Instead of a surplus of $3 million to $5 million, San Luis Obispo County now faces a $4.8 million deficit after administrators discovered an $8 million accounting mistake in next year’s budget forecast.
“It was straight-up human error,” said Emily Jackson, county budget director. Her office recently discovered that a significant portion of recently approved salary increases weren’t included in the financial forecast presented to the Board of Supervisors on Oct. 10.
Whether the expense will result in reduced county services or stalled construction projects is unlikely, she said, and the county is “well-positioned to address the gap in the coming year.”
The shortfall is less than 1 percent of the forecasted total general fund budget, which is expected to reach $525 million in the fiscal 2018-19 year. And, “A forecast is a forecast;” Jackson said, meaning the budget will likely shift with changes in property taxes or other incomes.
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“It remains to be seen if any cuts will be necessary,” she said. Administrators will know more at a mid-year budget review in February, when there will be a “more comprehensive discussion about what we’ll do.”
“Maybe things we would have done in the mid-year we won’t do ... maybe projects departments wanted to do, remodels they wanted to do,” she said, for example.
Her office already knew next year was going to be tight and wouldn’t show the kind of growth the county has seen the last few years coming out of the recession.
“We’re seeing a sort of plateau. Out of the recession we had a number of things growing our budget. The construction of solar plants in Cal Valley helped us come out of the recession faster than other counties in California. That put us in a good position,” Jackson said.
Expenses could be covered with reserves, which the county has built up to $180 million — a measure of the county’s financial security that is higher than other comparable counties, Jackson said.
“We’ve historically been in a better financial position than other counties have been. We’re mindful of the fact we have Diablo Canyon in the county. We’ve kept (reserves) high to be in a good position to address a decommissioning of the plant,” Jackson said.
Those reserves will also help cover major upcoming construction projects, such as the proposed animal shelter and the new women’s jail.