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Budget Crisis Notes

The Health and Human Services Department, the County’s largest department, still has a $600k deficit for CalWorks, a $170k deficit for In-Home Supportive Services and a $1.3 mil shortfall in Mental Health — almost all of which is due to recent budget cuts from the state — and more cuts are expected soon. HHS has already laid off dozens of employees and more will have to be laid off. Mental Health alone has gone from 120 employees to 46 in the last three years. HHS Head Stacy Cryer told the Board that she’s doing everything she can to find a way to get to a balanced budget by June, but with more cuts coming from the feds and the state, she has no specific idea how she'll do it.

The Sheriff still faces an $800k-plus deficit for just this fiscal year (through June 30), according to CEO Carmel Angelo’s budget allocations (which some complain is not a “budget” because the Sheriff needs more than what the CEO has allocated to him).

At the Supes February 15 meeting, Angelo had prepared a list of recommended layoffs of three sergeants and three non-uniformed Sheriff's admin staff, which would save upwards of $200k between now and the end of the fiscal year in June.

As the discussion proceeded, it was apparent that Supervisors Smith and Hamburg were prepared to move forward with the cuts recommended by Angelo. Hamburg said he didn’t like “betting on the come” — i.e., on the possibility that the County’s marijuana ordinance will produce enough money to close the Sheriff’s budget gap. Smith — deploying her usual thousands of words to make one simple point — finally ground to a halt with a pair of cliches: She was tired of kicking the can down the road and the inevitable can no longer be postponed.

Sheriff Allman, the anti-inevitable, again told the Board that his department had already done a lot to save money, that laying off deputies would be premature because you can’t bring them back easily, and that he’ll know how much the marijuana dispensary permit program will bring in “by April or May,” adding, “I have said we’re going to get between $400 and $500k. That’s four or five deputies. You have to put some trust in your 9.31 [the marijuana dispensary] ordinance. If we lay off six people we can’t provide the 9.31 service to the permit applicants.”

Supervisors McCowen and Pinches more or less agreed, not wanting to rush into more layoffs in the Sheriff’s department. McCowen insisted that there were still savings to be pursued in such areas as the $300k annually awarded to the tourism industry for nebulous “promotion,” plus several smaller programs and overall administration which might amount to upwards of $200k more for this fiscal year.

McCowen, godfather of the pot dispensary ordinance, also predicted the revenues from the program — permit fees, zip-ties, inspections, etc. — would be even higher than what Allman predicted. “Some are doubtful that 9.31 will result in significant revenue,” said McCowen. “The Sheriff says $400-$500k. I believe that’s an understatement. We’ll know in a couple months. There’s a growing cycle. They have to come in early and apply. 130-140 applicants will eliminate the deficit this year. And next year. … Postponing has a minimal downside. Let’s delay 60 days and see how things shake out. Layoffs will provoke a legal fight [the Sheriff had earlier said he hadn’t sought legal counsel — yet], and that costs as much as it saves. Then there’s a possible injunction. And we lose experience and the training cost [for any deputies laid off]. We are not forced to do this. We might be able to avoid the train wreck.”

Pinches pointed out that there were still several County bargaining units — the biggest being SEIU with upwards of 700 employees, plus the public attorneys and their high salaries, and the probation department staff — which have yet to reach agreements. The County is hoping for significant cost savings by negotiating pay decreases of at least 10%, maybe as much as 20%, but negotiations are moving forward very slowly. Pinches also told the Board that he wanted them to look at the $600k budgeted for “risk management” that he doubted they’d actually spend. Nobody disagreed, but nobody asked the CEO to add it to her list of possible non-staff budget cuts either.

Supervisor Brown thought that the CEO and the Sheriff needed an outside “referee,” and that an ad hoc committee of the Board should address the differences between the CEO’s layoff recommendations and the Sheriff’s foot-dragging.

In this case, McCowen had succeeded in persuading Hamburg, Smith and Brown — who were not enthusiastic about deputy layoffs in the first place — to give the can a big boot down the road. The Sheriff’s budget deficit, the formation of an ad hoc committee, the hiring of an auditor and/or a referee — all this is supposed to be back before the Board on March 1st.

There would be no layoffs in the Sheriff’s department in February, at least. But, as Supervisor Brown had earlier noted during the presentation of the status of the state’s budget, the budget situation is “very volatile” and “recovery will be slow.”

Assistant CEO Kyle Knopp did some rough forecasting of next fiscal year (July 2011 to June 2012) and concluded that at their present rate they’re looking at a $6 million deficit next year, assuming that Sheriff and Human Services deficits are carried over.

Throw in another $2 - $4 mil in increased pension contributions, and Mendocino County will be living in the can kicked down the road.

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