By Jon Chown
The Santa Cruz County Board of Supervisors approved budgeting principles to guide the development of the proposed Fiscal Year 2026-27 budget, aiming to address a projected $23.2 million deficit and long-term structural shortfalls.
The principles, outlined in a report from County Executive Officer Nicole Coburn at the board’s March 10 meeting, prioritize maintaining revenue-generating services, balancing reductions across county departments and community organizations, identifying alternative funding strategies, and creating room for future budget stresses.
The discussion follows a February mid-year report that projected a $5.4 million gap for the current fiscal year and warned of a $67.5 million structural imbalance by FY 2028-29 if no corrective actions are taken. Staff have already implemented hiring and travel restrictions and directed departments to prepare options to balance next year’s budget.
“These principles will provide clear, prioritized guidance as we develop a budget that supports mandated services, protects the community safety net, and prepares for long-term fiscal sustainability,” Coburn said in the report.
The Board’s action also allows staff to continue consultations with labor partners and community organizations on potential future reductions. It comes as the county evaluates whether to declare a fiscal emergency and explore medium- and long-term revenue strategies alongside expenditure management.
“We’ve navigated this before,” said Coburn. “We’ve been through a recession, the housing bubble, COVID … so we’ve experienced having to rightsize a budget and we know we can do this.”
The budget priorities include ensuring safety net services, behavioral health access, public safety, infrastructure reliability, and economic opportunity for residents.
Many members of the public share their concerns and budget priorities during public comment. Crystal Gonzalez, program director of Semillitas, a children’s college savings account program run by Ventures, called in to question potential cuts to her program and others.
“Before making these decisions, I urge you to consider what is at stake. Reducing support creates uncertainty for programs like Semillitas that rely on stable infrastructure, trusted partnerships and long-term planning to serve families well,” she said. “We’re not asking you to choose between basic needs and children’s futures. We’re asking you to recognize that families need both.”
Representatives from other nonprofits also reminded the supervisors of the good they do. Dientes Dental Care made sure they knew how critical its services were, as well as First Five Santa Cruz County.
The supervisors shared their priorities and thoughts. Supervisor Kim DeSerpa said economic development topped her list, particularly quicker development with fewer barriers “so that this county can start earning some extra money in sales tax and restaurant receipts.”
DeSerpa also suggested the county work harder to avoid cost litigation. In terms of the needs of nonprofits, she suggested more grant writing be done.
“Oh, one last big one. Public safety is a huge priority for me,” she finished.
Koenig said the county would have to reduce staff. Salaries have continued to go up, along with benefits and pensions, he pointed out, and it’s a situation that has to be addressed. “We just won’t be able to afford as many staff. Sad but true. This is very different from the Great Recession, the housing bubble and COVID, which were clearly temporary situations.”
Koenig said saving money by delaying infrastructure improvements would be the wrong approach. “The reality is that now our infrastructure is in terrible shape and it’s a huge liability for us,” he said. “So we have to deal with this personnel issue.”
Board Chair Monica Martinez said she liked the foundational principles presented and how the impact would be shared between the county workforce, local organizations and services.
“It’s really time for us to roll up our sleeves,” she said. “Each of us needs to exercise our political capital at the state and at the federal level with our associations and bring as much support and relief to our county as possible.”
No immediate financial impact is expected from the adoption of the principles. Supervisors passed the resolution 5-0.