By Zach Friend, Supervisor, Second District
The Board of Supervisors will be considering the annual budget at a set of upcoming budget hearings. While there were some positive indicators with revenues recovering from the pandemic impacts, some challenges still remain.
The Proposed 2023-24 Budget is based on the County’s adopted six-year strategic plan for 2018-24 and the proposed two-year operational plan for 2023-25.
The proposed budget continues an approach that has allowed the County to achieve a AAA bond rating (due to strong reserves and other fiscal responsibility measures). Here is an overview of the proposed budget and how you can get involved in budget hearings.
Key Elements
The $1.104 billion proposed budget includes a balanced $731.5 million General Fund that prioritizes sustaining existing commitments and capacity with modest targeted investments to improve services to the community.
Overall, General Fund core revenues have recovered from significant pandemic impacts. The big three revenue streams, Property Tax, Sales Tax and Transient Occupancy Tax (hotel/vacation rental) have all increased.
However, despite a balanced budget, there are significant challenges (from deferred maintenance to disaster recovery) that face the County.
Local roads and facilities have more than $300 million in deferred maintenance, managing the County’s cash flow while the County waits on up to $100 million in reimbursements from the federal government for past and current disaster response, continued damages and recovery costs, allocating funds for behavioral health, legal and other supportive services to implement state mandates including CARE Court, and supporting the County’s share of approximately $30 million needed to finance next generation radio emergency communication systems used by our first responders.
Key Investments
The Budget maintains current services and makes some modest investments in improved services (including some State-mandated programs). Here are a few of the investments for the coming year:
- Completing the new South County Government Center in Watsonville
- Completing Juvenile Hall improvements
- Developing a new Children’s Crisis Center (behavioral health)
- Open new Project Homekey permanent supportive housing
- Restore the Sheriff’s Recovery Center
- Fully reopen Simpkins Family Swim Center
- Implement CalAIM (California’s transformation of the Medi-Cal system)
- A new countywide emergency alert system
- Planning for the continuation of the Rail Trail
- Design of a new Freedom Campus Health Care Center
- Completion of the Live Oak Library Annex and Aptos Library
- A Master Plan on Aging
- Increases in inmate medical and behavioral health care
- Completion of a new DNA laboratory to reduce case processing times.
Property Tax Revenue
As part of the budget presentation, information was shared regarding property tax revenues and how much stays locally. We often receive questions about property taxes (given the high amounts people pay on local assessed value) and how much of your property tax dollar stays locally.
Due to a Prop. 13 formula, the County of Santa Cruz retains some of the lowest amounts of property taxes of any other County in the state. Only 13% of your property tax dollars end up back with County government to fund our local services.
On average, this equates to $463 of property tax dollars per resident.
By comparison, Santa Clara County (under the Prop. 13 formula) retains $10,831 of property tax dollars per resident — San Mateo County about $4,500 and Napa County about $4,000. Approximately 50% of residents live in the unincorporated county (compared to about 4.5% or so in Santa Clara County).
This low recovery amount has significant impacts on how the County provides services.
As you can imagine, counties that are able to retain higher amounts under their Prop. 13 formula have more money available for roads and services without needing new funding streams to backfill these needs.
If the Prop. 13 formula were to change in the state at some point in the future, unincorporated residents could see significant improvements to services and infrastructure without increased taxes — by simply having more of your local property tax dollars stay with local County government. As Prop. 13 was approved by voters as a state constitutional amendment, any changes to the formulation and distribution cannot occur at the local level.
Sales Tax
Similar to property tax, the County receives a lower share of sales tax than local cities in our County or other counties in the region. Half of the population lives in the unincorporated county but the County receives less sales tax per capita than local cities.
While it is common that the unincorporated area of a county does not contain the same number of commercial or brick and mortar zones as local cities, our County has less sales activity than peers across the State.
For example, Santa Cruz County receives about $89 of sales tax per-resident while Napa and San Mateo counties receive well over $400 per-resident. Local cities in our county average over $275 per-resident.
Further exaggerating this underfunding is that all online sales taxes are distributed to each taxing entity based on their proportional share of sales tax in their district, and not based on where the on-line shoppers live.
Until there are more comprehensive sales tax reforms, the County will not fully benefit from the online sales from the 50.5% of residents who live in the unincorporated area.
Budget Hearings
The County will begin budget hearings on May 30.
There are multiple ways to participate — if you’d like to attend in person, the meetings will be May 30 and May 31 at 9 a.m., and June 13 at 1:30 p.m. at the County Government Center at 701 Ocean St. in the Board of Supervisors Chambers. If preferred, you can also attend remotely (via Zoom) and the information for the login can be found before the meeting at www.santacruzcounty.us.
Additionally, you are welcome to send me your thoughts or you can send an email to the entire Board of Supervisors at [email protected]
Where can you view the Budget?
The County has a very interactive online budget tool to allow you to see a department-by-department breakdown of the budget or to simply read an overview of the proposed budget. Here is the link: www.santacruzcounty.us/VisionSantaCruz/Budget.aspx.
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As always, I appreciate any feedback you may have on this (or any other County issue). I’m maintaining regular updates on social media at www.facebook.com/supervisorfriend and you can always call me at 454-2200.