Mendo’s Cannabis Budget ‘Train Wreck’ ‘Totally Bungled’

Last week, we pointed out that the Supervisors planned to review their long list of long-ignored “directives,” a number of which were issued five months ago in a budget discussion last August, at their Tuesday, February 28 meeting. Several of the directives dealt with improving the County’s financial reporting to reduce the long delays in closing the books. The directives included speeding up vendor invoices, finding departmental data more easily, producing departmental budget vs. actual reports, and a list of mandated functions that are “not being met,” among others.

We predicted that they would either bemoan the delays but do nothing, postpone them again, or just give up and delete them. We were right. Although the meeting was only about half a day long, they decided they could delay the directives discussion again. Supervisor Ted Williams even said as much, commenting after the decision to postpone them again, “We could have been here all day on this one.” Not long after that they adjourned the meeting.

It just takes too much of their precious time to follow up on their own directives, even when doing so could make a dent in the budgeting and financial reporting delays that they have been complaining about for months now.

Auditor Controller Treasure Tax Collector Chamise Cubbison stuck by her previous $2.2 million General Fund carryover estimate (funds left over from last year which are available for this year). But she said there were still delays with some departments and with the outside auditor and ongoing problems in conversion from old the computerized financial system to “Munis,” the fancy new computer system that few people fully understand. Cubbison added that there were still some entries and adjustments to be made to comply with government accounting standards. 

Given that the County maintains an unusually high vacancy rate in funded general fund positions, nobody should have been surprised that the carryover would be in the millions, much more than the $500k the CEO estimated last month. But maintaining such high vacancy rates, rates that are higher in the line-worker positions than in management, means that lots of work is not getting done, not that the Supervisors care — nobody asks about workloads, productivity or completion rates in the County’s departments. This, of course, includes the Auditor’s office itself where there are not only long-standing vacancies, but vacancies in senior positions for staff trying to meet complicated accounting requirements.

When the Budget for the Cannabis Department arose, Supervisor John Haschak was uncharacteristically blunt: “The Cannabis Department has a $1.1 million budget and their revenues that were supposed to cover all of that were at about less than 10%, 7% of what they were expected to come in at. We didn't have a department that even brought up the issues until the executive office found it. Is that correct?”

Deputy CEO (for budget matters) Tim Hallman replied: “That is correct.”

Haschak: “And then we have this issue of the possibility of paying off some of that, saying some of those salaries with the LJAGP [state cannabis admin grant] money. But then we are finding that that might not even be a possibility because of the restrictions on supplanting the existing positions with that money. So it seems like we have this department that has totally bungled $1.1 million! And it looks like the County general fund is going to have to pay for it with general fund. Whether its $600,000 or $700,000, we don't really know. But we have a real issue here.” 

Later in the meeting when the overall budget gaps were being reviewed, Haschak added, “Looking at this, ‘current funding needs’ [for the Cannabis department], I agree that cannabis is, what I'm hearing, about $100,000. Because it wasn't from staffing. But it certainly — that's a department that this board oversees and it is our responsibility to figure out why the projections were off by over 90%.”

Supervisor Williams agreed:“The money we did not receive in fees means we didn't process applicants. We didn't do some work. Because that was based on cost recovery. So why would we have a $600,000 expense for staff that didn't do work? They must be working on something else. Maybe that something else is work for the state licensing that would qualify under the grant. We don't have to answer to it now. But staff was issue-spotting and calling things as they see them, right? But I would hope this item would come back with some level of detail. … It's commonsense. What's the story? Normally it would have been $600,000 and we didn't budget that, yet we have staff working. They are not working on something that's providing cost recovery. What are they doing? Are they doing work that we can bill the state? I don't mean to put you on the spot, CEO Antle, if this needs to come back, that's fine. But I think the Board needs to address it. We can't just leave it here. This is a train wreck.”

We’re not sure about Haschak’s or Williams’ numbers nor their inarticulate attempts to describe the cannabis department’s situation because the entire cannabis program is so badly “bungled” that it’s hard to follow the bouncing bong. But whatever the numbers are, there certainly is “a real issue here.” 

Trouble is, the Board hasn’t done anything to address it. They haven’t even issued any of their infamous “directives” to their Cannabis department in an attempt to figure it out. Remember, the Cannabis Department Director, Kristin Nevedal, works directly for the Board, not the CEO. CEO Darcie Antle calmly reminded the Board: “That question about what the staff has been doing and working on is a question for Ms. Nevedal.”

But, of course, nobody even asked Ms. Nevedal. Haschak should have included himself and his board colleagues under the phrase “totally bungled,” but we doubt he’d ever go that far.

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At one point in the cannabis discussion, Supervisor Ted Williams tried to claim: “…the program is costing us money. This is not the County’s cannabis program, this is the state's program. The County cannot license, only the state can license people. We're straddled [saddled?] with doing the state's dirty work with technical assistance on Site Specific CEQA reviews. And we have a bad ordinance that we can’t change because the deadline is in state statute in the past and we would have to do an EIR which might take four years. You are right in saying that this program cannot possibly succeed. A lot of us recognize that. I don't know of anything this board can do to make it work. This is a state regulatory problem. We are getting the brunt of and a lot of the criticism that comes here should really go to Sacramento. They have devised a scheme that we cannot possibly win. We do not have the technical expertise or the funds to make good on the state’s program.”

Williams’ claim that the state should be blamed for Mendo’s many cannabis program failures is belied by the recent statistics showing how many permits have been approved in other counties. Mendo has just twelve state licensed pot growers, less than 2%, whereas neighboring counties have upwards of half of them. This Board could have switched to a more workable use permit system two years ago, but when they refused to put a two-acre cap on that proposal as the Planning Commission recommended, local opponents circulated a ballot measure to block it and the Board folded, rather than simply agreeing with the sensible Planning Commission approach. 

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But Williams’ specious answer, however arguable, was soon eclipsed by Supervisor and current board Chair Glenn McGourty who couldn’t help trying again to avoid responsibility the mess he and his colleagues created when they consolidated the Auditor and Tax Collector offices.

McGourty: “We didn't actually vote to combine the Auditor Controller Treasurer Tax Collector offices, just the officers. We didn't say we were combining those offices, we combined the positions in those offices. That's different.”

No it’s not. 

Mendo had two separate and distinct offices: Auditor-Controller and Treasurer-Tax Collector. They consolidated those two offices into one office: Auditor-Controller-Treasurer-Tax Collector with one person in charge. And they did it against the considered and very public advice of everyone else involved and, as Supervisor Haschak pointed out several times, without any plan. This uncalled for and abrupt consolidation also caused three well-respected top senior finance officials involved in the consolidation to either retire prematurely or quit outright, leaving Ms. Cubbison holding the money bag while at the same time having to deal with two large, new financial software systems, the property tax system and the Munis financial system, with a depleted staff and no help from the Board or the executive office. 

Lately, the Board’s “Blame Cubbison” rhetoric has diminished somewhat, as the Board has grudgingly become aware that the problems with closing the books are countywide, not with just one senior finance official. 

But while they occasionally bemoan the problems and claim to be concerned, they continue to avoid asking pointed questions, setting deadlines, following up, or requiring basic departmental monthly budget status reports.