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welcome to the 2019-2020 budget hearings on June 17 2019 I'm going to call the meeting to order and ask the clerk to call the roll supervisor Leopold here friend here capit MacPherson chair Cooney here great uh now I'm going to ask you to join me in a moment of silence in the Pledge of Allegiance to the flag of the United States of America okay to the Republic for which it stands one nation under God indivisible with liberty and justice for all thank you are there any addition late editions or additions or deletions to the agenda yes there's one correction item number 26 uh the the item should read action on the consent agenda item number 31. okay great now's the opportunity for oral Communications as an opportunity for members of public to speak to us about items that are not on our agenda today is there anyone who like to speak to us seeing none I'll bring it back to the board uh this is moving on to item number five which is open remark opening remarks in a public hearing this is our cio's chance to let us know about this budget I've heard it's of uh an important day and it must be because our information service director is wearing a suit today so uh it's it's a big day uh so Mr palacias yes he wears a suit whenever he's asking for money so it's a good good practice uh chair Cooney members of the board your session this morning opens the 2019-2021 budget hearings so it's a it's a two-year budget for the very first time for the county the documents before you today include the cao's proposed budget which includes the accounting item detail in addition you have the supplemental budget which includes additional Financial actions reports the unified fee schedule continuing agreements list our office will be presenting any last day reports including a financial update and concluding actions prior to the close of the budget on June 25th and as always all of the budget documents are posted on the county of Santa Cruz website so let me give you an overview of our presentation today I'm going to cover County initiatives and the operational plan which coincides with my own work plan that the board has endorsed our County budget officer will give an overview of the budget she'll also go into the two-year two years of this budget 2019-2020 which is the recommended budget and then 2021 2020 2021 which is the projected budget overview and so this is the very first time the county has done a two-year budget ing to state law we are only allowed to adopt the 1920s so that's the one that you'll be taking official legal action on the 25th the 2021 is really a very detailed projection I think it's a good practice though and in effect we have taken it very seriously as a county and our departments have as well because it is give us that longer Outlook which is very necessary I think to long-term planning and then finally I will come back and talk about the challenges and opportunities facing the county we'll start with the county initiatives and operational plan so this is the work plan that I presented to you two years ago in which your board endorsed and very proud to say that we've accomplished the first three of those items already our strategic plan which took a year to develop is a six-year document which the board adopted last year and includes a vision mission values and also goal focus areas the focus series there's six of them each one of the focus Series has four goals that really is the guiding document the North Star for the county this year we are presenting for the very first time our operational plan and our two-year budget which are companion documents which really Implement that strategic vision um and then the ongoing efforts which will be um really um beginning this year is or next year is a performance evaluation the evaluating part we really haven't begun this effort we're just starting it uh in the fiscal year that's the third year of my being CAO which I uh indicated when I started the job that would be the third year effort we will be doing in this coming year a lot of training with our staff and some pilot projects as I have mentioned before there are some departments that are more advanced in performance evaluation and others that are just beginning but as a whole County we we will be undertaking performance evaluation in this coming year and we've already started our Primo effort which is our continuous process improvement with pilot projects this year and we'll be further rolling out rolling that out in the coming year so our strategic and operational plan as I mentioned there are six Focus areas each Focus area has four four overarching goals planning cycle is that we the Strategic plan drives everything our operation and plan and our two-year budget our companion documents which implement the Strategic vision and then next year we will begin the effort to train our staff in performance measurement and we are continuing to implement pilot projects and continuous process Improvement I will mention that this has been a huge lift for the county this is these are not minor efforts these are major efforts it's a change in County culture and it's really been a Monumental effort by the um our departments to do this and I'm very proud of them because they produce really really first-rate documents that we can be very proud of and especially given that the first time that we've we've done them so the operational plan so this is a concrete two-year plan that details the County's first step in achieving its Vision county-wide strategies indicate what we will do to achieve County goals while Department objectives and key steps say how this will be done departments will be highlighting their operational plan objectives throughout the budget hearing presentation so each budget presentation will include some highlights of their operational goals and then they're of course open to talk to you more in depth about those goals and then on the 25th there will be a overview of the entire operational plan um by the cao's office and you can see how they relate in this chart their strategic plan vision mission values who we are what we value what we believe in what are our goals and then you can see the operational plan is what we will do and how we will do it and how it's funded in the budget the operational plan was a very major effort started last September with a steering committee and subcommittees of County staff we had training on Smart objectives in October in November December we started drafting objectives and key steps uh January we gave feedback continue to Opera to refine the elements in February March in April we rolled out the plan to the community met with focus groups and did some community outreach and then we're now in the process of having the Board review it and the board adopt it the community engagement has been and continues to be an important component in developing the Strategic and operational plan draft strategies were presented to over 20 boards and commissions and its six Community open houses held in North mid and South County and additionally seven focus groups were held with key informants Community representatives and subject matter expertise and strategic Plan Focus areas and again for a first step I'm very proud of our staff for what they have done to achieve what I think is a very very good document and a good starting point for the county in terms of developing an operational plan which ties our overall strategic goals to our budget so this is just an example of more detail on the operational plan and this is an example example of an objective it's a number 64 objective number 64. it's in the Health Services Agency you'll actually find it in the operation plan on page 30 and on page 146 and it says by June 2021 Health Services Agency will increase Access to Health Care by decreasing the wait time for the next available appointment from an average of 1.3 days down to zero days so it's a very concrete smart objective which is exactly what we want and then if you were to turn to page 173 and the budget you'll actually find this which is the salaries and benefits um and details how we're going to implement and Achieve that objective and it says the cost which is 1.7 million dollars to achieve that objective so we understand that at the present time the operational plan and the budget that the link between those is not what we exactly hope to achieve in the future it's insufficient right now but it's uh that's the first step and in the future we hope to have much more explicit ties between the goals and objectives and the operational plan and the budget and the way that we're going to do that is through program budgeting right now our budget is basically broken down by department and division then that's been the way the county has always has done that done its budget in the future we want to break down the divisions into actually programs and do a true program budget for the for the board to get into more detail that takes a lot of work and that will be coming and forthcoming and that will allow us to more explicitly tie the objectives that are outlined in the operational plan to the budget now in this case you can actually see a very explicit tie between the objective and the budget but we want more of that we don't have that on all places when we recognize that this is a first step and then the next step after we do program level budgeting is to do performance evaluation and we really I know there's impatience to get to that point by the board and I fully understand that but we're not we haven't even really begun performance evaluation we haven't even trained our staff because again these were huge lifts doing our strategic plan doing our operation plan doing a two-year budget we're all very intensive efforts involving a lot of Staff time and so now the next step is to start doing the performance evaluation which will start with training of our staff and then we will start doing pilot projects in the coming years I will say that in some of our departments they are already way ahead on this on performance evaluation in particular parts of the probation department parts of the human services department they have examples of very good performance evaluation efforts but as a county as a whole we have really not even begun that effort and thus program level budgeting tied to our operation plan and then tied to performance evaluation will be the the way that we will be going in the future so I wanted to talk besides the process about our fiscal stewardship which the board has set as a goal and which you have had many uh achievements uh over the past number of years the board has given this direction and we have tripled our reserves we have met the board's goal of a 10 percent reserve of revenues which is very good and was also a big lift we have improved our credit rating and we have reduced our pension obligations and our structural imbalance to less than one percent of expenditures we still use some fund balance to balance our budget which is basically salary savings and reversions but below one percent is actually very prudent and very uh and very something we should be proud of we have also controlled employee growth our pre-recession Workforce was over 2 600 employees and we're still below 2500 employees even though we've expanded Services significantly in certain areas we still have less employees than we did prior to the recession 2009. we have also begun to tackle deferred maintenance issues with some improvements at our main facilities at Emmeline Freedom campus brahmer Street and here at 701 Ocean we've had some major achievements such as our solar installations which has reduced energy costs and our expansions of our health clinics we've also augmented Services even though we have been very prudent in our use of resources and our our staffing we still have done had some major achievements our we've had programs such as the nurse Family Partnership Thrive by three the whole person CARE program and medical drug expansion which have worked to improve our community well-being and health we have responded to the needs of the homeless by expanding our shelter and working to alleviate homelessness among Our Youth and we have made significant investments in our Public Safety needs with new facilities at Roundtree and Blaine Street and the sobering center all designed to reduce recidivism and transition and vendors back into our community in a positive way so I think it's something very proud and this is just a sample obviously folks are aware of all the things that we have achieved in expanding our services but I think it's something for the board to be very proud of that at the same time you've increased your reserves you've controlled employee growth you've also made major expansions in program services to the community it's a big achievement and I think something we should celebrate that often we Overlook but yet it's pretty amazing what we've been able to achieve and I the credit goes of course to our staff I'm very proud of our staff we have a first-rate staff and I've worked in public service for over 30 years I've worked in numerous organizations and we have a first-rate staff here I'm very proud of them and so the idea that we've augmented Services while still being very fiscally prudent is an achievement that we should all be proud of I will now turn it over to the county budget manager who will go over the nitty-gritty details of our budget I know this is the exciting part that you all looking forward to okay good morning members of the board um so before you is our should be on okay closer um before you is of course the two-year but proposed budget for 2019 through uh 2021 uh presented to you today as a collective effort from the Departments uh based on our best estimates to meet the requirements for County Services and programs over the next two years local governments throughout California face tremendous fiscal pressure and we are very pleased to say we are not looking at any major cuts to either programs or staff as is in the case in some other jurisdictions this budget also takes into consideration much of the community feedback we received during the Strategic and operational planning process by allocating resources consistent with identified objectives as part of our 2019-21 operational plan Oh wrong way sorry okay and here is an overview of the the two-year budget um the 2019-20 budget consists of about 827 million dollars with a decrease of about 45 million primarily from an increase of 18 and a half million for the general fund to maintain operations offset by a decrease of 63.9 million for all other funds and those are primarily from the completion of projects within the road fund housing fund and other capital projects Staffing reflects an increase of 53.56 funded positions and I'll go into further details in the Staffing a little later the county budget for 2021 totals 771 million dollars with a decrease of 55 million from 1920 primarily from an increase of 11.8 million for the general fund to maintain status quo operations offset by a decrease of 67 million and anticipating the completion of various one-time projects funded again from those various other funds Staffing reflects a decrease of 4.75 positions and I'll go into those in further detail so there's four primary taxes that make up 90 percent of the County's discretionary revenues included in the general fund and here are the the revenue assumptions for the next two years based on information available today the 19 2019-21 proposed budget anticipates declining growth in our property taxes from four and a half percent to three and a half percent limited growth in our cannabis business tax based on actuals to date and growth future of about five percent minimal growth in our sales tax we've had seen some growth today budget over budget which resulted in about a four percent growth for next year declining to three and a half percent um and that the three and a half percent growth in the second year is primarily because sales tax is flattening out it's primarily from The increased businesses that are opening uh we've had uh changes in the Aptos Village um and we're anticipating some openings of some other businesses in that second year and then of course our transient occupancy tax our hotel tax we're anticipating about a five percent growth and all of those support are estimated expenditures so here you can see the overall General Revenue Trends property tax now that the market values have been restored since the recession the growth is more modest and reliant on the CPI and sales of properties turnover but thanks to the voters for the passage of Major G our half cent transaction tax an additional seven million dollars is available to offset increased programs of 2 million and support core Services of 5 million otherwise general sales tax growth is beginning to flatten out as I mentioned earlier um and then the other two you can see here transient occancy tax has shown steady growth over the past years and is expected to continue on the average of five percent per year until the recession is upon us cannabis business taxes have not grown as originally budgeted which is consistent with what other jurisdictions are experiencing including the state as a result we have adjusted our expectations to show minor growth primarily for the dispensaries at five percent and increasing growth for cultivation as licensing progresses like to move on to some more specific highlights for the 2019 20 budget here you can see an overview of all the funds by category revenues are 779 million with a 48 million in fund balance from other funding sources for a total of the 827 million the budget was balanced by increases to fees and charges to offset increased costs where applicable increases in tax revenue primarily from our property tax growth just discussed and the use of available fund balance this chart represents what percentage each budget category contributes to revenues and these revenues are derived from a variety of sources and here you can see that on the next slide this chart represents where our revenues come from the largest source of funding is about 309 million dollars comes from federal and state sources primarily provided through Health and Human Services land use and Community Services only 23 percent of the County's funding comes from taxes here's an overview of the total expenditures of 827 million this reflects a decrease of about five percent from the previous fiscal year um this chart represents how expenditures are distributed amongst the budget categories salaries and benefits are the largest expenditure of 4 44 percent and support the County Workforce shown on the next slide it's important to note that we only spend about one percent of our expenditures on debt service which is very low here you can see the Staffing for the funded positions by budget category the details are provided in the appendix and the Personnel summary proposed Staffing is 2469 plus positions it's an increase as I mentioned earlier 53 positions from the current fiscal year it's important to note that 31.2 positions have already been added mid-year by your board from various increased funding for the focused intervention team expansion of homeless services and other Grant funded programs within Health and Human Services the increase in the net new positions is 22 positions primarily for Health and Human Services General services and Public Safety foreign now I'd like to focus on the general fund overview here you can see the revenues for the general fund account for 552 million with 6.2 million provided from the general fund fund balance which is also known as our structural imbalance or net County cost this is an increase of about three percent from the current fiscal year and this chart represents the ways in which each budget category contributes to the general fund revenues which represent about 28 percent of the total revenues the largest source of funding is federal and state dollars primarily through Health and Human Services here you can see the general fund expenditures of 558 million the largest source of general fund expenditures is of course salaries and benefits and services and supplies and then of course here you can see our general fund contribution so this is the when we have the Departments have their direct revenues and their costs and the difference for the general fund departments we provide the general fund contribution which comes from the general fund revenues and we call that here the general fund contribution or net County cost which is 162 million dollars these are the most discretionary dollars funded from the general fund and as you can see we spend more than half of every dollar on public safety here you can see a breakdown comparing those various categories to the previous year while revenues grew eight percent primarily from the passage of Major G our half cent sales tax or about 7 million total expenses once again outpaced our revenues by 6.2 million dollars which is funded by our prior year budget to actual savings you will note that the general fund Debt Service is very low at only 3.4 percent without any additional borrowing our debt service will decline over the next 10 years Public Safety is still the largest category at 54 percent with a slight increase in general government and Health and Human Services offset by a decline in one-time capital projects technology and contingencies so here we'll spend a little time looking briefly at our 2021 projected budget this chart shows the general fund imbalance between revenues and expenditures and how we rely on prior year budget savings to balance the budget this past year we had 6.2 million dollars which we estimate to have again at the end of 1819 to carry forward to 1920. the majority of this savings comes from unused contingencies and one-time unanticipated reimbursements of Prior year costs for various Human Services and other programs and some slightly better allocations from the state the projection for 2021 reflects status cooperations with a net County cost of 12.6 million which could be offset by 6.2 million if we achieve a similar budget savings during 1920. which will be challenging if the economy gets worse and we enter a recession this leaves a gap of 6.4 million to reconcile if additional Revenue measures like an increase to the transient occupancy tax are achieved and or some additional Grant revenues are received for programs then this Gap could be reduced by 50 percent and be more manageable with some one-time Solutions and some serious belt tightening looking ahead the general fund Revenue growth is anticipated to decline and we will be unable to match the estimated expenditure growth the general fund is unlikely to meet its obligations without new or increased revenues and or major cost reductions that could potentially impact programs and services based on revised projections the annual budget shortfall of six to seven million in 2021 declines to more manageable three to four million by 2324 however it could be as high as 11 to 12 million during a recession declining to 8 million if prior year savings are not achieved and general purpose revenues stagnate or decline further than projected since retirement rates may level out to a more modest average increase of three percent by 2324 Revenue growth could potentially cover our expenditure growth based on current operations and additional Revenue increases of course it's been important that we increase our reserves the past years because it will help us provide a softer Landing during a recession the State Board goal was to increase reserves to 10 percent of revenues by 2122 which we achieved with the current fiscal year budget three years ahead of schedule fiscal year 2019 20 reserves continue to be 10 percent of estimated revenues before any adjustments are accounted for as a result of budget hearings or year-end closing commitments include a reserve for natural disasters of two million dollars which could be used to address the winter storm 2016-17 shortfall which we will be discussing with your board since fiscal year 2011-12 the county is increased Reserve by 23 million dollars to create stronger Financial stability for the counties general fund and approve the County's credit rating okay and I'll mention that we did provide at this time before we make any additional adjustments we did provide an increase of 2.6 million in the 2019 budget to maintain that 10 percent I wanted to go back and um emphasize the point that um the budget manager just said is that our 2020 budget 1920 is balanced so that shows the balance there and it's balanced largely because of measure G uh measure G about approximately five million dollars is going into core maintaining core services and then another two to two and a half million is going into new initiatives so if we didn't if we didn't have measure G we would be experiencing approximately a five million dollar budget deficit that we would be cutting so that's good news that we that our residents were able to approve measure G and maintain our core services in the county which you see in 2021 so that's the second year of the budget is that we have a deficit on the best case scenario of about six million dollars and it could be much larger than that could be a size 12. that's above our use of fund balance so every year we're using fund balance of approximately 6.2 million dollars that's salary savings and reversions and we kind of count on it every year and every year we've been able to achieve it um but on top of that in 2021 we're showing another six million dollars that we don't have budget revisions for we don't have a salary savings for so that is going to be the challenge in the second year of this budget is unless we're able to bring in new Revenue sources we are going to be in a cutback mode in 2021. we're going to have to be eliminating approximately six million dollars of net County cost or general fund contribution which is the most difficult cuts to make as you can imagine and if we were to have a recession it could be as high as another 12 million dollars so in other words best case scenario we have a deficit of about six million dollars in the second year of the budget worst case scenario you get another you get up to 12 million dollars which would be very difficult very challenging cut cuts to make and this is something that is still under the best case scenario we're still projecting growth in our property tax grow as the budget manager pointed out we're still anticipating growth in sales tax growth and property tax growth in TOT even with that growth our expenditures are outpacing uh in a recession you would see that growth in those Revenue those key Revenue sources decline greatly and so that's why that worst case scenario you get out to um 12 million dollar or more deficit you can see that although that the second year of this budget is going to be difficult um that after that it actually probably gets better and that is largely because some of the costs for pers increases retirement costs actually level out and and then actually weigh out start actually declining not in not in this picture but they're basically starting to level out and decrease the rate of increase and so anyway it's something to keep in mind I just wanted to re-emphasize that for the board as we get into this budget this year we have a balanced budget largely due to measure G but next year will be challenging and depending on what happens if the economy it could be worse I wanted to talk briefly about our our challenges [Music] um we have some challenges in each of these areas Parks and Recreation Behavior Behavioral Health substance use disorders and then deferred maintenance and Roads storm drains and bridges we have had a significant investment of new resources and behavioral health and substance use disorders from the federal and state governments and this board is also made significant Investments using measure G funds a big chunk of the money measure G money that came in you set aside for this and so even though we have a challenge there we've also put in new resources Parks and Recreation has historically been underfunded in this County as in many jurisdictions and the board set aside a big part of measure G funds to help improve Parks and Recreation and so even though we've made advances we still face challenges in parks and recreation roads storm drains and bridges measure D which the voters approved a few years ago which is half cent sales tax as well as the gas tax sb1 have put significant new resources and we're starting to see improvements in that area but the storm drains the storm storms and storm drain problems that we've had have led to more problems in our roads and storm and storm drains and bridges and then we have the ongoing problem of just deferred maintenance in our facilities which we don't really have any funding source so in the other three areas the board the voters have put in new resources we're making progress we still have significant challenges but in deferred maintenance we really don't have any resources and those are things like our County Jail like this building the elevators and the HVAC system we had our HVAC system go out a few days ago during our board meeting we had our elevator go out just a good example we had a water leak at MLA and which seems like we have one every few months and it's just the Aging of our buildings that we haven't invested in like many jurisdictions and so that's a continuing process that we'll need to look at so in closing our costs are rising faster than our revenues and especially we notice it in the second year of this budget we worry about a recession approaching um that there's a housing shortage which causes all sorts of stresses in the community and then most significantly for us is our winter storm shortfall the Public Works director will be talking about this in depth during his presentation but it is a significant problem in that many of the costs that we had from the winter storm of a few years ago 2016 7 and 17. we are worried about what amount we are actually going to get reimbursed by the federal government and we've seen difficulties in getting those reimbursements from the federal government and then the disaster funding so that is a very significant Challenge and I know we're going to talk about that more in depth during the public works department budget we have some opportunities there's a potential to raise our transient occupancy tax many jurisdictions two of them in our our own County are now at 12 percent there's some jurisdictions in Santa Clara and Monica Monterey County that have gone up to 14 percent our 911 fee is outdated and we need to update that to modernize it that's another opportunity and then we've been looking at the possibility of going to the voters at NCSA 48 for County Fire to see if there would be a willingness to increase funding for that agency as well that part of our our agency we also are very good at leveraging Grants and public-private Partnerships we sent you some good news about Prop 47 for the community which is huge it's amazing seven million dollars of resources coming in to this community as well as other grants that we've been aware of we have reserves that we could use somewhat if we needed to and we are going to look at that as an opportunity for some of the storm damaged roads possibly using some of our a small amount of reserves for that and then the other thing is that the county has been very conservative and prudent in its use of debt we have less than one percent of our revenues going to Debt Service which is very very low and very prudent it's a good thing but there's there's opportunities there in the future as well most agencies are more in the three to five percent and that's generally considered five percent would be considered prudent and and good and we're in the one percent so anyway congratulations to the board in the past over I mean that but that is another opportunity in the future so we will continue working on the operational plan and to your budget continuous process Improvement performance measurement you're going to see a major initiative in the coming year with training and new pilots coming out for that and then we are urging of course the board to continue as you have in the past to show fiscal restraint and expand when we can but also be aware of the challenging challenges and opportunities that are facing that with that that brings our presentation to a close and I know the auditor controller Treasurer tax collector had a few words and then we will be open for any questions on the budget overview good morning chair and members of the board as you begin a week of budget hearings I have a few brief remarks to make overall the County's fiscal message is a positive one this is due to our high Bond ratings our low interest rate costs and the achievement of the 10 Reserve goals as set by your board to maintain strong County Fiscal health the county short-term ratings was reviewed this month by both Standard and Poors and Moody's rating agencies we receive the highest rating available this continues the County's history of strong bond ratings our long-term ratings have remained unchanged s p has awarded us AAA rating and Moody's an aa3 rating on Wednesday the county sold short-term bonds with a low interest rate cost to us of only 1.19 percent regarding the County's fiscal reserves your board adopted and met a reserve goal of 10 percent this action reflects your board's dedication to invest in the future this will become even more important in the next year as many economists are predicting a recession or some significant slowing of the economy by the end of 2021. if this happens maintaining our reserves may be a difficult yet important fiscal management step with economic uncertainties ahead of the county I urge you to continue your practice of maintaining spending restraints during this budget hearing thank you and that concludes my report thank you we'll open it up for questions now suppressor Prime thank you chair thank you for the presentation I actually just have one brief question that is in regards to the sort of best worst case scenario in regards to the 6 or 12 million that we're moving forward you presented the possibility of three potential Revenue measures of which one I would assume would be directly tied to the general fund the tot the best case scenario though I assume was in regards to the current projections absent those Revenue measures correct that is correct and what what would be a best case scenario should one two or three of these Revenue measures uh pass that we would actually have a sense then of of where these numbers would go sure so for every one percent increase in the transient occupancy tax we realize about a million dollars so depending on the level of the increase currently 9-1-1 or outdated 9-1-1 fee doesn't take into account cell phones and so we've lost considerable amount of Revenue to support that so the general fund is supporting that to the tune of of close to over a million dollars so if we were able to right size that fee we could save a million dollars there and County Fire doesn't benefit the general fund but we know we want to expand our County Fire services so so you would estimate maybe up to three million uh potentially recognizing though that if a recession would happen at the same time people travel less and so this isn't a one for one but but uh we would still be faced in a best case scenario even with Revenue measures the reality of cutting potentially three plus million dollars in the next couple years that's correct okay thank you supervisor uh thank you chair thank you for the presentation um the uh the one thing I was trying to um figure out around the sales tax increases um I these numbers uh seem to uh jive with other uh figures that I've seen but when we looked at the Public Works budget and the measure D there was no growth at all and I'm wondering is it they said they were being conservative but are we are we not uh including resources that could be available for things that that the public considers to be very important so we have been advised I mean we are seeing growth budget over budget and that growth is already occurring this year um but actually the the actual sales tax is is fairly close to Flat the growth the future growth so they may be depending on how they budgeted this year if they budgeted the full amount that they expected for measure D then they may look fairly flat for the coming years yeah I'm so I'm just trying to figure out if we say that we ex that this budget anticipates a four percent growth right it's actually less than two percent we are actually already seeing and receiving about two and a half percent of that four percent growth because it's budget to budget so our estimates uh in our current year we're already seeing an additional two and a half percent above budget okay I was just uh responding to the to the numbers that were up here earlier and then at the three and a half in in year two and just it seems to me that we should have a common standard I guess across departments and when we make these kind of uh uh budget suggestions uh because I think it's it's helpful for us to be using if we're going to be conservative back there but we should be conservative across the board and if we're gonna anticipate uh growth we should be we should anticipate that across the board absolutely I really appreciate the work that you put into this I guess one thing with the measure D versus our sales tax measure D is a county-wide sales tax versus our own sales tax so it's just an incorporated area and I know that measure d uh incorporates some of the it's of course the cities and there are some cities that actually seen declines in sales tax like Capitola which is actually declining because of the Mall closure okay and we're we're actually growing largely some of it is due to Aptos Village we're anticipating some of the growth there greater Pearson yeah I'd like to make several comments um first of all for uh very uh enlightening but uh same time challenging uh budget scenario that you've presented uh this uh really what you've done is uh amounts to a milestone in good governance and transparency for Santa Cruz County I look at this budget and can even understand it and I think most of the people in Santa Cruz County can too and I want to really say thank you to you and all the staff when we're evaluating a two-year budget it's it's really easy to understand and under the Strategic plan and the operational plan I want to say thank you to all of your staff as you have done too especially I think to Nicole Coburn and Sven Stafford um and I want to thank them for uh seeing me to look at that uh to in the operational plan to add something to address the needs of senior citizens in our County that is very important especially in light of Governor Newsom um ordering a master plan on Aging to be developed by next year in October so I think it's really important that we are on in line with that and that the fiscal discipline it can't be overstated I think that is really a great we're hopefully we don't have we're not going to need it this year but next year is going to really be a challenge as you have stated and the spending or having only one percent debt Services really somewhat remarkable for government agency I can't I want to reiterate too with the help of County voters we've made some great strides toward addressing some of our future needs that we we need to do so with measures G and D and also the library measure M or no s excuse me S measure s that and that was in 2016 but in making investments in our roads and infrastructure I think our biggest challenge as you said we don't have a support system for our maintenance and as much as we all want to add something and do something more we we need to really focus on maintaining our our own buildings and so forth and I'm not saying that because half this room was full with maintenance workers in in the county right now but it'll cost us more if we don't address it right away also that we know that our Purge costs are going to be going up I think it's um going to be leveling it's going to be a tough year next year and maybe the year after but hopefully they'll level off and will help us to get to that to address that six and a half six and point four million dollar shortfall but overall I just want to say thank you for presenting an understandable budget and one that looks very good and we just have to keep our wits about us to make sure that we are ready for what's about to come with a recession that everybody is predicting sometime we are in good shape I think to do that and I want to thank you again for everything that you have presented today Spencer Capitol I want to thank you all for your work too this is uh this is you know probably one of the most important things we do in the whole year as far as if we make one mistake we're we're all going to suffer for it I guess all the decimal points are in the right spot I mean I remember a few years back when I was on a library board at one decimal point was off and uh one part of the county was uh actually facing about a 5 5 million dollar deficit or whatever so and I think that happened with the state of California too but that's bigger money so anyway uh with the Staffing it's increased that came by real quick it we're up to it'll be at about 2 470 and what was it two years ago two years ago approximately I don't mean approximately well we increase the Staffing this year about 50 positions and the previous year we increased the Staffing very small amount about 20 some positions so less than a hundred it was it was about two thousand two hundred and fifty or something like that yeah closer closer to the 2300 Mark yes and I bring that up because that's a future uh possibly pension obligations that we'll have and kind of a quick overview in the last 40 years three four years we've done what to take some of the to address the pension uh problem that faces everybody uh you know down the line yes there's been a number of initiatives to reduce pension costs uh the board took action um to provide a third tier for or a second tier rather for retirement which was we increased the age of retirement this board did for new employees this is a number of years ago actually so you established a second tier you also adopted a vesting schedule for retiree health benefits ing to years of service and then after that the state of California adopted pension reform which in effect established a third tier for our employees so the first tier was for General employees was two percent at 55 then the board adopted a second tier 2 at 60 for new employees and then there was a third tier established by the state of California was two percent at 62. and and then in addition you adopted a vesting schedule for retiree health benefits um in addition employees you've worked with our labor groups so that employees now contribute more towards their own pension and that's taken place over the years so employees pay their own share of retiree health of health benefits and of pension benefits and that amount has increased over the years so all of those things are good news in the future but right now we're still in the last part of the prior benefits and that's why it's costing more right now but the future actually looks quite hopeful because of these reforms okay and then uh total total reserves uh there'll be some one-time spending on on that right and what is the total about how many million that we haven't Reserve to the honor it's over it's close to 55 million close to what 55 million five million it's a total reserves yes and after the one time it would go down to how much it'll if if your board takes action on using some of the commitments for natural disasters to fund the storm uh fund shortfalls it would reduce the reserves by approximately 2 million or up to about 2 million two million two million okay and then the other one how much of a stress is the Federal Highway uh money that's supposed to come in I think it was approximately seven to eight million dollars and if they're not giving anything I mean so we're we're having uh we're having to shuffle everything in order to cover about what seven to eight million dollars yes the Public Works director will go over this in in more detail but the summary is that there's about seven million dollars of storm damage roads that the county repaired in emergency bases for which we did not get reimbursed from a combination of federal highways and FEMA and that totals about approximately seven million dollars and that shortfall is something that we are going to have to make up with and we have a proposal to do that which will be bringing forward and you'll be talking about it during the Department of Public Works budget is that included in the what we're looking at now it's not another seven million we're going to have to take out later no it's uh we have a plan for that and it will be addressed during the public works department budget uh that'll be in the next day or two yes okay absolutely the from the budget of uh this year and next year projected there's about a difference of 19 million dollar increase in the general and that would be mostly due to staff increase maybe huh and and also a little bit of inflation and colas and everything yeah there are Staffing increases in there we've also added new programs um so we've augmented various programs thanks to Major G so there's various other new services and programs including that 18 and a half million thank you thank you all of you thank you for both a clear budget and a responsible budget that both addresses emerging needs in our community and uh is fiscally responsible uh calling attention to what you said earlier which is our first two-year budget so one of the goals of the two-year budget was not only to give people some census to where things were going have a broader time scale the second one was to free up some staff resources who spent many many months preparing this budget to spend time on Performance Management and those other things I know it's early because we're just getting this budget in but how are those resources going to be available to look at other projects and to to free up capacity for more analysis and Performance Management um that is our intent yes um depending on what happens in that second year you know it could be if there's major changes in the budget we'll have to have more extensive work but our intent is to focus really just on the changes in that second year to what we've already submitted to you and to focus more on some of the new performance measurement as it ties to the operational budget so that's what our hope is because it is a huge I mean this document is is huge and this is just one piece of it right there's all the line item detail and there's all the the supplemental and it's a big effort to produce just to produce it and so the idea is that by not having to produce the same amount of uh effort we were able to devote more to our performance measurement and continuous process Improvement efforts great thank you sure another thing I wanted to thank you for you um you can't you're expected to we expect to have you have a six-month review of this is that going to be at the first of the year in January is that correct with this budget I think that's that's excellent that gives us a heads up as we're going along um really we're you know they talk about this recession and it could start in six months it could be in six years but I think having that uh you know mid-year review is really important and I really want to thank you for for doing that for us too it's going to be very important so we can prepare for anything that might come up we actually have instituted two previews one in late November or December to summarize the close of the prior fiscal year as well as what trends we're looking at and then we have a formal mid-year budget review in February right uh so now it's an opportunity for members of the public to speak just about items on today's uh or just covered by this item uh is there anyone I'd like to speak to us about the overview of opening remarks within proposed budget okay sing none I'll close it and I'll bring it back to item number six which is an overview of the general government budget category there's a presentation on General government budget category as provided in the proposed budget these are Pages uh 45 to 47 as outlined in the memorandum of the Cao foreign again members of the board Christina Mowry I'll be presenting this item and providing you an overview view of the general government category so here you can see a list of the Departments included in the general government category everything from the assessor auditor controller to Personnel Information Services General Services of course our office the county Administrative Office and then we have uh We've included our financing from the general County revenues Debt Service and contingencies as well as contributions to am back yeah and here you'll see an overview of the general government expenditure category represents about 102 million dollars for the upcoming fiscal year this represents 12 percent of the total budget expenditures for fiscal year 1920 and is a one percent decrease from the previous fiscal year which is primarily due to the increased cost of to maintain current operations offset by some one-time decreases for the internal service funds like Information Services and risk management this chart shows the share of expenditures by department and agency the largest expenditure of course is salaries and benefits which comprises about 45 million dollars and supports about 320 positions with an increase overall of one position from the previous fiscal year additional expenditures include services and supplies of about 40 million and 32 million in other charges here you can see the expenditures by type for the two fiscal years the majority of the funding of course is for salaries and benefits and supports the 300 plus funded positions for fiscal year 1920 and 310 positions for fiscal year fiscal year 2021. there you can see the services supplies at 41 million rising to 42 million in the second year and other charges it's important to note you see the major shift in other charges there that's where we budget for our risk management funds claims reserved so they budget their reserves and Appropriations and that's why we see the major shift in the overall category there here you'll see the revenues for the general government it's comprised of about 54 million this year or about 53 percent of their total financing with the general fund contributions and other funds making up the difference of 47 percent to meet the expenditure needs the general government revenues represent seven percent of the total budgeted revenues and is comprised of about 50 million in charges for services and 2.9 Million miscellaneous and seven uh less than less than a million in licenses and permit fees additional financing includes 24 million in the general fund contribution and 24 million in other funds which is primarily our risk management funds this chart shows the share of financing by department and agency and note that both the ambag and the Board of Supervisors are not represented here since they are fully supported by the general fund they have no revenues risk management is the largest share of General government at 38 percent primarily because the risk management reserves include the various reserves for the various funds here you can see the revenues by type for the two fiscal years the majority of the revenues from charges for services that's almost 50 million and in 2019-20 and an increase of 52 million for 2021 to offset the rising costs and here you'll see the general fund contribution for each of the Departments and agencies the total is 24 million dollars which represents 14 percent of the total general fund uh net County cost or contribution and the further details are provided in each of the budget proposals from the Departments the general government departments contributed 61 objectives for the 1921 operational plan major projects include mobilizing for the 2020 census creating a strategy to reduce Fleet emissions and several continuous Improvement projects to create a better experience for the County residents and here you can see some of our our highlights and our successes um Personnel Department organized the County's first career fair with 100 County departments represented 410 job seekers in attendance and 110 days at three different Workshops the clerk Elections office reduced the record setting November 2018 election they saw the highest voter turnout since 1982 and offered three same-day registration centers across the county and installed and promoted two more vote by mail drop boxes to allow voters to return their vote by mail ballots with greater ease of course Major G passed we're very fortunate to have that pass and support our core services and new programs and in general Services the fleet division increased its Fleet hybrid Fleet by three vehicles for a total of 75 alternative fuel vehicles the county administrative office as you just heard has produced the first two-year budget and operational plan and we've begun Primo oops oh and that's uh well I let me go back wasn't quite done and the office of Economic Development created and launched a new office of Economic Development website Santa Cruz Vitality to promote a compelling value proposition and brand for Santa Cruz County and our department heads are here today to answer any of your questions the majority of them are on consent agenda and then we have four departments presenting their budgets in detail to you General Services Personnel Services Information Services and of course the county Administrative Office so with that I'll turn it over to see if you have any questions otherwise we can do we have any questions about the general government budget category president Christian yeah I am as a member of ambag the association of Monterey Bay Area governments I really thank you Maura Tomy of the executive director of ambag for her staff and doing a terrific job of tracking big issues that affect our region I especially appreciate ambig keeping its members informed regarding state and federal regulations that could have a serious impact and unfortunately we heard last week that there could be a serious one coming upon us we heard how the federal rollback of national fuel efficiency standard for vehicles could have a disastrous effect on California and it's greenhouse gas emissions reduction goals and the ability to deliver more than 130 billion for that purpose so it's a real big concern we have transportation related concerns in our own County but this is a regional area too which of course we are one of the Three Counties with San Benito and array I'd just like to ask a couple questions for some of the members that are here in the general services that we've talked to on the Cannabis licensing initially we assumed that the fees would generate a high Revenue which weren't attained and that's true throughout the state of California and we need to move more as we have been doing to make this self-sufficient operation if we can and if I could ask some 40 if if we are reducing a planner position in this as called for in the budget are we going to be able to process the uptick and we hope to see in the applications for this I don't know if anybody from from Cannabis operations could answer that uh yes I can I can answer that and I'll see if if they want to come in and um I know they're monitoring the the hearings and their offices uh we are the budget is proposing to um to have one position which is unfunded we still have the position um our staff felt that them that they are able in the Cannabis licensing office to process applications at this time with the Staffing they have uh the issue has been more in the planning side where we've devoted more resources in the planning department to this effort so cannabis life licensing feels that at this point we are able to manage it but we still have the position there and if we see an uptick and we need to bring another position back we will okay um another question to be directed to our County Clerk our excellent County Clerk Gail Pellerin uh last week or just recently you talked about our election system being decertified but we got a grant for doing that and uh to update our election systems and what does that mean is that any difference what differences can the voter in March of next year expect to see if any or I know that you explained it somewhat a week ago but I think this is a good time to repeat that um and it would be State money that would be going becoming voting system and what voters would see is basically it's all need paper-based as we wanted we're staying with the same vendor we have now so it's basically some upgrade of our current system and on the paper ballots instead of connecting the head and Tails oh there you go sorry good morning uh so on the paper ballots instead of connecting the head and tail the arrow pointing to your choice it's going to be a bubble so it's a little more intuitive for voters as well the accessible unit is going to look like a large tablet and it would allow a voter to vote independently and privately and it will print off a paper record with the choices written clearly out enumerated there what they're voting for and then it has a QR code that gets read by the scanner okay so and then I'll be we're doing those voting uh demos this week so I want to invite the public and you as well to go to the demo we have set up for County staff on Thursday and uh we'll have it one in the morning from 10 to 12 and then six to eight over at Simkins and then Friday will be over in Watsonville Civic from 10 to 12 demonstrating the new voting system so this will be a first Glimpse there'll be lots of other opportunities to look at it but we're doing that this week prior to hopefully having the contract before you on June 25th I know County Council is working with us on that so thank you excellent thank you thanks appreciate it um and well I have a one another question director to Economic Development the uh the budget continues to provide time for implementing projects but doesn't really include any services for supplies to help fund the expenses will that hamper the economic development Department's ability to meet its objectives of new projects throughout the county um good morning Warden um no it won't certainly we would welcome any additional funding uh that could be provided but I think that when we look at what we've done so far which is Staff time we've been successful in in most cases what additional funding could bring to the table would be opportunities to advance additional analysis through consultants and in particular for Boulder Creek we could help I think further facilitate the advancement of the Boulder Creek Main Street program which would uh we could for example we could back fund some of the cost of hiring a a consultant or a Main Street program manager for that that area okay thank you you bet any other questions or comments are we are these if you want more comments about the consent we're going to do the consent agenda next correct yeah so um so is there any uh public comment on the overview of General government saying none I'll uh I guess we'll move on to item number seven which is the action on the consent agenda the general government these are items 12 through 23. uh on our on our agenda today and first I'll ask if any board members have any questions or comments would like to pull any item okay see none survival uh thank you chair uh you know when we switched to the consent agenda a portion of our budget hearing process we lose the opportunity to hear about what's going on in critical departments but are somehow deemed not large enough or or are significant enough for us to have to spend time hearing presentations I appreciate the work done by these departments every day and the fact that you also answered a lot of questions that uh that we sent down as part of our budget memo um of these I just want to acknowledge the ongoing work of the assessor recorder's office I think does fantastic work and and we count on in such a critical way to be able to to figure out where our money is going to be coming from and uh in which the public counts on so thank you for that ongoing work the auditor controller Treasurer tax collector provides also critical work I noticed that one of the the Strategic goals is trying to make sure that that we are capturing all the tot revenue from vacation rentals I look forward to the annual report we get from planning about to get an idea of of uh how many we have and and different parts of the county but I know that your work ongoing and the the fact that that you've been helpful uh to us in achieving uh the goal of the reserves the the support from your office and the ongoing work to ensure that we get the the best rating possible is has to do with the presentation that you put together so uh thank you for that the Board of Supervisors agenda is part of this and uh I I just want to recognize Jillian Ritter uh who uh is the the captain of our Board of Supervisors staff she does incredible job we are grateful to have her and I appreciate all the work she did does and supporting us every day in the board of supervisor's office some of the other these other departments we hear from uh quite a bit we spend a lot of time talking about cannabis uh and the Cannabis licensing offices is doing ongoing good work and I'm sure we'll see you before the board on a regular basis over the next couple of years uh the as I mentioned about at the elections office uh also uh outstanding work and clean elections here and our recent update of our election ordinance was useful and part of the ongoing work that you do to make sure that we're doing the best we can and County Council of course we we depend on you and the leadership that we uh that we get from uh our County Council Dana McRae but the ongoing work of all the attorneys makes a huge difference lastly I'll just uh express my appreciation to the office of Economic Development there is a lot of economic activity going on in the first district and uh I I've been able to count on our Economic Development staff to provide good information to me to my staff that I can share with the public I appreciate th