The Merced County Board of Supervisors on Tuesday unanimously accepted a record $1.14 billion preliminary budget for the 2023-24 fiscal year from its administrative team led by CEO Raul Mendez.
For the second consecutive year, the total budget exceeds $1 billion, and amounts to an increase of $81.2 million from last year’s final budget of $1.06 billion.
Most of the supervisors expressed words of wonderment over another billion-dollar budget, saying it wasn’t expected again after one-time American Recovery Plan Act (ARPA) money inflated previous budgets in response to the covid pandemic and a tough economy that lingered on.
“I don’t know, it’s crazy,” said Board Chair Scott Silveira. “When I first got elected, in the first budget process that I was a part of, our total budget was $684 million, and our local revenue share was $100.6 million dollars. And here we are five years later with a $1.138.6 billion budget. That’s an increase of $454 million in five years. The local share this year is going to be $124.3 million, an increase of $23.7 million [from five years ago]. So you look at those numbers, and you see that top line number, we are over a billion. But understand that the money that we truly have — the money that we have the most discretion over on how we want to spend — has only gone up in that time by $23 million, which is nothing to sneeze at, but I think it just kind of shows you things are a little wonky out there.”
Silveira and his colleagues also praised their working relationship with CEO Mendez and his administrative staff, saying constant meetings and communication over priorities helped make this year’s budget planning process go remarkably smooth.
“We are staring down the barrel of a $1.138.6 billion budget,” remarked Silveira, “and really, the only request that came out of it was a $450,000 change on something. In my opinion that is pretty darn good.”
Silveira was referring to a request by Supervisor Lloyd Pareira to shift over $450,000 from Public Works monies to supplement another $550,000 earmarked to help the community of Delhi acquire its first-ever county park. The request met with approval from his colleagues.
Pareira also suggested that county staff and the board work on adding more funding to road maintenance in the form of overlays and patching with possible funds that are left over from larger projects in line to be completed.
The General Fund portion of the overall budget is listed at $792.5 million, up from $737.2 million last year. The General Fund represents 70 percent of the total budget.
Of that 70 percent, roughly 75 percent, or $598 million, is supported by department dedicated revenues, or federal and state funding.
The Health & Human Services sector accounts for most of this dedicated funding that flows into the region. HSS also accounts for about 59 percent, or $463.4 million, of the total General Fund.
General purpose revenue — the county’s discretionary resources — from property and sales taxes, interest payments, permit fees, among other such areas, is expected to be at $124.3 million.
When this discretionary resource is added to the county’s current fund balance of $70.1 million, the total is $194.4 million. And that’s 25 percent of the General Fund. And most of that, about $92 million, will be headed toward Public Safety and Justice spending areas that are not as reliant on state funding sources.
The county has a total of 2,432 employees, and this year’s budget shows $326 million going toward salaries and benefits, a $7.4 million increase from last year. There’s also 46 new positions listed; however, these are included with no additional net county costs, meaning that some are intradepartmental swaps or positions supported with other outside funding streams.
The major increases in the proposed budget are attributed to $30.3 million in appropriations related to all phases of the John Latorraca Correctional Center project, $32.3 million related to Health and Human Services programming, $12.4 million to support Capital Improvement Projects, $10.5 million related to increases in the Justice System programming, $6.4 million related to Public Safety functions, and a net reduction of $10.7 million in appropriations for management, infrastructure and municipal supports.
State Budget Woes
In his published budget introduction, CEO Mendez wrote: “The State of California is facing a $31.5 billion deficit due to declining revenues. While some of this may be addressed through reserves, it is more than likely to result in significant cutbacks and potential impacts to local government programs and services. Additionally, efforts to stem inflation are beginning to slow the economy through increased interest rates, and experts predict that additional steps to reduce inflation could be taken in the coming months, creating a greater risk of recession. Similar challenges exist at the federal level, as lawmakers battle over raising the debt ceiling and plans to reduce spending. While failure to increase the debt ceiling would not directly impact our county programs, it would likely create economic instability and lead to reduced revenues in the near future.”
“The county also continues to spend down its federal American Rescue Plan Act (ARPA) funding allocation of approximately $54 million in concert with the results of its public outreach campaign conducted in late 2021/early 2022. Community facilities, homelessness services, roads, and parks are all beneficiaries of that funding plan. Lifted by this one-time funding source, these projects will continue in the coming years as the onetime ARPA allocation is spent down. As of March 31, approximately $11.3 million of the ARPA funding has been spent down on projects such as repairs to veterans halls and other community facilities, park upgrades, and public safety efforts.”
“The recovery process for flood-impacted areas is ongoing. In concert with ongoing recovery efforts, Merced County will maintain its long-term commitment to flood control efforts. This includes the Black Rascal Creek Flood Control Project, which would construct a floodwater detention basin on the Black Rascal Creek Watershed (2.5 miles east of the City of Merced) to provide protection against a 200-year storm event and establish much needed flood control for the currently unprotected Black Rascal Creek Watershed and small disadvantaged communities. Federal and state resources are currently committed to the project, as well as ARPA funding, with a total project cost of approximately $35 million. The project is expected to go to construction within the next year. Our efforts don’t stop with this one project. Merced County is working hard to advocate at the federal and state levels for a streamlined and more expansive permitting process that would allow locals to more regularly clear brush and debris from waterways, as well as conduct periodic dredging to maintain channel capacity. With the frequency and volatility between droughts and flooding in California, the county continues to support additional water storage to protect our residents from flood events, maintain our economy through suitable irrigation water allocations, and maintain our quality of life by way of reliable drinking water supplies and groundwater recharge. Following the atmospheric river events that devastated some areas of the County earlier this year and continue to be a risk and concern, the organization has taken a ‘never again’ mentality and will remain committed to this important health and safety priority.”
Final Budget recommendations for Merced County will hinge on the outcome of this summer’s State Budget, with those trailer bills expected to run into September. Stay tuned!