By Melissa Murphy / The Reporter, Vacaville
Posted: 05/05/2010 01:04:45 AM PDT
Solano County's structural deficit is shrinking, but more cuts have to be made for the coming fiscal year's budget to be balanced.
During the third quarter budget review for fiscal year 2009-10 on Tuesday, the Solano County Board of Supervisors was told the structural deficit is $5.47 million, down from $8.38 million in the midyear review. Budget revisions in September showed an $18.88 million structural deficit.
Supervisors voted unanimously to approve the third quarter review.
Solano County Administrator Mike Johnson explained that although he's happy to report the significant drop in the structural deficit, the gap between funds and expenditures could increase to $16.2 million next year.
"There has been significant improvements," he said and added that revenues continue to decline, and although expenses are declining, it's not fast enough.
By the end of this fiscal year, officials project the county will have $52 million in its reserves and $40 million in fund balance.
During better economic times, part of the fund balance would be saved in the reserves.
It is projected that in fiscal year 2010-11, the county will not only draw $6 million from its reserves, but $10 million from the fund balance.
By fiscal year 2011-12, the county is looking at a $21 million use of the fund balance, Johnson said.
The revenue in 2010-11 will continue to decline, including an 8 percent reduction in property taxes and a loss in interest earnings as the county depletes its cash reserves.
Meanwhile, expenses will increase in cost of living adjustments for existing contract obligations and projected impact of Health and Social Services' caseload.
Going forward, to fill the structural deficit gap, the county is exploring opportunities for consolidation, looking at automation to create efficiencies, examining another round of early retirement incentives and establishing a two-tier retirement system.
Meanwhile, Johnson said there are other options including rescinding Employer Paid Member Contribution to retirements by 6 percent for all employees, which would save $4 million, reducing the employee work week to 37.5 hours to save $3 million or furlough for 12 days to save another $3 million.
Johnson said there may be future layoffs.