Nevada County faces uncertain financial future
If the economy doesn’t turn around soon, Nevada County may have to dip into reserve funds to keep services flowing in coming years, according to County Executive Officer Rick Haffey.
On the bright side, the county has a proposed balanced budget of $191 million that Haffey expects will hold for the 2008-09 fiscal year, despite declining growth in property taxes and flat sales taxes due to the economic downturn.
None of the county’s reserves are projected to be spent this year, Haffey told the Board of Supervisors Thursday during budget hearings.
Meanwhile, spending for salaries and benefits will rise, even as employment shrinks, income from taxes declines and the economic future remains uncertain, in light of a possible raid by the state.
The county’s CEO doesn’t expect the economy to turn around until 2010 at the earliest. He also fears what the state could do to county funds with its looming $17.2 billion deficit.
“County finances remain in excellent shape,” Haffey said. But officials are wary of “the ever-present threat of the state.”
The fears stem from the state’s legal authority to shift its own funds and to raid county coffers – something state officials have done in the past two decades to balance earlier budgets.
“We have significant concerns about the state budget,” said chief county fiscal officer Joe Christoffel. “The uncertainty at the state level remains unusually high this year. It’s going to be a long, hot summer in Sacramento.”
To offset those concerns, the county and supervisors have been building reserve funds the past few years, Christoffel said, and now have almost $18 million for tough times.
The plan is to save another $1.1 million this year to bring it to $19.1 million by June 30, 2009.
Unfunded retirement liabilities
About $5.2 million is earmarked for budget backfill in the case of declining tax revenues, $6.2 million for buildings and facilities and $6.5 million for pensions, retirement health benefits, civil litigation and general plan updates.
“Unfunded liabilities for retirement remains significant,” Christoffel said. To keep up with the future costs of pensions and retiree health benefits, the county will enter the second year of a five-year savings program, which started at 5 percent of salaries in 2007-08, climbs to 10.2 percent by 2011-12 and remains at 10.1 percent thereafter.
The county will do its work with 976 employees in 2008-09, 10 fewer than the current fiscal year, which ends June 30. Nine of the 10 were lost from the building and planning department due to the construction downturn; there are no plans to bring the jobs back.
While the county will be paying fewer employees, it will be paying them 5.5 percent more than last year, due to a five-year plan for 14 percent in raises that kicked in this fiscal year.
Salaries and benefits will cost the county $85.3 million, up from $79 million in 2007-08 and $60 million in 2003-04 when the county had about 1,025 employees.
The supervisors were taking final public comments on the budget Thursday, with the possibility of taking more input Friday. The final board vote on the budget takes place June 17.
To contact Senior Staff Writer Dave Moller, e-mail email@example.com or call 477-4237.
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