San Mateo County will be able to maintain its current level of services over the next two years, thanks to still-hot house prices and a healthy surplus. But relentlessly increasing costs for indigent health care and employee benefits make its long term-financial picture murky.
“The cost of doing business is rising faster than our sustainable revenue stream,” warned Jerry Hill, president of the Board of Supervisors.
This is the backdrop the supervisors will be contemplating next week as they hold their marathon hearings on budgets for the next two fiscal years. Hearings start Monday, June 26, at 9 a.m., and wind up Wednesday afternoon, June 28, in the Supervisors Chambers at 400 County Center (corner of Bradford St. and Hamilton Avenue) in Redwood City.
County Manager John Maltbie is proposing a budget of $1.59 billion for the fiscal year starting July 1, up 4.3 percent from the fiscal year ending June 30.
The budget for the 2007-2008 fiscal year is proposed to drop by $115 million to $1.48 billion. That drop reflects major one-time expenditures scheduled for 2006-07, Mr. Maltbie explained. These include: restructuring of the computer system; replacement of the election voting system; one-time funding for the Retiree Health Care Trust Fund; completed capital improvements; and litigation settlements.
The budget for the coming fiscal year cover such major programs as opening the new Youth Service Center this fall; a new homeless program called HOPE; strengthening the Planning and Building Division; updating the Local Coastal Plan for the Midcoast; providing housing for youth leaving foster care; and planning to replace the women’s jail.
The budget has been helped by a generally strong local economy and increasing revenues from sales and property taxes. These are up over 8 percent this year, and projected to rise 6 percent next year. “Property taxes are our bread and butter funds; they support essential services,” said Supervisor Hill.
Property taxes make up about 19 percent of total general fund revenues, but close to 55 percent of discretionary revenues that the county has control over. Almost $1 billion in county revenues come from the state and federal government and are allocated to specific programs with strict guidelines.
“Therefore changes in property taxes have a major impact on many vital county services,” Mr. Maltbie said. He expects real estate sales to slow and property tax revenues to drop.
Fortunately, the county has $142 milion in reserves, which can offset the $23 million deficit projected for 2007-08. “But if expenditures continue to outpace revenues, the county will have to reduce expenditures or increase revenues to balance its budgets,” Mr. Maltbie said.
Clouds ahead
The supervisors’ biggest worry is the increasing gap between costs to provide health care for those who can’t pay, and the reimbursements it receives from the federal and state governments.The deficit for operating the San Mateo Medical Center is projected to rise by $14 million in 2006-07. If this deficit continues to grow, it will consume more than 60 percent of general fund revenues by 2014, Mr. Maltbie noted. This will reduce funding available for criminal justice services for unincorporated areas, child welfare, public and mental health, and other human services.
“We’re just pinched by inadequate reimbursements from the state and federal governments,” said Supervisor Rich Gordon.
Mr. Gordon said the county may have to re-evaluate the levels of care it provides through its hospital and clinics; it may even have to consider closing the hospital.
The county is required by law to provide care to the indigent, but the law doesn’t specify the levels of care, Mr. Gordon noted. “We may have to say to some folks, ‘You’re not sick enough for us to care for you — yet.'”
Mr. Gordon also suggested working with other hospitals and health providers to share the burden of indigent health care.
The other huge worry is the increasing cost of paying and providing benefits for the county’s 5,683 employees, plus its retirees. Mr. Maltbie listed increases in costs for annual salary adjustments, retiree healthcare, employee health care, and recently negotiated increases for probation officers and nurses.
And union contracts are due to be negotiated this year. “We will have to have some serious discussions with the unions,” said Mr. Gordon.
For information on the budget or the schedule of hearings, call the county manager’s office at 363-4123; or go to co.sanmateo.ca.us and click on Budget.
[bug & bullet] RESPOND
Send any response to this article to editor@AlmanacNews.com. Note if it’s for publication, and if so, include your full name; your street and town; and your phone number. Your phone number will not be published.
