COVID-19 leaves SLO County facing a budget deficit up to $56 million
San Luis Obispo County has projected a $32 million to $56 million general fund budget shortfall next fiscal year due to COVID-19.
At a meeting Tuesday, the Board of Supervisors was updated with the third quarter 2019-20 fiscal report. The board also unanimously approved more than $12 million in budget adjustments, $7 million of which came from the general fund, for the end of the fiscal year.
According to the report, third-quarter spending and revenue — which spanned from Jan. 1 to March 31 — were about the same as last year.
The report said that the impacts of COVID-19 did not show up substantially in the third-quarter actuals because the shelter-at-home order did not go into effect until mind-March.
However, looking forward, the coronavirus pandemic will have “significant impacts to the budget in the current year,” according to the report.
Expenditures in some departments are expected to increase while revenue from departments, such as parks, have decreased. As part of the report, all departments were asked to project their expenditures and revenue shortfalls through the rest of the fiscal year.
General fund budget adjustments
As of March 31, the general fund had a balance of more than $10 million. After about $7 million was reallocated on Tuesday, the report projected $3 million will remain for the next fiscal year.
Although many of the budget adjustments were related to coronavirus, the largest request came from the Sheriff’s Office due to labor agreements signed last year after the current budget was approved
The Sheriff’s Office was granted $4.2 million for “unbudgeted salary and benefit expenditures.”
According to spokesman Tony Cipolla, the overage costs were not related to the 75% increase in deputy patrols.
And of the Sheriff’s Office’s expected $2.5 million overtime overage, only $195,646 is projected to be due to coronavirus, the report says.
About $1.2 million from the general fund was given to the Behavioral Health Department. According to the report, Behavioral Health anticipates it will need $1.4 million more than originally budgeted because of coronavirus and revenue shortfalls due to the shelter-at-home order.
Other departments that required notable budget adjustments included nearly $1 million to Social Services’ foster care program and around $200,000 to Social Services for general assistance to cover unbudgeted expenditures.
The county also reallocated $485,000 to Parks and Recreation golf courses to “maintain adequate cash balance” because significant funds were lost due to the shelter-at-home order.
Projections for the 2019-20 fiscal year
Looking toward the 2020-21 fiscal year, the county is expecting $32 million to $56 million in general fund budget shortfalls, amounting to about 5% to 10% of the county’s general fund budget.
According to a county news release, their projection is similar to what many local jurisdictions are experiencing.
The county said a large drop in consumer spending is the primary reason for the expected budget shortfalls. Local emergency response has also affected the budget, the release said.
“We have many tough choices ahead of us,” County Administrative Officer and Emergency Services Director Wade Horton said in the release. “To put this shortfall into perspective, the largest single-year gap closed during the Great Recession was $30 million, which is the low end of what we expect.”
The county’s budget will also be affected by the state budget. Gov. Gavin Newsom has recommended allocating about $29 million in CARES Act funding to San Luis Obispo County for health and human services impacted by the pandemic.
However, according to the release, the funding may not address the overall general fund budget gap. The county said it is working to better understand the funding requirements.
At the Board of Supervisors meeting, budget director Emily Jackson said the county anticipates it will be about three years before the county returns to normal.
The county will address the immediate shortfalls and analyze the future situation.
The county’s hiring freeze was one of the immediate actions taken to address budget concerns. According to the release, the county is also reviewing all discretionary spending.
The county budget hearings are scheduled for June 8 to 10 and are open to the public.
This story was originally published May 19, 2020 at 6:17 PM.
