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June 12, 2012 > Proposed county budget

Proposed county budget

Submitted By Guy Ashley

Alameda County Administrator Susan S. Muranishi presented a proposed Alameda County Budget for FY 2012-13, on June 5, 2012, that calls for elimination of 37 vacant positions and other reductions to close a funding gap of $88.1M. According to Muranishi, the County continues to be squeezed financially because of a protracted economic slump, with demand for safety net services remaining unusually high and the resources to pay for these services reduced but she also noted the budget gap is under $100M for the first time in four years, which suggests that the County's concerted efforts to lower costs are having a positive impact.

While County supervisors face the task of balancing the FY 2012-13 budget, they can take some consolation that sacrifices in recent years, including a four-year freeze on cost-of-living increases for most County employees and community-based organizations who contract with the County, are helping to stabilize County finances. Moderate up-turns in the local economy, including rising real estate prices and more homes sold, provide some optimism that the trend toward smaller budget deficits will continue.

The 2012-13 Proposed Budget is balanced and provides more than $2.6 billion in total County spending authority. It was unveiled amid signs of slow economic recovery. Employers are adding jobs, initial claims for unemployment have dropped and businesses appear poised to increase spending. While house prices remain considerably off their 2007-levels, some indications point to slowly rising values beginning next year. However, the economy's direction remains uncertain, as evidenced by a surprisingly dismal jobs report and revised GDP figures for the first quarter.

A healthier economy would improve the County's fiscal condition by reducing demand for County services and increasing County revenues, thereby reducing deficits and program cuts. Low house prices result in lower property tax revenues that are the main source of the County's discretionary funds. The County assessment roll grew by a mere 0.37 percent in FY 2011-12. Alameda County's unemployment rate is well below the 11.7 percent recorded in August 2010 but the 8.9 percent recorded in April 2012 remains stubbornly high.

"Even if the local economy improves significantly, the poor fiscal health of the State and federal governments means funding of County services is likely to be in jeopardy for years to come," said Supervisor Keith Carson, Chair of the Alameda County Budget Workgroup.

With the release of the State Budget's May Revision, the Governor has acknowledged a funding deficit of $15.7 billion, or $6.5 billion higher than the $9.2 billion gap estimated in January 2012. Most of the increase is attributable to dramatically lower revenue estimates.

Half of the Governor's proposals to close the State's funding gap involve spending cuts, including dramatic reductions to health and human services programs administered by local government and the use of assets from now-defunct local redevelopment agencies.

Concerns persist that the cuts identified by Sacramento will not end there. The Governor also assumes $5.6 billion in new revenue from a package of tax hikes that will go to voters in November 2012. His plan includes severe "trigger" cuts to K-12, higher education and the courts, if voters reject the measure. While most of these "trigger" cuts would not directly affect County services, it is possible the Legislature would not be inclined to cut education so severely and would instead reduce other programs and funding for County services.

As for "realignment," the State's transfer of responsibility for many public safety and health and human services programs to counties, much uncertainty remains, including whether the County will receive adequate funding to pay for realigned services. The Board of Supervisors and County staff continue to advocate for a more just and equitable funding formula. While these shifting responsibilities mostly involve public safety programs, Governor Brown has made it clear that local government is likely to be asked to assume control of more programs in the foreseeable future.

The Proposed Budget includes funding to provide mandated and essential services, meet debt service obligations, maintain a minimum level of infrastructure and capital funding, and adhere to the Board's Financial Management policies.

The Proposed Budget supports a workforce of 9,060 full-time positions and calls for a combination of permanent, on-going program reductions, revenue increases and one-time strategies to close the $88.1M funding gap. Through on-going, cost-saving and revenue-generation efforts, County agencies/departments have offered to contribute $48.4M in prior-year "Fiscal Management Reward" savings to help balance the FY 2012-13 Budget. Alameda County's Fiscal Management Reward Program allows departments to carry over net savings each fiscal year for use in subsequent years for budget balancing and to help preserve vital services.

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