By Zach Friend
The County has been slow to climb out of the Great Recession, in which the County saw significant cuts to programs, staff and reserves. Over the last few years, the Board of Supervisors has slowly begun to restore some of these elements and last year the Board put more money in reserves than it had in a decade, and focused on addressing needs in public safety, parks and health and human services (which were mainly pass through requirements from the state and federal government). However, the overall increases in staff were quite modest — less than a 1 percent overall increase in total County staff. Overall, County staff is down over 10 percent from the beginning of the Great Recession.
County Economic Forecast
According to the State, which produces County level economic forecasts for five-year periods (2015-2020), Santa Cruz County is expected to have modest job growth (about 1 percent) with community salaries rising by an average of 1.9 percent per year. The population is expected to grow by about 0.6 percent per year.
The State does warn, however, that recent economic gains may not continue and the Governor recently predicted a slowing of the state economy. Locally, sales tax, property tax and transient occupancy taxes are up modestly over last year but the County still remains in a structural deficit – one that first began at the beginning of the Great Recession. While the deficit has dwindled over time, there is still real work to be done to ensure a fully balanced budget.
Where exactly do our revenues come from that make up the budget?
Nearly 55 percent of all county revenues come from the state and federal government; a much different funding structure than cities. These funds are generally pass-through funds to provide state and federally mandated services such as health care programs.
Approximately 22 percent of the county revenue comes from local taxes. And while property taxes make up about half of that 22 percent, you may be surprised to learn how little of your property tax dollar goes to the County.
For every one dollar the county collects in property taxes, the County is only allowed to keep approximately 13 cents.
So where does the rest of your property tax go to? The largest share, about 57 percent goes to schools while another 17 percent goes to local special districts, cities and the libraries.
What about sales tax?
About 1 percent of local sales tax collected stays within the jurisdiction where it was spent. For example, assuming an 8.25 percent County sales tax here is the breakdown:
5.25 percent goes to the state; 1.25 percent goes to local libraries, the Metro (bus) and regional transportation projects; 0.5 percent is for Prop 172 local public safety mandates, 0.5 percent is for local health and social services which leaves 1 percent to pay for general purposes in the jurisdiction in which the tax was collected.
How are our taxes spent?
Now let’s look at how the County’s funds were spent in the last budget year. Approximately 33 percent was spent on health and sanitation services with another 26 percent spent on human services. Most of these human, health and sanitation expenditures are state and federal government mandates – most recently they are requirements associated with the Affordable Care Act.
The largest portion of the county’s discretionary spending is for public protection (Sheriff’s Dept., Probation, County Fire), which is 30 percent. Additionally, the County maintains a reserve, which was increased to 8 percent in the last year with a goal of getting to 10 percent in the coming budget years.
The County budget can often be complex and I hope this provides you with a helpful overview. However, if you have any questions, I’d love hear from you. Please feel free to call at 454-2200.