Alameda County’s best case budget scenario is a projected $72.1 million funding gap, county official said on Thursday. In reality, the county’s budget, which does not take into account impacts from covid-19, is likely to be steamrolled by rising expenses and sharp declines in revenues in the near and long-term.
“We are in an unprecedented time period,” Alameda County Administrator Susan Muranishi told the Board of Supervisors budget workshop group on Thursday.
The county typically reports a budget shortfall somewhere between $50 million and $100 million. For example, last year’s shortfall was $60 million. But during difficult economic times, such as the Great Recession, it ran a budget shortfall of $177 million in 2008-09.
The decision to offer a “maintenance of effort” budget without current and future expenditures related to covid-19 was to give county supervisors a baseline before making further budget decisions later this year, Muranishi said. She added the county will likely reopen its budget sometime in August or September to reassess the local budgetary situation.
Because the county’s primary role is to act as a safety net, any ongoing financial distress will seriously affect aid and programs for low-income residents, children, seniors, and the disabled. Anecdotal evidence suggests demand for county services has skyrocketed since the shelter in place was ordered in mid-March.
Of primary concern is an estimate by county staff that the pandemic could decrease county tax revenues by 10 percent. Alameda County’s Measure half-cent sales tax, approved by voters in 2014 to fund Alameda Health System, for one, could be greatly affected by such a dramatic reduction in funding.
The sales tax brought in $164 million in tax revenue during Fiscal Year 2018-19. Highland Hospital in Oakland, the county’s main safety net hospital received $123 million from Measure A. With the local economy ground to halt going on two months, sales tax revenues have assuredly nose-dived, and further impact a hospital system that was operating on razor-thin margins even before the pandemic.
Real property transfer taxes and hotel taxes, among a number of ancillary revenues are projected to also decrease, county official said. Property taxes, however, are expected to stabilize for the time being. Following a recession, county staff explained, a reduction in property taxes typical takes a few years to develop.
The county’s budget workshop, meanwhile, provided a roadmap for how the Board of Supervisors will balance the $3.1 billion budget. Its members backed an option that would disproportionately cut more from public protection, while leaving public assistance programs virtually intact.
Option C, shown above, would slice into the $72. 1 million funding gap with $31.2 million in cuts to public protection, such as, the sheriff’s department, district attorney’s office, and probation department. Alameda County District Attorney Nancy O’Malley voiced support for Option C during the workshop meeting. Under the proposal, only $2.9 million would be cut from public assistance.
The Board of Supervisors will continue with the budget process later this month before approving a balance budget for the upcoming fiscal year by June 30.