A five-year budget forecast presented to the Santa Barbara County Board of Supervisors shows an anticipated $12.2 million revenue shortfall for the General Fund next fiscal year could grow to $55.2 million by the 2022-23 fiscal year.
Even if the supervisors follow their historical policy of contributing discretionary revenues to the General Fund, the gap between income and expenses next fiscal year would be an estimated $6 million, and that could rise to $15.1 million by 2022-23.
But Jeff Frapwell, the county budget director, said in his presentation to the board Tuesday that county staff has launched “Renew 22,” a “five-year transformation plan” that will change the way the county does business.
Five teams and the County Executive Office are looking for ways to reduce costs and enhance resources through half a dozen strategies, and some are being or have been implemented, Frapwell said.
He also pointed out a lot of assumptions were made in developing the forecast, and many of those things are likely to change.
“We currently forecast what we know today,” Frapwell said. “We know there are other things on the horizon. They’re not quantifiable enough to include in the forecast, but we’ll continue to monitor them.”
Salaries and benefits make up the majority of expenses in the county’s $250 million general fund budget, and for the forecast, the staff assumed annual increases of 3 percent for salaries, 6 percent for retirement costs and 7 percent for health insurance premiums will climb 7 percent.
The annual set-aside for the Northern Branch Jail will continue to increase, reaching $19.3 million by 2022-23, and maintenance funding will rise 10 percent each year, reaching $5.3 million that same year.
But he said discretionary revenues are also projected to increase.
“We’re not in a period of revenue decline,” Frapwell said. “That’s not the issue. It’s that our expenses are outpacing our revenues.”
That assessment didn’t sit well with 4th District Supervisor Peter Adam.
“That’s lipstick on a pig,” he said. “It’s still a deficit and it still smells just as bad.”
Frapwell said that while the county will lose transient occupancy taxes from the board’s recently approved ban on short-term rentals in all but commercial zones, it will see increased TOT revenues from the Miramar hotel.
The forecast also does not include any potential revenue from the budding cannabis industry, he said.
If nothing else, the potentially extreme revenue shortfalls are forcing the county to take a hard look at its operational structure.
“It’s a compelling reason to look at and challenge the various departments” to evaluate their operations, Frapwell said. “We can no longer afford to nibble around the edge of our budget gap. … We’re looking across the departments. What can we do better on a countywide level.”
As part of Renew 22, employees in all departments, including union representatives, are developing strategies to make the county thrive as an organization, he said.
Teams are exploring strategies that include consolidations, multidepartment cooperative arrangements and multiagency partnerships, innovative information technology, and new workforce initiatives and employment models.
“We are not going to be a successful organization unless we retain high-performing employees,” Frapwell said.
Only one person — Andy Caldwell, executive director of the Coalition of Labor, Agriculture and Business — spoke during public comment.
Caldwell told the board that every year the budget reports fail to include the primary source of county funding — property taxes and state and federal funds.
While the county can’t do anything about state and federal funds, he said, it can do something about increasing property taxes.
“Your biggest hole is in social services,” Caldwell said. “If you get out of the way of our economy, the economy will grow. … People will need less social services.”
He said when the board recently dealt with oil development, wineries, marijuana and lot splits, all of which could have produced revenue, all were “denied, denied, denied, denied.”
Adam agreed with Caldwell.
“We make a series of bad decisions throughout the year, then we roll into budget deliberations and act like we’ve done the right thing,” he said. “It gets worse every single year. For some reason, we can’t see our way clear to do the things we need to do to generate money.”
First District Supervisor Das Williams responded, “I don’t think there are any of us that are immune to that. You wanted to ban a crop from Ag 1 (zoning) that was worth more in revenue than all the oil projects.”
Second District Supervisor Janet Wolf told fellow board members the county had seen worse times.
“Every budget year is a challenge,” she said. “I don’t think we’re hearing anything here that we haven’t heard in other years. It’s a matter of degree. … I think we need to look critically at what we do in our county.”
Chairwoman and 3rd District Supervisor Joan Hartmann pointed out the county is known for its high quality of life, but agriculture and tourism notoriously generate lower-paying jobs.
“Clearly, we need a long-term budget strategy,” she said. “Santa Barbara County isn’t the only one dealing with this. … Every now and then we do need a crunch just to be more efficient.”
After the board unanimously accepted the budget forecast, Frapwell said the staff will probably return to the board in December with updated budget projections and strategies for dealing with the shortfalls.