The Merced County budget has topped a billion dollars for the first time in history, but elected officials are warning the public not to get used to it.
County supervisors unanimously approved the 2022-23 final budget on Tuesday. At $1 billion and 57 million, the new budget is $212 million more than last year’s final budget. But much of the jump is attributable to an increase in federal and state funding in the wake of the COVID pandemic, and officials are not counting on receiving the money in the future.
A huge chunk of the budget increase comes from the $97 million two-phase renovation of the John Latorraca Correctional Facility near El Nido. The county also budgeted roughly $33.5 million in federal funds through the American Rescue Plan Act (ARPA). That money was set aside for things like parks, libraries and county facilities as well as addressing outstanding issues like homelessness, water infrastructure and public safety. The rest of the increase comes from $52 million for health and human services programs, $19.9 million for public safety and the justice system and $8.3 million for road projects.
“Local governments cannot rely on the influx of federal relief funding coming out of the pandemic on an ongoing basis,” Merced County Executive Officer Raul Mendez wrote in a budget proposal last June. “The rising costs of construction, employee pay and benefits, and other services indicate a need to exercise cautious budgetary practices in the coming years in an effort to weather an unpredictable economy.”
Caution was the overall theme of Tuesday’s deliberations. A billion dollars is an enormous sum for elected officials to put their names to, a fact which supervisors occasionally poked fun at.
The need to cushion the county’s finances in the event of disaster or severe economic problems was also high on the list of priorities. Supervisors voted to increase the General Fund Reserve by $3 million to $42 million, and upped the amount held in the Reserve as a percentage of county revenue from 7-9 percent to 7-12 percent.
“I think it’s really important to stock away as much money as we can,” said Supervisor Josh Pedrozo.
“Those reserves, once you use them they’re gone,” Silveira said. “I want to commend our staff and the board for committing to that reserve policy. We need to save it for a rainy day and that’s exactly what it’s there for, a rainy day.”
Looming in the background is the precarious state of the national economy. Concern over runaway inflation and rising fuel costs has only gotten worse since the budget was first proposed back in June. Fears of a recession haven’t gone away, if anything they have grown in recent months as the housing market and financial sector has groaned under the weight of decisive Federal Reserve interest rate hikes. The volatility has been a point of pain for local leaders, who voiced their concern while deliberating on the budget.
“I hope and pray that I’m wrong but something’s out of whack. Everything is crazy out there,” said Silveira. “We’re going to see slowdowns.”
Supervisor Lloyd Pareira said the county’s conservative budget was something future generations could be proud of, adding “I don’t feel that way about my federal government.”