‘We’re going to have to pivot much sooner’: Alameda County’s budget deficit is likely higher

Alameda County’s baseline budget shortfall of $72 million is likely somewhere closer to $140 million, and possibly larger, county officials said on Tuesday.

Alameda County Administrator Susan Muranishi warned the Board of Supervisors will need to deal with the abrupt economic downturn faster than previously expected.

Earlier this month, at a budget workshop session, Muranishi envisioned adjusting its proposed budget for Fiscal Year 2020-21 sometime in August, a move the county has never made so early. “We’re going to have to pivot much sooner,” Muranishi said.

A projected 10 percent reduction in sales tax revenue in Alameda county, by itself, would add roughly $65 million to the projected $72 million shortfall, Muranishi said. Property tax waivers granted by Gov. Gavin Newsom this month, which runs through May 2021, will further decrease county revenues, Muranishi added.

“Unless your eyes are closed,” Alameda County Supervisor Keith Carson said, “we’re moving toward the perfect storm.”

Newsom’s May budget revise released on Thursday forecasts a dire financial future for the state that could persist for several years. State unemployment could peak at nearly 25 percent, Newsom said. The proposal includes cuts to new programs and education, removal of tax credits, and possible reductions in pay for state workers. But there was some scant good news for the county and its cities.

A so-called “off-ramp” clause in the state’s minimum wage schedule that allows for the suspension a future increase in pay for low-wage earners will not be used, Newsom said. Alameda County cities without accelerations in the state’s minimum wage scale to $15 an hour by 2022, will see an increase from $13 to $14 on Jan. 1.

The state will shift $750 million in federal CARES Act relief funds to help cities and counties to secure hotels to be used to house those unsheltered, and who are also vulnerable to contracting and spreading covid-19 in their communities.

Another $450 million in federal funds will be allocated to cities that did not qualify for direct funding. Every city in Alameda County missed out on the first round of federal relief funds because of provision that required a city to have a population of, at least, 500,000. Newsom, though, suggested cities should use the additional funding to combat homelessness.