Mendo Central, Ukiah, is broke and getting broker faster than previously thought. Revenues are drying up, costs increasing, an untenable situation getting less tenable by the month.
According to County Budget Officer Jennifer Wyatt, General Fund revenues — of which law enforcement takes up more than half at 54% — will be declining at around 3% per year for at least the next three years.
And that's the optimistic prediction.
All of Mendo’s General Fund departments — those not funded by state, federal or private grants — have taken major budget hits, “reductions” if you prefer, over the past two years with General Fund revenues down to an estimated $58 million.
Last Tuesday, Assistant CEO Carmel Angelo lead the discussion about the ever-widening gap between income and ongoing financial obligations. CEO Tom Mitchell’s only remark during the entire budget discussion was after the dismal departmental budgets were discussed: “That's just for the operating departments. There are still deficits in non-operating departments that create the total June 30 deficit. The lack of sales taxes and other revenues going down plus there are other factors involved. They [the staff] didn't have mitigation plans or employees but they are part of the overall deficit.”
Mendocino County, not so incidentally, is paying two CEO's — Mitchell and Ms. Angelo who does Mitchell's CEO-ing for him.
Well over $200k or two deputy sheriffs per year could be funded by firing Mitchell.
Ms. Angelo began by summarizing what the County has done in the face of reduced revenues: a 6% reduction in the workforce. 80 employees have been laid off and 120 positions have been kept vacant although 51 “mission critical” positions have been approved to be hired back as permanent or extra help.
Mandatory and voluntary time off to the tune of 10% salary reductions (no reductions in benefits) has been imposed. Reserves have been spent. Travel has been curtailed. Even bottled water has been eliminated. Hair shirts optional.
The individual department budgets for this year have been or will be balanced by June 30, except for the Sheriff, said Angelo, as the Sheriff whittles away at his deficit, presently estimated by the CEO at $700k. Sheriff Allan says it will go down to less than 400k by June 30.
And then the math and the thinking went Mendo-fuzzy.
Angelo said the CEO’s office would continue to “look at” mandated vs. discretionary services and contract renewals. But which services are mandated or not, and which contracts are being reviewed remains vague. (We suggest looking at the long list of high-priced contract psychiatrists on the Mental Health contract list, for starters.)
Angelo said most of the short-term budget balancing tools have been exhausted and that the actions taken so far have produced increased workloads and lower employee morale.
To deal with the short-term budget gap Angelo suggested continuing the hiring freeze, freezing all salaries and benefits, and embarking on no new capital projects.
As usual, spared the budget ax was Mendo's bloated management. A 10% pay cut on the dozens of County management staff at the Supervisors pay grade and higher would save a quick $300k-$400k just over the remaining four months of this fiscal year and the Sheriff’s budget gap would instantly go poof!
Ms. Angelo fired up the Powerpoint projector and switched on the buzzphrase machine: restructuring, program reductions, consolidations, workshops, multi-year strategies, balancing methods, and many, many more — every buzzword in the bureaucrat's handbook except “cut.”
Never a man to be bamboozled by the fog machine, Supervisor Pinches broke in. “Do you have any examples? What about the details?”
A clearly exasperated Angelo replied she was considering joining environmental health with planning and building, combining some administrative services, and maybe marrying the museum to the library, the Clerk of the Board to the CEO's cubicle (an idea whose time has probably not come, if you ask the Board). Angelo said she was “working with” department heads to get'er done but specifics would have to wait until February 23rd, the next big budget workshop, or maybe May. Probably May.
Pinches replied, “We need specifics. It’s taken us years to consider privatizing solid waste. We can't wait another year or two. We need recommendations now. Good or bad. You have to be more specific, not generic.”
“We can't just react,” Angelo replied. “We have to plan and analyze costs and benefits. We need department heads in the loop. We have to form a team with the CEO and the department heads and all the departments to look at services and ideas. What we do should be sustainable. I don't see it happening soon. I realize the urgency, but some things will take longer than others. We have begun to look at the supervisor-to-staff ratio and at revenue enhancement, leveraging dollars, economic development, labor negotiations — we have eight bargaining agreements coming up this year,” Angelo said, basting Pinches in the very generic abstractions he had balked at.
Supervisor John McCowen didn’t like the non-specificity either.
“This won't help this year. You have no specific recommendations. Maybe on February 23, maybe in May. We have a $3 million deficit that we have to balance by June 30. If you won’t have any recommendations until May, then you’re admitting there will be a $3 million carryover.”
Pinches had some specific revenue enhancers.
Why not sell surplus property like the Hopland Road yard, or the recently vacated Willits court facility? If we’ve had all these staff reductions, Pinches asked, why not vacate some facilities? Why not move Mike Sweeney’s Solid Waste Management office into a County building and save the rent?
Angelo was unmoved.
“$3 million [the still unaddressed revenue gap for this fiscal year] is ten or twenty positions. We could come in with a list if you want. But it is not the best strategy according to your CEO office. We need a long-term approach … a thoughtful process rather than just reacting to the current deficit. We’ve vacated a net of 200 positions over the last two years. At some point services will begin to self-correct.” … “Some small general fund departments can't take a 10% cut. Otherwise they wouldn't be able to survive. Do we need all these departments? It’s an evolving process.”
“So you're saying we're going to throw the deficit into next year?” asked Pinches. “I can't go along with that.”
Wyatt replied bluntly, “The only short-term solution would be layoffs.”
No it wouldn't. Must we mention management again?
Supervisor Kendall Smith didn’t like the buzzword barrage either.
“There’s a disconnect between the information you're giving us. This is just postponing decisions. What actions are you recommending? Where are the suggestions? … Time is marching on. I have real concern that we are abandoning our responsibilities.”
Supervisor Colfax was inspired to join his colleagues in their demands for specifics with another long rant.
“If this were a proposal that were bring brought forward by an entrepreneur about how to deal with a particular business plan or if it were a proposal brought before us as some funding agency or if it were a pitch being made by a movie producer, I think it would fall flat on its face. The reality is here we are in exactly the position… one thing we're good at, some of us up here… It's exactly what… It's February! What did we say in August and what are we saying now? So we can do all these things. These are good things. But you know what? There's no narrative here. There's no coherence to this. Given our situation in county government right at the moment we are looking at bankruptcy unless we take drastic action. If I were a court appointed bankruptcy adjudicator I would say, This is not a good plan to reorganize your company. This does not take into account all the things that need to be done if you are ever going to get back into business or if you are ever going to prevent going completely bottoms up! And that's the part of this here… I'm going to tell you what's bothering me about this. This is departmentally driven. Not board of supervisors driven. I think we have to pay attention to what our job is and our primary job is make sure we survive as an agency in this county. We are getting people coming in here saying, Boy if you say the right thing you have a real big crowd come in and really give you hell. But you say that's ok, maybe we can, maybe we won't be around in eight years so let's forget about it. But we have to be really talking about really what services… not what we can nibble around the edges, oh let's stop… I mean the bottled water thing sort of sums it all up from my perspective; the fact that it would even make it into this document in which you are talking about tens of thousands, hundreds of thousands, millions of dollars, that need to be dealt with and we're talking about, We saved on bottled water. Maybe I've had to much sun. Maybe I've been out there banging my head against the sand too many times. But the reality is here and this is just not it. We up here need to sit back and say, Do you want to eliminate… Why don't we just eliminate all mental health programs? Why don't we just eliminate this whole set of services? Why don't we close certain programs in certain jurisdictions in certain areas? What can we cut back and survive with? As it stands right now we are not going to survive as a, as a credible county entity unless we come forward with… This board, I'm not talking about staff so much here, but we have to come up with solutions here and we did come up with recommendations that I don't see up there. We talked about cutting wages 10% across the board. We talked about cutting wages progressively in such a way that those who are… and bring it down to a certain level. [Not to Colfax's level, though.] We talked about going to a four day week. These are things we have talked about, each of which is controversial and problematic. But the reality is that this is not… If this was a plan for a household, we're looking at this, we're going to lose our house here! We're under water already! And I don't know that this is taking us anywhere except that it's a nice sequence, a narrative of a decline and fall. And that's the part of it here… and it sounds critical, but it's not critical. It's the situation we're all in and I think this decline and fall mentality here is, can we remake government? Reagan didn't succeed in doing it at the federal level, but until we start talking about doing these things that involve the fact that, take into account that, we don't have revenue! If we're not going to address that then how are we going to survive? It's not happening. I just find this a very poor way to proceed. The problem here is that some of the more radical solutions that have been suggested by members of this board are just blown off because they would touch on certain interests and certain… and require certain activities that would not be the way that we've always done business in Mendocino County. It's a different world out there and I think we better get used to it.”
McCowen agreed.
“This should have happened a year ago. We've asked the CEO's office for recommendations, not just, We're going to cut everyone 10%, 15%. We need a list of recommendations. We need $3.7 million between now and June 30. We need a list of $5 million worth of cuts to choose from. Without a list of specific recommendations with specific values attached to them, we're not being put in a position where we can successfully close the gap for the current deficit. Supervisor Colfax mentioned bankruptcy. If you don't balance your budget that's eventually where you wind up.”
Ms. Wyatt had a very creative way of looking at the deficit carryover to next year.
“In the past, we had fund balance carryover, but last year and this year we have had a deficit balance going forward. So this is no different than any other fund balance carryover that we use in part of our budget process.”
Except the fund balance carryover is now a negative $3 million! And that would be added to a negative surplus of almost $8 million next year!
Then there was the County’s fast-growing pension debt. Nobody knows exactly how big it is; official estimates range from $170 million to well over $300 million over some number of years. It depends on how it’s calculated and who's doing the calculating.
One thing is sure, though. Because of the stock market collapse and the substantial interest on the pension debt, at the rate that pension obligations are growing compared to the County’s very limited ability to pay it off, the pension obligation is ballooning out of all proportion by millions of dollars every year.
Making financial matters worse, pension fund money is being siphoned off to pay retiree health care for those employees who retired before 1998.
Combined with the ever-increasing Teeter Plan debt where the County overborrows against anticipated, but not realized, tax delinquency penalties and fees, the large declines in all categories of income added to the state’s near bankruptcy, well, something has to give.
The Supervisors insist, incorrectly, that this huge pension problem belongs on the Retirement Board's agenda. But the Supervisors will end up being stuck with the bill, so that's a flimsy bureaucratic dodge.
There are really only two ways to deal with the County's huge and growing budget gap at this point:
1. Declare bankruptcy the way MediaNewsGroup’s Dean Singleton recently did and simply tell the banks and other creditors that Mendocino County can never pay all the accumulated and compounding interest on its debt. After all, the thieving banks created the overall problem — the stock market collapse, the recession, and most of the revenue cuts and they got all the bailout money. So, if Singleton can stiff his creditors, Mendo can stiff the banks their interest. This would mean Mendo would still pay off the principle on the debt and the ongoing yearly payments — but screw the interest. Interest payments are the biggest budget killer.
2. Cut back management staffing levels and salaries upwards of $3 million annually.
Otherwise, as Colfax and McCowen explicitly said, Mendo will be filing for bankruptcy soon anyway, and that would lead to pretty much the same thing.
* * *
Although she'd complained mightily — CEO Angelo and Silent Sam, the other CEO, had put off even the possibility of specific cost saving measures for another two weeks — Supervisor Smith announced, “I move to accept the presentation and adopt the strategic balancing plan and move on!”
Colfax was flabbergasted.
“I have to ask the maker of the motion if she's being facetious, sarcastic or perverse? This is entirely inconsistent with concerns you've raised in the past. What do we accomplish by doing this? It's like saying we'd like a lot more noise and shuffle and dancing and ceremonies. It hasn't worked over the last six months. It hasn't worked over the last six years. The idea of stretching out our problems into the future is really… in step recovery programs, it’s the kind of thing you try not to do. This is clinical (clinically nuts?) as it relates to the problem before us. We're facing economic issues and it's not a matter of simply rearranging words on 13 pages or whatever of, uh, documents put before us. Are you serious about this? I'm asking!”
Smith replied, “If the board is not interested in closing the budget gap in any kind of expeditious fashion… I mean it should have been done yesterday. I don't see that all these next steps are all that egregious because, you know, maybe Supervisor Colfax can be blunt. I'm thinking, Well, we've gone off the cliff already by the time we do this [waves at Carmel's charts]… Is this going to get us where we need to go? I don't necessarily think so, but that's more because the Board can't grapple with difficult issues as witnessed today. So I'm not serious. I'm not facetious. I'm just, like, trying to get through the day. I've already commented that we're not doing any revenue enhancement. But [this presentation] doesn't limit us. So hey. I don't know! We'll see!”
Board Chair Carre Brown was miffed.
“Supervisor Smith, you're being very critical of your fellow board members based on that they may not agree with you on the path you want to go down. I really think it's unfair because we have different ideas and the ad hoc committee… I think the majority of the board laid confidence in the CEO's office to come back with those recommendations.”
In fact, the majority of the Board (all but Brown) had just finished denouncing the CEO’s presentation. But the hour was late and the CEO (Angelo, that is) had nothing else, so Brown called for the vote on Smith’s “facetious” motion to punt again.
The motion carried, 4-1. Colfax dissenting.
Good reporting as usual Mark. Well. Now the ole “We’ll Study” Mitchell has quit, what do you think about CEO to CAO? I’m not too sure the title is the thing, although it may be to some. I believe as you do to cut management right now and set up a good reporting system. Start right there.
Unfortunately, I don’t think there’d be much practical difference between the CEO or the CAO model. It’s one of those “structural” things that some people like to talk about but with the kinds of people running and being elected as Supervisor in Mendo these days, having the department heads report to the Board or the CEO won’t matter in any observable way. It does depend on who the person is. Mike Scannell wasn’t a bad CAO and wouldn’t have been a bad CEO either. John Ball was a bit high-handed but that attitude was what the Supes needed — and rejected — and got Mitchell, the exact opposite: no-handed. The test will be what happens to Pinches’ two big pending proposals, whether you agree with them or not: 1. Scout Lake project progress, and Solid Waste privatization. If these two things get moving at least into real proposals then we’ll see that there’s been at least some change. Otherwise, it’ll be do-nothing as usual, on-lookers all. PS. Please note that very few things on the weekly agenda are put there by the Supervisors, almost all of it is staff driven. There’s no other elected or non-profit board in the County that is so extremely staff driven. Do you think they’d start taking control of their own agenda if they went back to the CAO model? What odds do you give? For example, why doesn’t Pinches, who is the most active supervisor, put the Scout Lake project on the permanent agenda where it would get more attention? That’s his pet project, but he doesn’t even insist that he get a status report every week or every month. Why not? All that needs to happen to move it to the next phase is for Mr. Sanford to draft an agreement for the Boy Scouts to sign. And that’s been pushed back and pushed back for months. It’s arguably the most do-able project on the Supervisors’ plate. None of the other Supes disagree. Sanford has all the building blocks in place. And yet it’s been stalled for months. What does that say about the Board, the Supervisors, the CAO/CEO model and the department heads?
It’s not just a matter of “drafting an agreement,” Mark, it’s a matter of negotiating still-remaining big issues with a private property owner. Pinches seems to forget that sometimes — see his complaints about how fast Brooktrails raised their own dam — on publicly owned Lake Emily.
Roland Sanford told the BOS back in December that it would take 3-4 months to “wrap up the agreement with the Boy Scout Council.” That sounds like April to me, at best, and as I think it was CEO Mitchell assigned to do the negotiations (see BOS agendas), who knows now. Don’t know as if having the item on the BOS agenda in the interim would be helpful, as far as speeding things up.
Pinches is certainly getting private updates, although they don’t seem to be entirely accurate: About a month ago, he told us it would be done in “10 days,” but it wasn’t. From what I’ve heard, Pinches’ public pronouncements about “his” project (some here in Willits would somewhat disagree with that description) have not been particularly helpful either.
from the Dec. 11, 2009 Willits News:
“According to Sanford, the Boy Scouts and the county have not yet determined whether it would be best to merely raise the dam on the reservoir, increasing its capacity by 30 to 50 percent, or to build one or more ancillary reservoirs.
“At this point all of those possibilities are still on the table,” Sanford said.”
here’s a couple public comments from the Aug. 2008 Willits News article, “Supes want to study raising Scout Lake,” which gives some background on the raise the dam vs. build ancillary reservoirs issue:
from Steven Kline, Union City:
I am adamantly opposed to the County of Mendocino and the City of Willits in wanting to increase the height of the Wente Scout Reservation dam.
Raising the lake by a mere 10 feet will mean the total destruction of our Scout Chapel, our parade grounds, our camping meadow, our campfire area, our waterfront and two of our campsites. The additional 10 feet would inundate the roads around camp and put the height of the lake at the base to our admin building and our dinning hall forcing new roads to be built throughout camp.
A large grove of mature redwood trees currently at lake level would be destroyed as well as numerous oak trees and pines trees. Additionally the fluctuation of the lake would cause an unsightly mud bowl effect as the County of Mendocino and Willits used the water at their discretion.
Contrary to Mr. Pinches, building two new dams on our property would have far less impact on the Scout Camp than raising the lake 10 or 20 feet. I support your need for emergency water, but not at the cost of our Scout Camp.
from Stan Pisle, Berkeley:
I find in incomprehensible that Mendicino county is considering such a ridiculous move on private property. Raising the lake 10 or 20 feet would effectively destroy the main operational property of Wente Scout Reservation. This sounds like China’s Three Gorges Project. Is the county willing to pay for the movement all the infrastructure of the camp?
for the record, in my previous comment, I should’ve disclosed that, on this issue, I’m not just an AVA reader, I am helping Willits City Councilwoman Holly Madrigal with her campaign for 3rd District Supervisor. my bad.