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County Notes: Budget Bust

Next Tuesday’s Supervisors meeting agenda includes a mid-year budget presentation (i.e., more than two months ago.) In that presentation prepared by the CEO’s office, not the Auditor, there’s a section called “Summary of General Fund Departments Projections by Budget Unit.”

But they add, “This summary provides information on budget unit projections for end of year (EOY) FY 2021-22 and only includes those budget units that are projected to come in greater than $100K, over their NCC assignment.”

There several things wrong with just that opening sentence.

1. They must mean FY 2022-23, not FY 2021-22, otherwise they shouldn’t need “budget unit projections.” 

2. Only the budget units “projected” to be more than $100k over? Projected by whom? Based on what budgets?

3. They are basing their projections on the department’s “assigned” “NCC” (net county cost), not the department’s own budgets. Meaning the CEO’s office has again dictated County departmental budgets based on an arbitrary pro-rata share of the anticipated General Fund revenue, not on the departments’ own budget estimates.

Then we look at the few departments which the CEO’s office says are more than $100k over budget.

“BU 1020 — Executive Office. The Executive Office budget unit anticipates being over budget by $226,539, due to the increase in salaries and staffing needed to accommodate the management of the Payroll Unit and the needs of special projects assigned to the Executive Office.”

The Board was not told that it would cost upwards of $225k to shift payroll duties from the Auditor to the Executive office based on unfounded worries by Supervisor Ted Williams. And “the needs of special projects”? What special projects? 

“BU 1610 — Buildings & Grounds (Facilities). The Buildings & Grounds (Facilities) budget unit anticipates being over budget by $239,530, due to salary increases, energy costs, increased travel & transportation costs, the Judicial Council of California charging $90,000 over what was budgeted, and internal revenue estimates coming in lower than budgeted.”

Salary increases, energy costs and travel and transportation should have been in the original budget; there should be no surprises there. The Judicial Council should pay for their own blown budget. And all underestimated revenues should be explained. 

“BU 2310 — Sheriff’s Office. The Sheriff’s Office budget unit anticipates being over budget by $503,304, due to the new MOU’s and the changes to premium pay types, longevity pay, and certain paid time.” 

This is just plain wrong. The Sheriff continues to have ongoing budgeted vacancies that will offset a large amount of whatever overrun the CEO’s office is guessing about. The Sheriff also has grants and donations which will further offset any alleged overruns. Did anybody in the CEO’s office even talk to the Sheriff? There are no “new MOUs,” (contracts with Sheriff’s department bargaining units). The only unbudgeted salary increases they got were the across the Board $3k bonuses everybody got which came out of the Federal covid money, not the General Fund.

“BU 2810 — Cannabis Management. The Cannabis Management budget unit anticipates being over budget by $662,000, due to shortfalls on Cannabis fee revenues.”

We think this overrun is probably underestated. Even some Supervisors have declared this budget unit to be a “train wreck,” and “totally bungled.” But as we reported yesterday, the whole subject is beyond our ability to comprehend.

“BU 2860 — Animal Care. The Animal Care budget unit anticipates being over budget by $329,737, due to the average monthly staffing costs are higher than budgeted and revenue estimated to be 61% of budgeted.”

This one deserves its own special explanation. The 2022-2023 budget shows the Animal Care at about $1 million. So this is an extremely high percentage overrun. How could staffing costs be so much higher than budgeted? If it had to do with moving Animal Control out of the Sheriff’s department and into Animal Care, then there should be an offset in the Sheriff’s budget. Why were revenues so badly underestimated?

But that’s all the CEO’s office provided. They did not provide numbers for any other departments. They did not provide the budgeted amounts their overrun calculations were based on. They did not explain the difference between the departments’ budgets and “assigned NCC.” And they did not say over which period these projections were made (half a year? more than two months ago?). 

These pathetically incomplete numbers however show that CEO’s office can calculate departmental revenues and expenses down to the single dollar and make projections based on them, dubious as they seem. Yet the Supervisors continue to pester the Auditor, not the CEO, about timely financial reports. 

If the CEO’s office simply did their job and provided a standard monthly revenue and expense budget report for each department with an explanation of significant discrepancies from the departments (not from the CEO’s office) then the Departments, the CEO, the Supervisors and the public would have a much better understanding of the County’s finances. But the CEO’s office has never provided such reports; the Supervisors have never demanded them. Yet the Board continues to whine that they’re in the dark about the County’s finances. As County employee (and Sherwood Band of Pomo Indians Tribal Council Treasurer) Tracy Wright told the Supervisors last August regarding CEO Darcy Antle’s failure to provide budget info to the Board: “She’s not doing her job. You need to get on her. That’s the final line.” 

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IN LATE FEBRUARY we made a public records request to the County’s Counsel’s office for:

“Copies of all invoices and payment records associated with case number 21cv00561, Mendocino County Sheriff Matthew Kendall v. Mendocino County Board of Supervisors. Also, from which budget line item were payments paid out of?”

Our first response from Deputy Counsel Charlotte Scott said that they needed an additional ten days and would respond by March 10. 

On March 10 Ms. Scott responded again:

“I am writing in response to your Public Records Act request seeking ‘invoices and payment records associated with case number 21cv00561, Mendocino County Sheriff Matthew Kendall v. Mendocino County Board of Supervisors.’ The County will produce invoices and payment records for the defense of the litigation, except for the portions of the invoices which may be privileged attorney-client communication or attorney-work product because they provide insight into litigation strategy or legal consultation. (Los Angeles County Bd. of Supervisors v. Superior Court (2016) 2 Cal.5th 282, 297-300; County of Los Angeles Bd. of Supervisors v. Superior Court (2017) 12 Cal.App.5th 1264, 1273-1274; Government Code section 7927.705). Records which were received or communicated solely for the purpose of settlement negotiations, will not be produced as they are privileged and exempt pursuant to Evidence Code section 1119, and Government Code section 7927.705. With respect to your inquiry “from which budget line item were payments made out of?”, while the Public Records Act does not create a duty to answer questions or create a public record, we are investigating whether there is a public record that could be produced which provides that information. The County anticipates producing all non-exempt public records responsive to this request within the next two weeks (on or before Friday, March 24, 2023).”

Readers will recall that case number 21cv00561 began when the CEO and the Board threatened to personally charge Sheriff Kendall for ordinary budget overruns and tried to absorb his law enforcement computer system, the one that has strict restrictions on who can access it, into the County’s overall computer system. Kendall then hired local attorney Duncan James saying that 1) the Sheriff needed the County to pay for Mr. James since County Counsel was already representing the Board, for $50k, to argue these foolish and irresponsible proposals; and 2) to stop them because they were dumb, not to mention illegal. The case has dragged on for going on two years now. (It started in June of 2021 when then-CEO Carmel Angelo blurted out in open session, “Say the Sheriff comes in $1.6 million over budget. Am I going to send him a bill for $1.6 million? And when he says he won’t pay it, and he goes public, is the Board going to say he’s going to have to put up $1.6 million?” That was followed by Supervisor Ted Williams saying “Let’s do it.” Supervisor Dan Gjerde added, “If it’s county code, I don’t know why it’s not being followed already.” County Counsel Christian Curtis piled on: “This is not just county policy; it is state law.”)

In the ensuing months, lots of court hearings were held in front of Judge Moorman and lots of legal filings were made. Moorman eventually ruled that Kendall could have his own attorney, but she didn’t insist that Duncan James be named Kendall’s attorney. So that ruling was appealed. Duncan James and his private staff attorney spent lots of time on the case, at prevailing attorney rates. The County arranged for an outside attorney for Kendall, but Kendall said he’d only use Duncan James, not a County-selected outside attorney. An on-line appellate website says the case has settled, but gives no particulars. All we want to know is how much this wasteful and unnecessary farce has cost County taxpayers (not counting the hundreds of hours spent by County Counsel and staff). Instead we get a legalistic run-around and double delay which makes us suspect that it’s worse than we even thought. Meanwhile, isn’t the County claiming to be kinda broke? 

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For Your Too Little, Too Late Files…

Supervisor Maureen Mulheren has sponsored an agenda item for Board consideration next Tuesday which would “Provide for Cannabis Cultivation and Nursery Operations, a Reduction in the Cannabis Business Tax for Tax Years 2023 and 2024 and to Establish a Penalty and Interest Amnesty Program and a Prior Year Tax Payment Plan.” 

Yet in that same Tuesday agenda packet we found a Cannabis Revenue chart which showed that (legal) pot tax revenues going back to 2017 when the permit program began. In the next four years revenues increased to almost $6.2 million, but are now way down to an estimated $1.5 million, a decline which should be a surprise to no one, except official Mendocino County.

Further down in the separate budget materials we found: 

“The Cannabis Management budget unit anticipates being over budget by $662,000, due to shortfalls on Cannabis fee revenues.”

Doing the math on this dismal and confusing subject is beyond us, even though we’re usually pretty good at following MendoMath. Supervisor Mulheren doesn’t provide any math either. Apparently the thinking is that if the County reduces pot taxes for next fiscal year (by some unspecified amount) and stretches out the payment schedules, and waives the penalties and interest for past due non-payments — some provisional permit holders who are delinquent on their taxes say they didn’t even grow any pot last year — somehow there will be additional pot tax revenue in the long run, despite the Cannabis Department’s very conspicuous high deficit sucking sound, ongoing expenses for staff and expensive outside planning consultants, and the dwindling number of permit applications, while at the same time the increasing time and expense of processing those dwindling permit applications…

Tuesday’s discussion of how this is all supposed to work should be interesting, but probably not clarifying.

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