County Notes: Handwringing Won’t Balance The Budget

In his latest Supervisor’s report, Supervisor John Haschak bemoaned the difficulty he and his colleagues are having trying to balance next fiscal year’s General Fund budget. 

Apparently, Haschak thinks that some unspecified “efficiencies” he insists are “happening” combined with unspecified “cuts will be made” will magically bring Mendo’s General Fund budget for next year into balance. 

But, then Haschak frets rhetorically, “Where in the County do cuts come from that won’t affect our safety or wellbeing or the wellbeing of our neighbors?” Haschak and his colleagues have repeatedly insisted that “public safety” and “revenue generating” positions will be exempt from cuts. 

Depending on your definition of “public safety” (e.g., does it include the Public Defender’s office? Probation?) that means that somewhere between $5 million and maybe up to $10 million or more would have to be cut from the $90 million General Fund expenses after exempting at least $60 million in public safety and revenue generating slots. Trying to find $5 million to $10 million worth of efficiencies and cuts in the remaining $30 million budget is impractical to the point of ludicrous because many of those offices are small, already understaffed and overworked, and would be effectively crippled by further cuts. (With the exception of the fully staffed and well compensated County Counsel, Executive and the Supervisors offices themselves, which are also probably magically exempt from cuts.)

Not once in Haschak’s report does he mention revenues or tax collection, despite the Board’s frequent requests for staff to get busy adding parcels and properties to the tax rolls and Supervisor Gjerde’s recent failed attempt to get a monthly “tally” of properties newly added to the tax rolls. 

Of course, putting un- or under-assessed properties onto the tax rolls won’t generate much near-term revenue. But making sure current unpaid taxes are paid with penalties and interest would. So you might expect that tax collection would be a priority. Unfortunately, we have never heard Haschak or any of his colleagues ask about the status of tax collection from non- or underpayers. Especially the big ones that everyone knows are out there.

Whatever Haschak may mean by “efficiencies,” they are not “happening” in any way that will make a noticeable dent in the budget gap. Haschak’s example of the pot department’s too little-too late efficiencies is irrelevant in this context.

Mendo still doesn’t know how big the deficit is. Their fancy budget portal lists the “current fiscal year” as FY2021-22 with information in it “updated” on 5 Dec. 2023.” 

The county’s website link even has the words “latest” and “transparency” in it. FY 2021-22 ended on June 30, 2022, almost two years ago. This is what passes for “transparency” and “current” in Mendocino County. 

Back in 2009/2010 when Mendo faced a similar budget deficit, “public safety” was not exempt. Neither the Sheriff nor the DA didn’t like it, but then-CEO Carmel Angelo pushed for and got a series of budget cuts in the Sheriff’s and the DA’s Office. Yet so far, no one has even asked the Sheriff or the DA what they can do to reduce their budget. (In fact, the Sheriff has said that he’ll need at least ten more corrections officers when the new wing of the jail is opened next year.)

Back then no attempt was made to identify which positions were “revenue generating.” Everybody had to pitch in with cuts.

The Board today seems to think that the half-dozen newly added appraiser positions in the Assessor’s office are “revenue generating.” But so far, according to Assessor-Recorder-Clerk Katrina Bartolomie, those positions have not even generated enough new assessment value to cover their cost — if the assessments ever translate to actual revenue. 

No amount of empty rhetoric or claimed “efficiencies” or even a few vague “cuts” will make any real difference to the general fund budget gap. So far, only four people have taken the County up on their early retirement offer, and only two of those were in General Fund departments.

If Haschak were serious, rather than just mouthing buzzphrases and publicizing pointless questions, he would make a specific proposal for balancing the budget with an outline of how to proceed, what cuts could be made, and at least get the conversation started. But so far, neither Haschak nor his colleagues have any practical idea how to deal with the upcoming multimillion general fund budget gap.

Budget hearings for next fiscal hear (July 2024-June 2025) are scheduled to begin next month. Will anybody propose any specific budget balancing measures? Or will they continue with the Haschak approach of whistling past the train wreck?

* * *

The CEO’s ‘Budget Recommendations’ 

CEO Darcy Antle’s “budget recommendations” to be discussed at next Tuesday’s Supervisors meeting are unintelligible gibberish. 

First she starts off declaring that there’s a “$15m: FY 2024/25 Budget Deficit as of 4/23/24” which is “Based on current expense projections” (but which she declines to explain), and “Does not include CIP (Capital Improvement Plan). Assuming no additional General Fund appropriations.” Which is not only NOT a “recommendation,” but not a valid assumption since this week’s agenda goes right ahead with “additional General Fund appropriations.” 

Then CEO Antle says that the County has “$79m: Non-Discretionary revenue” which is “$2.8m lower than 23/24.” Adding: “$2.2m between Federal, Sales Tax, and TOT,” which may mean that $2.2 million of the $2.8 million reduction is in those tax categories, or maybe not; it’s not clear. And, “$650k from higher obligations.” Which, besides NOT being a recommendation, is totally meaningless.

Then the CEO says that there’s a “$94m: General Fund Ask,” which probably means that the budget requests from each budget unit add up to $94 million while the discretionary revenue is only $79 million. Why doesn’t the CEO at least point out whether she agrees with the $94 million “ask”?

The CEO then says that the “Initial deficit offset recommendation: $2.5 - 4.15M” is based on “Up to $3.2M – County Retirement reserve to offset changes in actuarial assumptions.” We’re not sure what that means either. But it may mean that “up to” $4.15 million of previously budgeted contributions to the retirement fund may be avoided because they have changed some “actuarial assumptions.” This could mean that they now assume that County retirees will not live as long as they used to, thus saving some pension outlays. But who knows? Whatever it is, it’s voodoo money.

There’s also “$650K - ITSF Holiday (carried forward from 23/24).” We have no idea what an “ITSF Holiday” is. The CEO doesn’t bother to explain.

Then there’s a “$300K – CalFire Dispatch budget adjustment based on forecasting.” Also not explained. It could be that the Calfire Dispatch operation in Willits for Fire and Emergency Services may cost a little less than it used to — but there’s no explanation about what those “forecasts” are based on.

The CEO also claims that they will “Research and maximize EMS funding.” More gibberish.

The most promising info bit in the “budget recommendations” is the CEO’s intent that May 7 the Budget Workshop will address “Property Tax reports: Total Valuation, Discovery process.” However, given the depressing history of this subject and the glaring emptiness of next week’s presentation, the odds of this aspect of the May 7 workshop producing useful numbers or forward progress are minimal.

We see nothing in this week’s “budget recommendations” that amounts to anything remotely resembling an actual budget balancing recommendation. 

This is all very standard for the CEO. Put a title on a PowerPoint slide that implies some green eyeshade analysis and proposals with dollar values attached, but instead provide only bait and switch, offering a shiny new Ferrari but delivering a junked Yugo without a transmission. 

Time and again the Supervisors bend over backwards to pretend that these useless budget presentations have value, using them as a pretext to drift into more vague gibberish themselves about how tough it all is and, in Supervisor Williams’s case, retreating into “the broader issues” while scoffing at better tax collection because “All properties perfectly assessed with taxes fully collected will not solve the structural problem described above.” 

Of course, nobody proposed perfection nor that tax collection alone would “solve the structural problem.” What we said was that collecting taxes due would not only be fair to the County’s honest taxpayers, but would make a major dent in the deficit, and, combined with whatever remaining cuts might have to be made, would close much of the current gap. Williams poo-poos our proposals, but has not offered a single specific budget closing recommendation.

Apparently, these two dozen or so overpaid senior officials in the CEO’s office and the Supervisors chambers who collectively cost local taxpayers well over $2 million a year are incapable of even putting specific budget balancing recommendations on the table. Meanwhile, taxes continue to go uncollected and expenses, a number of which are retroactive, continue to be routinely approved, many on the consent calendar.

For example, Agenda Item 4d: “Approve Agreement with Theron Chan, M.D. in the amount of $45,000 to provide medical oversight, direction, and guidance for the Public Health Department as the Interim County Health Officer, effective upon signature through July 31, 2024; authorize the Public Health Director or designee to sign any future amendments that do not increase the maximum amount; and authorize Chair to sign same.”

Dr. Chan, CEO Antle’s significant other, may be a very capable doctor. And he’s certainly cheaper than his predecessors. He may even be “familiar with County processes.” (Although if he really was, he’d be running the other way.) But where will the $45k come from? “Budget amount was not budgeted and BHRS Fiscal plans to account it for Q2 using the savings from the CHO position, this will be funded by Intergovernmental Transfer Funds.” Oh! There you go! No problem! 

The CEO also proposes Item 4e: “Adopt resolution and approve Memorandum of Understanding between the County of Mendocino and the Mendocino County Association of Confidential Employees for term of July 1, 2023, through June 30, 2026; and authorize Chair to sign same.”

How much is this baby (that dates back to July of last year) worth? “Approximate $199,000 with salary and benefits.” And where will the $200k come from? “Increases will impact various budget units; County Counsel, Human Resources, Executive Office, Auditor’s Office and Retirement.” There you go. Get the rubberstamp.

Funny how they can be so precise in recommending various spending items but seem incapable of comparable specifics when it comes to budget balancing.

* * *

Mendo’s ‘Everybody Does It’ Excuse

In October of 2017 then-CEO Carmel Angelo wrote:

“Retroactive Start Date Contracts Require Board Approval.— On September 27, 2017, a memo was sent out to all Elected Officials and Department Heads reminding them that all contracts must adhere to Mendocino County's Purchasing, Leasing & Contracting Policy, Policy No. 1. Effective immediately, any contract that has a retroactive start date will need Board of Supervisors' approval, regardless of the dollar amount of the contract; and requires noting ‘Retroactive’ on the top of the routing sheet.”

That was the County’s first significant acknowledgement of and attempt to improve the problem of retroactive, i.e., rubberstamping after the fact, contracts. But of course, putting the word “retroactive” on the routing sheet didn’t change anything. The problem only got worse.

In February of 2021 Supervisor Williams asked then-CEO Angelo what she thought about those pesky retroactive contracts that were routinely presented to the Board for rubberstamping.

In her response then-CEO Carmel Angelo replied: 

“When you get a retroactive contract essentially you — you know, you basically just rubberstamp it because the contract is already in place. A large contract, let's just say like RCS (Camille Schraeder’s Redwood Community Serivces), that has provided services for over 20 years, something like that may take a little longer to negotiate and it comes in retroactively, but we know that they will still get the contract because they are the only service provider. It would be a good idea to focus on what a retroactive contract is and why it's retroactive, what that means, and are there ways to mitigate that. … For the next meeting, I would like to bring in a small group of department heads that consistently have multiple contracts that are retroactive. I want to make it clear though that there are ways to approach this. This is not a public shaming of the department heads because they have a retroactive contract. Let me be real clear. There are times that something happens and you just can't help it. You get money or whatever.”

“You get money or whatever…”

Then-Assistant CEO (now CEO) Darcie Antle added:

“We are always going to have retro [sic] contracts. But also the workload that has been placed on the department, and in particular HHSA this year [during covid], we are seeing a few more retros in that area. We worked really hard last year to clean it up [demonstrably false] but the pandemic has caused some more delays this year but I think we can get back on track.”

At least CEO Angelo was blunt in her response, admitting that the Schraeders are the main beneficiaries of retroactive contracts and that retroactive contracts are simply “rubberstamping.” But there was no follow up to this discussion; no department heads were brought in, no follow-up on later agendas. Retroactive contracts continued to be “approved” on the consent calendar without question or discussion, many of them in the millions of dollars.

That was, until Supervisor Ted Williams brought it up again a couple of weeks ago when he compared Mendo’s huge number of retroactive contracts (over 600 since 2018) to Sonoma County’s none. At the end of that aimless discussion Interim County Counsel James Ross said that he had “spot checked” Sonoma County’s agenda and he thought that Sonoma County avoided the problem by not including the word “retroactive” in their agenda items.

After the usual blather, er, discussion, CEO Antle agreed to look into the applicable policies and talk to the applicable officials. History shows that none of that will happen and nothing will change. 

However, in an overt attempt to make sure that nothing changes, without explanation or reference to Supervisor Williams’ previous complaint, CEO Antle (and we assume Interim County Counsel James Ross) inserted an extensively researched “summary” into this week’s otherwise info-free CEO Report entitled “Overview of Retroactive Agreements in Selected California Counties.” 

In their summary Antle and Ross went to a lot of time and trouble to research the agendas in Humboldt County, Lake County, Marin County, Nevada County, and Sonoma County. Not only did they count the retroactive items in each county, but they actually asked for and obtained explanations from each of those counties, pointing out that in most cases the only way to identify retroactive items would be to compare the contract dates with the agenda item dates.

In effect, Antle and Ross are saying, 1) everybody does it; and 2) Mendo does it better because Mendo puts the word “retroactive” in the agenda title.

* * *

Besides CEO Angelo’s refreshingly blunt comment noting that the retroactive approvals are nothing but rubberstampings and that Schraeders are the main beneficiary of the practice, the best independent explanation we’ve heard for Mendo’s gross overuse of retroactive items was provided back in 2021 by former Environmental Health Director David Jensen: 

“To really understand the issue of retroactive contracts, look closely at the County’s byzantine contract development and approval process. Track the inexplicable time from initiation to approval. There you will find the real problem. They use canned language with fill-in-the-blanks entries for names and numbers. Then comes the glacial review process. As Environmental Health Director, I would wait for contracts to be approved, then have to resubmit them for reprocessing because the effective date had passed, hence it had become “retroactive.” Approval by County Counsel was the purgatory where they lingered longest. If the process is not corrected, the problem will continue.”

Jensen is right. And that probably explains why CEO Antle and County Counsel Ross went to such great lengths to prepare and document their “everybody does it” excuse: the problem is in the totally unaccountable County Counsel’s office itself.