On Thursday, Official Mendo posted its “mid-year budget update” nearly three months after the mid-year ended. The pretty presentation package collides directly with the ugly budget reality contained within.
To see the fruits of the graphic designer’s extensive effort (and the numbers pig with its make up on) go to:
and click on the presentation element of your choice.
Amid the rosy numbers due to be revealed in next week’s highly anticipated “mid-year budget review” are some glossed over large items that make the entire presentation seem much shakier than it appears to be.
For example, on the revenue side:
Sales Tax revenue from July 1 to December 31 2018 is listed as about $1.8 million, yet the Auditor forecasts and end of year sales tax revenue of $6.5 million, about $400k more than forecast three months ago. No explanation. How will the County somehow realize almost $3 million more in revenue than current rates would generate?
So that’s $3 million off.
The Cannabis business tax revenue so far is almost $400k, yet the County says they expect to receive $1.1 million even though pot grower sales are off and much fewer are permitted than were anticipated. No explanation.
Another $700k off.
Solid Waste franchise fee revenue so far is less than $50k, yet the County expects to receive about $800k. No explanation (but there may be some one-time fees due before June 30 on this one).
Nevertheless, another $750k off.
Interest income was budgeted at $500k; the county has received about $140k and yet the Auditor says Mendo will rake in $800k in interest. No explanation.
Another $300k off – probably more.
It’s hard to predict property tax revenues based on year to date because of the way the County collects them (in two lumps, December and April, plus finals followed by fees/fines). But the Auditor is estimating $1 million more than the $33 million budgeted and estimated three months ago without any explanation. We see no evidence that property tax revenues will increase at all, much less as much as the Auditor says. We were told last year by CEO Angelo that the Auditor’s prediction is nothing more than a 4% increase from last year without any attempt to actually estimate it.
So that’s at least another $1 million less in revenue than projected.
And, of course there’s the high-profile Cannabis budget gap now estimated at about $2.5 million (which is likely understated because the County has been and continues to be overly optimistic about everything associated with their failed pot permit program).
Total of just the quantifiable revenue shortfall so far is at least $11 million worse than whatever semi-rosy picture the County paints. And these are just the obvious gaps from a cursory review of the budget materials.
Add to that the County’s own departmental rundown, which shows another $1 million in net overruns — including law enforcement — AFTER applying about $3 million in carryover from last year. (The pre-carry-over overrun is about $4 million, almost half of which is in the Sheriff’s department.)
There are also several significant issues that are not mentioned: There’s nothing in the budget about Juvenile Hall, which is still costing way more than the average occupancy of 15 delinquents would justify.
There is no mention or estimate of the value of the employee position vacancy rate which might offset some of the deficit.
And there’s no mention of the salary survey and pending across the board pay raises that the Board has been dangling in front of line workers for more than a year now, saying that their long delayed salary survey is still not finished.
So, overall, with only a cursory first pass, we find a budget hole of at least around $12 million without explanation — AFTER applying $3 million in carryover funds from last year.
And that was three months ago. It’s probably worse by now, but at the sludge-like pace of Mendo’s high-paid budget mavens, we won’t know how much worse for three more months or more.
It’s particularly surprising that the revenue side of the budget, where most of the deficit is, has no notes, no comments, no explanations, even though on its face it’s way off. And if the common impression that property and sales taxes are worse than estimated is true, the revenue gap could easily be much higher. Mendo hasn’t even tried to estimate it. (Humco’s sales taxes for this fiscal year are way down.)
Can the Board of Supervisors allow this kind of presentation to be submitted without complaint or serious question? Is an unexplained $12 million (or more) budget gap something a self-respecting CEO can offer as a casual budget update?
Maybe we’ll find out at the Board’s “mid-year budget update” agenda item on Tuesday next week.
PS. Buried deep in the budget presentation is this brief teaser on the list of budget priorities for next year: “Development of property acquisition options around the new courthouse.”
What could that possibly mean? Is Mendo planning to buy property “around” the pending new courthouse over on the railroad tracks to house the as-yet-unaddressed ancillary law enforcement offices that are now several city blocks away from the new courthouse? Where is that money going to come from? And who’s suppose to finance the accompanying planning and construction?
PPS. Several budget notes relate to a jail overrun estimated at almost $800k including:
“The Sheriff reassigned one correctional deputy to Professional Standards. His assignment is to assist in completing background checks. This will improve the hiring process which reduces overtime expense.”
(Note: So the overtime overrun at the jail is mostly caused by unfinished background checks of applicants? We doubt it. There’s a much bigger staffing problem here which is unaddressed.)
“The Sheriff’s Corrections staff is currently working with the Public Defender and Courts to increase to usage of video for Court hearings. This will create efficiencies in the Court process and could result in less overtime used.”
(Note: Which begs the question of how much video (in the jail) is being used now for court hearings and why it wasn’t “increased” long ago. We’ve heard that the inmates, for one example, particularly don’t like talking with their public defender over a video line. But they don’t talk to their public defenders much anyway.)
In other words, the jail overtime problem is only going to get worse.
Another jail stat that we saw for the first time in the mid-year budget presentation was the number of arrestees booked versus the average jail population over the last three years. Average daily population over the last three years hasn’t changed much from just over 300 at any given time. But the number of prisoners booked has jumped from about 5,000 in 2016 and 4,000 in 2017 to over 7,500 in 2018. The budget text offers no explanation for this, however, it seems obvious that a lot more people are being arrested but spending a lot less time in jail. Isn’t this a trend that needs some kind of alternate approach? Or at least an explanatory note from law enforcement?