June 24, 2004

County supervisors approve $3.4 billion budget

Staggering $200 million deficit forces park, library fees up; elimination of 550 county jobs

By Sheila Sanchez
Staff Writer

The Santa Clara County board of supervisors last week approved a $3.4 billion budget for fiscal year 2004-05, slashing a total of 550 jobs and making drastic cuts in programs serving the area’s most vulnerable citizens—children, seniors and the mentally ill.

The action came the morning of June 18 in a packed and tense meeting at county headquarters in downtown San Jose after weeks of agonizing public testimony about the impact of proposed reductions outlined in County Executive Pete Kutras’ recommended budget presented in May.

County leaders said the budget reflects the board’s commitment to develop a sustainable county, while preserving its mission to maintain a healthy and safe community.

The county was faced with a deficit of more than $200 million and the budget makes cuts in every county department, relying on borrowing money to maintain core services.

The county may also face future program reductions and cuts as it relies heavily on money from the state and federal governments. It’s expected that at least $47 million more in potential cuts from the state be made this summer, Kutras said.

That’s why the budget includes a $47 million reserve to address the impact of final state budget actions and an extra $18.5 million for future mental health and drug and alcohol services.

“We’re going to have fewer mental-health clients get services and a reduction of drug and alcohol services,” lamented Kutras, explaining that the county provides mental health services for the 15 cities located in the county, including San Jose.

The county also funds several community organizations in San Jose, which will also see reductions in county funding such as the Emergency Housing Consortium, the Health Trust, Hope Rehabilitation Services, Indian Health Center, InnVision, Catholic Charities and domestic violence shelters, to name a few. A total of 90 organizations’ budgets were cut.

Among the strategies used to bring the budget into balance was a controversial plan to defer $35 million in payment to the California Public Employees Retirement System (PERS). The county expects to use $25 million from that amount to save its most important programs serving its vulnerable populations such as mental health and drug and alcohol services. The payment of the $35 million will be amortized over a 10-year period. This is the first time that the county has made such a deferral.

County leaders were also forced to identify other ways to balance the budget including identifying core services, offering early retirement incentives and negotiating zero or minimal wage increases with labor groups, consolidating county agencies and working collaboratively with community organizations.

Among the fee increases included in the budget are overdue fines at libraries jumping from 25 cents to $1; county park entrance fees from $4 a car to $5; car tent camping fees from $15 to $18; an increase in fees for Notary Services, Credible Witness, Marriage Witness and Passport Photographs to $10 each; and increases in planning and building fees.

To streamline the organization and preserve critical services, the county offered early retirement incentives to non-executive managers. To date, 607 county employees, 22 percent of those eligible, have taken advantage of early retirement.

The early retirement incentive was coupled with an extension of contracts with only modest wage or salary increases for the coming year.

“Providing an incentive for employees to retire now made good business sense,” said Board Chairman Supervisor Pete McHugh.“Without the incentives, the county would have to lay off other employees and turn around and hire new employees as the retirements dribble in. That would have been extremely disruptive to services.

“The adopted budget is the first in a multi-year process to reduce county government,” he added. “It begins constructively addressing the gap between the growth in county expenditures and growth in its revenues.”

At the start of the budget development process, county agencies and departments were assigned reduction targets ranging from 12- to 14.5 percent, for a total of $175 million. The objective was to reduce the staggering deficit in a way that minimized the impact on safety net services in the areas of public and mental health.

The county also examined which services were mandated by federal and state governments and local county ordinances, as well as the ratio of employees to supervisors. County leaders said the reviews were instrumental in informing the difficult budget decisions.

As pointed out by Kutras, the Senior Nutrition Program is not mandated, however, it is critical for many on limited-fixed incomes.“We didn’t want to cut this as deeply as other programs because there’s no one else to do it,”

Kutras said. “We’ve got every department across the board faced with reduced services. If you are going to come to the county for services you may see longer lines, reduced capacity and probably longer response time from the sheriff’s office. It’s painful for our community. It’s painful for us. We believe in and we’re passionate about the services but we just don’t have enough funds to keep them going.”

In an effort to save money, and creating a similar reporting structure to 45 of the 58 counties in California, the Office of the Medical Examiner/Coroner (MEC) was reassigned to report to the Santa Clara County Sheriff’s Office. The merger was aimed at saving money, but has been criticized by opponents who fear it will create a conflict of interest.

The board voted 4-1 in favor of Kutras’ proposal to merge the departments. McHugh cast the dissenting vote. San Jose Police Chief Robert Davis opposed the merger. The position of chief medical examiner, formerly held by Dr. Gregory Schmunk, will not be filled saving the county $235,000 in salary.

Operating under a “memorandum of understanding” with Kutras, responsibility for the administrative and oversight duties were shifted to the sheriff. The medical, investigative and custodial duties of MEC will continue to be performed independently by the medical examiners. The office also will benefit from the 24-hour command coverage, information technology, and administrative support of the Sheriff’s Office. Continuing to restructure the county organization, the board also eliminated the General Services Agency consolidating its functions with other county offices.

Supervisor Jim Beall, chairman of the board’s committee on children, seniors and families, advanced the proposal of the Children’s Shelter Use Committee, which recommended two six-month pilot programs for alternative reuse for previously closed cottages at a cost of $240,000. The recommendations followed input from more than 400 community representatives.

The board’s commitment to providing preventive services to at-risk families led to a restoration of $473,000 on an ongoing basis and a one-time addition of $262,000 to fund contracts with community-based organizations that provide services to vulnerable county residents in their own communities.

“There are limits to the resources we have available,” said Supervisor Liz Kniss. “The well is almost dry, however, and one-time bridge funding has allowed us to restore critical programs and services. We will continue to evaluate our budget options as we work through financial challenges for the coming year.”

Supervisor Blanca Alvarado said restoration of $150,000 to Asian Americans for Community Involvement. That money will help the organization to continue providing primary care services for clients who cannot be accommodated at a county clinic, adding that the absence of such services would result in costlier demands on the county’s public health system.

The budget also included the restoration of officers to patrol the area adjacent to the Elmwood Correctional facility.
In the past three years, the county has had to find more than $500 million in deficit solutions, including cutting nearly $240 million from departmental budgets and eliminating nearly 1,300 jobs.

The county has identified a structural deficit of $132 million in fiscal year 2005, due to escalating costs and revenue performance. The approved $3.4 billion budget addresses this problem, county leaders said.

At Supervisor Beall’s request, county supervisors have directed staff also to research revenue alternatives for their consideration later in the year and to begin planning for fiscal year 2006. The county anticipates additional shortfalls during the next two years of $68 million and $50 million, respectively, excluding state impacts.