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Homeless Plan, Financial Non-Plan

Glenn McGourty, leading candidate to replace Carre Brown as 1st District supervisor next January, opened Tuesday’s Supervisors meeting by summarizing an obscure technical paper he stumbled across in Davis which claims that Ukiah Valley grape growers are “saving” some water. (He could have simply emailed the report link to the Board, but the candidate seemed to feel it necessary to reassure grape growers he's their guy.)

Looks like an all-mail-in election in November. Plans are being made statewide, according to Elections Officer Katrina Bartolomie.

Clearly feeling pressure from Ukiah city officials and their Police Chief, Justin Wyatt, CEO Carmel Angelo fired a pre-emptive shot on the County’s homeless inaction. Without allowing comment, Angelo insisted (irrelevantly) that Health and Human Services has been providing ongoing homeless services with their contractors. They have been  also doing assessments to identify the “more fragile” (medical or age or families) and relocate them into local hotel rooms. That, Angelo declared, was “successful.” And the county has an “Isolation and Quarantine Plan” that’s been approved by the state. Regarding the homeless camp on Hastings Drive that the City of Ukiah has asked for assistance in, uh, removing, Angelo said, “We are doing everything we can short of relocating this camp to assure that the camp has what it needs and gets assessed” and moving “those we can move,” and “providing sanitation.” Angelo added that Supervisor McCowen is working with the city and the campers to see what can be done. The isolation and quarantine “plan” will be enacted when an infected person is identified (i.e., no one so far), and then they will deal with moving the camp and campers somehow later.

Supervisor Ted Williams asked CEO Angelo for additional details about the Ukiah Homeless camp because, Williams said, he’s heard complaints from the public. Angelo agreed several times that “there is an encampment,” and that it’s grown in spite of her team's leadership, but that she’s working with the City of Ukiah which has been “very vocal” demanding that the County do something about it. “We are at somewhat of an impasse,” concluded Angelo. “The City of Ukiah wants it moved to the Ukiah Fairgrounds but I, as incident commander, have refused to do that and there are lots of reasons for that. We continue to work together on other sites to move the homeless persons in that camp who prefer to stay in a camp-like setting and can stay in one with sanitary conditions. Those who cannot, we will continue to move them as we can.” Supervisor McCowen has been looking at other sites, Angelo noted, continuing “We are in the planning stages. We are working with the city to serve those people in that camp.”

McCowen added that porta-potties and handwashing stands have been installed at the camp (aka “sanitation”). But it’s hard because of the size of the camp. “We are trying to keep them in the community and safe,” said McCowen, but breaking up the ever-larger mini-city and dispersing its inhabitants would be a bad idea. The Ukiah Fairgrounds option is a problem because “we can’t force them to go there.” McCowen said that some people [i.e., McCowen] believe they’d just come back to their “neighborhood” on Hastings anyway. The county is working on a “more appropriate location” and doing assessments of the remaining campers.

Public Health Officer Noemi Doohan said her staff is doing “surveillance testing” at Plowshares (the Ukiah homeless food kitchen) to make sure there are no virus cases “hiding” in the homeless population. She expected results any day now.

Ukiah City Councilwoman and leading candidate to replace retiring McCowen as Ukiah-area Supervisor, Maureen Mulheren, asked the Board to speed up the homeless work and the implementation of the Marbut recommendations. (Marbut suggested firm disposition with priority to locals and minimal service for passers-through.)

Several county officials, especially supervisor Carre Brown, took offense at even Ms.Mulhern’s mild skepticism of county plans for the homeless, saying that the county is doing a lot and meeting a lot and gosh if Ms. Mulheren just paid more attention she wouldn’t be asking such impertinent questions. In addition, the county is working on the homeless “strategic plan” which, McCowen insisted, will incorporate the Marbut report. (A claim he’s now saying at nearly every meeting — and which loses more credibility every time he repeats it.)

HHSA Director Tammy Moss Chandler said that HHSA has identified 80 homeless people over 65, or who are “vulnerable,” and homeless families and given them hotel vouchers. 73 adults and 7 children are now housed in hotels and motels who were previously homeless. The helping professionals are working on identifying people who may need disease isolation but so far nobody has been identified as such.

McCowen then managed to out-monologue Moss-Chandler, droning on about the long-delayed “strategic plan” for the homeless which is still under development (more than two years after the Marbut report and counting) which, he insisted, will at last implement Marbut's recommendations. (Marbut, incidentally, is now the Trump administration's point man for national homelessness.) McCowen asked Ms. Moss-Chandler for the schedule of when she and the county will have a finished plan, understanding that the virus crisis has provided yet another convenient excuse for its delay.

Moss-Chandler said the “plan” will be ready in late April to be presented to the Continuum of Care Committee (a homelessness Super-Agency of top officials from every possible organization paid to work on the homeless problem). She also said the county has applied for several hundred thousand worth of homelessness-related state funding which has not yet been received. The county is trying to “access that funding more quickly” and figure out how to work with the Board when they get it. Some $300k worth of other virus emergency funds are available now, she said, and they are working on figuring out how to spend it.

A Grim Financial Forecast

Mendo Treasurer and Tax Collector Shari Schapmire told the Supervisors on Tuesday that the April 10 property tax deadline was not extended and people are “encouraged” to pay on time if they can. Governor Newsom has asked (but not ordered) counties to cancel penalties for late payment and a process to do that is underway. But the County depends on these revenues for about $40 million in General Fund services (about half of which are law enforcement including the District Attorney and the Jail). 

County Auditor Lloyd Weer said that first installments of property taxes were paid in December and they were in line with budget expectations. But, because of the virus/shelter in place economic shutdown, the second installment “is probably not going to hold up.” Weer said he can’t determine the “revenue performance” at this point and he won’t know “until we see the kinds of delinquencies that we experience.” 

Schapmire said she collects about $145 million in property taxes each year. So far, about $32 million has not been collected. Typically $4 million is uncollected anyway in a normal year. So that leaves $29 million left to collect. But some other one-time funds may reduce that shortfall to about $20 million “which I realize is still a lot of money,” Schapmire hastened to say.

Oddly, Schapmire also said her office “cannot accept partial payments.” They are working on a penalty cancellation request form which will require tedious case by case review. “We will have to be liberal with this,” Schapmire said. Under the Teeter Plan which requires the county to front money to school districts, incorporated cities and special districts, the County is legally required to give them their sizable portions of whatever those second installments turn out to be, then hope collections somehow cover it in the end, usually with penalties and interest, but not so much this year with cancelled penalties. 

By law then, about 70% of the $145 million goes out to the schools, special districts and cities, leaving $40 million or so for the County. 

Schapmire didn’t mention how much shortfall they may face in the County’s two other tax revenue sources — bed tax and sales tax. (The bed tax is certainly going to be way down given that the county’s inns, motels, hotels, and b&b spas are closed. And so many businesses have also closed that the sales tax harvest will also be down significantly.) 

For this fiscal year (ending in June) Mendo budgeted about $90 million in total tax revenues, including about $25 million in sales tax, the aforementioned $40 million or so in property tax, about $6 million in bed tax, over $2 million in anticipated penalties and interest, and another $12 million of property tax backfill from the vehicle license fees that were canceled a few years ago and replaced with a larger property tax allocation from the state. Somehow some pollyannaish optimist projected about $4 million in “cannabis taxes,” which would have been fanciful to realize in a good year.

Given that the last three months of this fiscal year are obviously going to result in significant tax revenue reductions, it’s probably safe to say that sales and bed taxes will be off by at least 20% on top of whatever property tax shortfall there may be. If property tax revenues are down by just 10% that’s over $4 million. Sales tax could be off by $5 million. Bed tax could take big hit of $1.5 million or more. Penalty and interest revenue could easily be off by $1 million due to the “liberal” hardship cancellations, and upwards of $3 million in vehicle license fee offset property tax revenues could disappear. Without even addressing the hard-to-accept $4 million in cannabis tax receipts, we’re talking large tax revenue shortfalls.

Then there’s the fees and service charges that will not come in, probably at least another $2 million.

Conservatively, Mendo is looking at a general fund revenue shortfall of at least $15 million off the budgeted $90 million just for this year, not to mention the following years as what’s left of the economy tries to catch up.

Of course, there could be some local agency bailout money from the feds or the state, but it probably won’t come anywhere near closing the gap given the overwhelming demands for fiscal help from the federal government and the relatively paltry amounts being discussed so far.

Speculation has already begun that property values are going to take a large hit in the next year or two as well, which translates to bigger property tax shortfalls in future years.

One interesting wild card that occurred to us is the school closures for three months. If school are closed, does Mendo still have to pay the school districts their full property tax allotment? One would think that school budgets would shrink in proportion to reduced “average daily attendance” so maybe the County can keep some of those property taxes as an offset to the looming shortfalls. (We have a call in to County Schools Superintendent Michelle Hutchins, but so far no response.)

Looking back on the last, much less severe, budget crisis in 2009 we recall that the County took a number of what were considered then to be drastic cost-cutting measures including: 

A 10% across the board pay cut.

Mandatory and voluntary time off.

A hiring freeze and non-replacement of retirees (who were encouraged to retire). 

Canceled, reduced and delayed capital improvement projects.

Since the virus budget fallout is clearly already worse than the 2009 “Great Recession” impact, it’s not too soon for Mendo’s budget and finance people to prepare a few general fund revenue scenarios with accompanying budget reduction estimates and start preparing for the budget cuts to come that will probably be steep, painful and long lasting.

And who knows what kinds of cuts are in store for the even larger state and federal grant aid programs, primarily in Health and Human Services, like food stamps, mental health, public health, Medi-Cal/Medicaid, and general welfare grants.

Ms. Schapmire concluded by saying that the financial picture is made up of “a lot of moving parts,” but she neglected to note that there is sand in the gears.

Stephen Rosenthal Writes:

Re the budget shortfall: Here’s an idea. Start by cutting the salaries of the Supervisors and County Department Heads (including and especially Angelo) by 35%. Then cut the handouts to the “non-profit” helping agencies that can’t account for their expenditures in a formalized line-item budget by 50%. That should save at least a few million dollars. Won’t happen though. They’ll go after the slaves again.

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