Muddling the Numbers

Mendo’s budgeters have produced their first quarter budget review for Tuesday’s Board of Supervisors meeting.

The numbers don't add up.

Readers may recall our preliminary attempt last week to calculate the size of the looming budget deficit with available data. With this week’s budget report we can compare our projections to the County’s and update the numbers.

Revenues:

Last week we said, “Instead of the rather arbitrarily budgeted 2% income over last year, the County will be lucky to get the same as last year, for a revenue shortfall of at least $1.3 million.”

Next week’s budget report simply says, “Based on FY 2017-18 actuals in BU [Budget Unit] 1000 the Auditor anticipates an increase in BU 1000 [property tax] at mid-year.” There’s nothing about sales tax projections which we expect to be down, not up 2%, the other big discretionary revenue source.

However, the County says they’ve got an extra $4 million in unbudgeted carry over from last year. We’ll accept that number.

So, combining that $4 mil with our continued projection that revenues (property and sales tax) will be down by at least $1.3 million, we will give the County $2.7 million in net revenue increase, but that increase could easily go down further as real revenue numbers come in.

Expenses:

Juvenile Hall: 

We said: At least $0.5 million over budget.

The County says they’ve laid off more people than we thought in Juvenile Hall by closing one entire wing and laying off three cooks.

So the Juvenile Hall is probably on budget or a little under, although still high compared to other neighboring counties.

Sheriff’s overtime and patrol:

We said: At least $1 million over budget.

County says overtime is down some but overall the Sheriff’s department (not counting the jail) is more than $2 million over budget.

We’ll take the County’s number of more than $2 mil over budget.

Management and executive pay and benefits:

We said: At least $0.5 million over budget.

The County completely ignores management and supervisor raises in their summary of the budget status.

So we stand by our original estimate of over half a million over budget in self-given management raises.

Ag Department:

We said: At least $0.5 million over budget.

County says they’ll only be over by about $9k. But they have a fishy note appended that says “a budget adjustment has been requested.”

So we stand by our estimate of half a mil over budget.

Pot permit program:

We said: At least $1 million over budget.

County says the pot program is “on budget.”

That seems ridiculously misleading, particularly with another “budget adjustment request” note added. So we stand by our estimate of at least a mil over budget on that one.

* * *

Then there’s the new overruns projected by the County:

Jail: almost $800k over

Human Resources: $100k over

Public Defender and Alternate Public Defender: more than $400k over

Plus the planned one-time “essential” capital equipment expenses for: Deferred Maintenance, the IT Master Plan/IT modernization, Critical Public Safety Infrastructure (mostly communications/radios), and the Jail Expansion Project for a total of about $4 million in planned new expenditures.

Notes: There’s an interesting list of 64 terminations since July 1, 2018, and another showing 50 new hires. Which may imply some undetermined salary savings.

There’s no money budgeted for line employee pay raises that were presumably being planned via the ongoing salary survey but probably won’t kick in until the following fiscal year.

Total budget gap (revenue and expense):

We said last week, there would be a net deficit of at least $5.0 million.

This week we update that to:

Revenue: up $2.7 million ($4.0 million carryover minus $1.3 million shortfall from projection).

Overruns and other added expenses (including departmental overruns and capital expenses if not deferred): Up $6.8 million.

Net deficit: Up about $4 million. ($6.8 minus $2.7 million)

Because the County deploys rosy revenue estimates, pretending that the Cannabis and Ag departments are not in serious deficit and pretends that “budget adjustments” (?) will fix problems in some departments, the County is claiming there’s no big or insurmountable problem.

We say that if County management wants to spend any money on “essential capital” projects they will be around $9 million short. If they postpone these "essential" projects they'll still be at least $5 million over budget.

PS. So far there’s no indication that the County plans to do monthly budget status reporting as they previously said they'd do, so we won’t have another budget update until February. But there may be some adjustments after Tuesday’s board meeting.

PPS. Under “budget priorities” for next year we were surprised to read: “Development of property liquidation options for the Willits Justice Center and Ukiah Courthouse.” (The Willits Justice Center, sold to the taxpayers as necessary courtroom space, is occupied only by the Willits Police. It's also the ugliest public building in the state, or at least in the running. One option would obviously be to sell the building to Willits. Other options might include Measure B conversion, or commercial sale, but Willits already has lots of empty storefronts.)

So the County may be in the planning stages for selling off the existing Ukiah courthouse in semi-anticipation of the completely unnecessary new courthouse four blocks away near the railroad tracks. The courthouse project appears to be on permanent hold, given that only the judges want it and funding remains problematic. How that proposed sale will affect the County’s courthouse-related departments – DA, Public Defender, Probation — remains to be seen.