full responsibility for the mistake. Plans are already in place to ensure that this type of error doesn’t happen again.”
The County Administrative Office presents an annual “financial forecast” at the start of the budget cycle for the following fiscal year, which began on July 1.
Finding the mistake set off a reexamination of the whole budget. “After the error was found, budget and accounting staff closely reexamined all calculations and assumptions used in the development of the financial forecast report,” reads the news release.
“While this gap will impact the budget for the coming fiscal year,” Jackson said, “the projected shortfall represents less than 1 percent of the forecasted total General Fund budget. But because of our careful approach to growing the County’s budget over the past several years, we are well positioned to address the gap in the coming year.”
Budget documents are a snapshot of what the agency feels the coming year will look like. Many factors can happen — from natural disasters, to inflation and even recessions — to affect the actual tax revenues that come in.
While it’s fairly straightforward to predict expenses — given that employee salaries and benefits eat up the vast majority of the money — there is some up or down movement possible with taxes like transient occupancy and sales. And with SLO County holding a mostly “slow growth” political stance, increases in property taxes can also be fairly accurately predicted along with revenues from planning and building fees.
As to what’s next, the discussion on Nov. 7 “will serve as a guide to closing the projected gap in the coming fiscal year,” said the release. “The County methodically increased its budget as it moved out of the recent economic downturn. In doing so, it expanded public programs and services and funded several major capital projects, while adding more than $70 million to reserves, increasing its General Fund contingency from 4 percent back to its 5 percent target, and bringing employee wages closer to market.”
More information is available online, see: www.slocounty.ca.gov. – Neil Farrell