It’s hard to make sense of Mendocino County’s annual attempts to balance its precarious books, especially this year. On the one hand they talk about a structural deficit based on continually increasing costs (mostly personnel and their salaries) versus flat or declining revenue. On the other hand they always seem to be able to find enough money to cover their increasing costs, especially as the General Fund salary costs have experienced a slow but continuing decline, offset by continuing salary increases.
A few months ago, Auditor-Controller/Treasurer Tax Collector Chamise Cubbison gave the Board of Supervisors a preliminary guess that the carry-over from the close out of last year’s finances was around $12 million, or $14 million if you count some “unavailable” investment returns. At last Tuesday’s mid-year budget revision, that $12 million was essentially confirmed by the formal closing of the books for last fiscal year (ending in June of 2025).
According to the CEO’s February 24 budget presentation:
“General Fund
The increase in non-departmental (ND) revenue does not represent additional General Fund dollars available, as it is offset by departments projecting to come in over budget or not meeting their 6% attrition. The following chart starting on Page 21 shows the projected Fiscal Year End Net budget position with the additionally projected ND revenues. Projections show these amounts Net to $14,097, which means that the projected Year End General Fund budget is nearly balanced and will require strict budget monitoring over the remainder of the 2025-26 Fiscal Year.
Updated Non-Departmental (ND) revenue projections reflect an increase of approximately $2.8 million, primarily due to stronger property tax, in-lieu of Vehicle License Fees, Williamson Act replacement tax, and interest earnings. These gains are partially offset by adjustments in sales tax and opioid settlement revenue.
It is important to note this net increase in ND revenue does not represent additional General Fund dollars available, as it is offset by the net end of fiscal year position for General Fund departments, impacted by departments projecting to come in over budget or not meeting their 6% attrition. A detailed overview of projected Department end-of-year projections starts on page 20.
Executive Office adjustments reflect staffing and project changes since adoption, resulting in a net General Fund increase of approximately $112,000.
District Attorney adjustments are largely driven by the merger of budget units 0448 and 0464, and consolidation of 0465 into 2070, resulting in a net General Fund increase of approximately $726,000.
Social Services continues refining its budget following significant first-quarter changes, including updated staffing levels and realignment funding adjustments.
Grants and Economic Development budgets are reduced due to staffing changes and vacancies.
Public Health has refined its budget but is not requesting additional General Fund support.”
Part of that budget presentation included the chart below purporting to breakdown how the County ended up with about $12 million in unbudgeted additional revenue which they could use to cover operations costs in the various departments that are overrunning their budgets (which were arbitrarily cut by 6% from the prior year).
Auditor-Controller/Treasurer-Tax Collector Chamise Cubbison tried to explain the increases:
Cubbison: “The balance sheet adjustments primarily relate to the fair value of investments that we are required to book at market value. It does not result in actual funds available. Those are for the investment in the treasury pool that have various different maturity dates out in the future. But that is what that $1 million balance sheet adjustment has to do with. The non-departmental ongoing revenue is a result of property tax, $914,000 of increased property tax. The $3.68 million is various other kinds of one time fluctuations. That relates to interest largely. I’d like to caution the Board not to be too reliant on a particular budget amount for interest rates because they tend to fluctuate. We’ve been very fortunate the last couple years to have some very good yield on our investment. So this portion of that $3.62 million is due to interest. But as interest rates go down over time they can very quickly return to much less revenue from interest on the treasury pool for the county general fund portion. So that revenue is also associated with cost plan [the plan which allocates sizeable overhead costs to operational departments by a pre-determined formula], cost reimbursements from internal service values. That also fluctuates. The cost plan is prepared using the prior actuals from two years and then it’s trued up when the costs are actually available for the year that was approved. So there’s kind of a rolling… Sometimes that can be good, sometimes not as good. The cost plan number is not a consistent number to be relied on. The County also did well unexpectedly I believe with transient occupancy tax. So we are not quite sure whether that is based on just higher room rate charges or if occupancy was truly higher than anticipated, but there was still some good amount of revenue generated from the TOT [bed tax]. There is some money, $473,000 in cannabis tax. I think that we’ve been conservative on what the estimate was. We are still not completely sure how to accurately predict that. It’s kind of an unknown number that fluctuates again wildly. So I just want to point those individual items out. There’s also a change in accounting availability. That depends on… We, with the accounting and the reporting, we determined that actually the end of September is the most realistic revenue recognition period before we close the books, so that allows us to count an additional months’ worth of revenue in the financial statements. So it’s shifting from unavailable revenue to available revenue. That is kind of a one-time shift that as we go forward if we consistently use September as our cut-off for recognition, we won’t have that kind of shift again. That’s why we count that as one-time. The $2.49 million is actually savings in department budgets for those departments that were over or under budget. That netted out resulting in that $2.49 million. I just wanna point out that I think we’ve been much more aggressive with the 2025-26 budget with the imposition of the attrition factor and the reduction of the 6% so the departments were forced to reduce their budgets more close to actuals, so we don’t anticipate an ongoing savings, or unanticipated savings, of $2.49 million going forward.”
Some of this is understandable, kind of, especially the parts about the higher than expected interest earnings and the budget savings that accrues from departments operating with fewer staffers. But we were not the only members of the public who found Ms. Cubbison’s assertion that changing the date of closing the books (the “cut-off for recognition”) actually results in any additional revenue or that it magically changes revenue from “available” to “unavailable” or the reverse.
Unfortunately, the Supervisors had no questions of Ms. Cubbison, so whether this local version of old George H.W. Bush’s “voodoo economics,” or perhaps voodoo accounting, will actually provide additional revenue remains illusory.
CEO Darcie Antle and her staff disagreed somewhat with Cubbison’s suggestion that some of the magic $12 million be used to cover departmental overruns. Instead, Antle & staff proposed that $5.1 million be spent on one-time expenses and the rest designated for reserves. But, as usual, those “one-time expenses” were ill-defined as well.
The CEO recommended that about half of the $5.1 million, or $2.5 million, be allocated to “risk,” which is undefined, but which we take to mean insurance claims and lawsuits, probably including Chamise Cubbison’s pending civil case against the County. The CEO suggests that the rest of the $5.1 million go to Road Maintenance ($1 million), “water” (i.e., $500k toward administrative costs associated with the pending Potter Valley Project/dam removal), and $100k to $360k each for the Little River Airport, capital improvements, the Low Gap Landfill, local share of a cannabis grant and, of greatest curiosity: $100k for “architectural design for DA Office move.” (Nobody has yet discussed or disclosed what the plans are for the DA office move after the old downtown courthouse is abandoned and our mostly newly appointed judges move their numerous pampered asses to their very own plush new barcode-courthouse over by the tracks. Given Mendo’s facility cost experience, there’s absolutely no way that $100k will be enough for the “architectural design for DA Office move” work. And the cost for construction of whatever that “design” ends up looking like will probably be a budget buster of its own.
The Supervisors asked no questions of staff about all this confusion or how the CEO arrived at her recommended levels of allocations to these one-time categories. Nor did they make any remarks about how they might ultimately choose to allocate the $12 million windfall this year or next.
weird!!!
Creative Financing, lol