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County Administrator’s Office3501 Civic Center DriveSan Rafael, CA 94903www.marincounty.org
April 28, 2020
FY 2020-22 BUDGET UPDATE
County Administrator’s OfficeBudget Update04/28/20
Slide 2
PURPOSE OF BRIEFING
• Updated 5-year General Fund projection
• Revised budget instructions
• Initial one-time funding recommendations
• Next steps
County Administrator’s OfficeBudget Update04/28/20
Slide 3
ECONOMIC FORECAST
• Significant economic slowdown is expectedo Depth and length is still unknown
• Short-term impacts are widespreado Increased unemploymento Declining economic activity and tax revenueso Increased demand for disaster response and safety
net services• Federal and State stimulus packages will help offset short
term impacts• State budget outlook has dramatically declined
o Reserves of $20B are unlikely to be sufficient to mitigate impacts
o Significant reliance on volatile revenue sources such as income tax and sales tax
County Administrator’s OfficeBudget Update04/28/20
Slide 4
INITIAL UNEMPLOYMENT INDICATORSN A T I O N A L F I G U R E S
• Average of 5.5 million new claims per week nationally since March
o Increase of over 25 times the number of claims filed in the same weeks last year
County Administrator’s OfficeBudget Update04/28/20
Slide 5
INITIAL UNEMPLOYMENT INDICATORSS T A T E F I G U R E S
• Over 2 million new claims in California since March 14o Nearly 20 times the number of new claims in the
same period last year
County Administrator’s OfficeBudget Update04/28/20
Slide 6
INITIAL UNEMPLOYMENT INDICATORSM A R I N C O U N T Y F I G U R E S
• Over 8,000 new claims in Marcho Nearly 15 times the number of new claims filed in
February
County Administrator’s OfficeBudget Update04/28/20
Slide 7
ECONOMIC SURVEYR E C E S S I O N L I K E L Y , D E P T H A N D D U R A T I O N U N K N O W N
• Economists are debating how they expect the economy to recover
• Swift (V-shaped) or prolonged (U-shaped)
County Administrator’s OfficeBudget Update04/28/20
Slide 8
IMPACT OF SOCIAL DISTANCING
• Social distancing measures significantly increase the depth and length of an economic recession
County Administrator’s OfficeBudget Update04/28/20
Slide 9
FISCAL IMPACT TO MARIN COUNTY
• Shelter in place orders have significantly impacted County revenues
o Marin County loses more than $5 million per month in revenues when the economy is paused
• County expenditures have also increased; most costs are eligible for FEMA reimbursement
o Emergency Operations Center (EOC)
o Increased demand for community support services
o Medical surge preparations
County Administrator’s OfficeBudget Update04/28/20
Slide 10
ESTIMATED MONTHLY REVENUE LOSSES FROM SOCIAL DISTANCING
Type Impacted Services Source Monthly Loss HHS Realignment
Social Services, Public Health, Behavioral Health Statewide sales $1,400,000
Public Safety Sales Tax Sheriff, DA, Probation, Fire Statewide sales $1,325,000
Gas TaxesRoad Maintenance and Rehab Projects
Local and Statewide fuel consumption $700,000
Parks Measure A
Park improvements, open space preservation, vegetation management Countywide sales $725,000
TOT (Hotel Tax) Countywide, Fire, CDAUnincorporated lodging $450,000
Sales Tax Countywide Unincorporated sales $250,000 Property Transfer Taxes Countywide
Countywide real estate transactions $275,000
Permit Fees CDA and DPWUnincorporated construction activity $350,000
Rentals and Box Office Fees Parks, Marin Center
Facility and event rentals $325,000
Recording Fees Assessor Countywide $35,000
Parking Fines Sheriff Unincorporated $30,000 Unclaimed Gas Tax Agriculture, Weight and Measures
Statewide fuel consumption $50,000
Monthly Loss Total $5,915,000
County Administrator’s OfficeBudget Update04/28/20
Slide 11
GENERAL FUND BUDGET ASSUMPTIONS R E V E N U E S W I L L D E C L I N E
Revenues• Significant short-term decline in revenues
o Statewide sales tax ($6.0m) Dedicated to public safety programs
o Local sales tax, hotel tax, fees and permits ($2.5m)o Interest income ($3.0m)
• Property tax growth rate assumed to slow more quicklyo Maintains relative stability over the long term
• Flat state and federal revenue funding for most mandated services
o 1991 and 2011 Realignment revenues will be considerably reduced ($6.5m)
• Does not include expectations of federal stimuluso Will revise in June pending May Revise
County Administrator’s OfficeBudget Update04/28/20
Slide 12
BUDGET ASSUMPTIONS E X P E N D I T U R E S H A V E B E E N R E D U C E D F O R R O A D S A N D F A C I L I T I E S
Expenditures• Maintain current service levels• Cost of living adjustments each year• Increased pension costs beginning in 2022
o One-year lag from investment market performanceo Longer term impacts are unknown, but can be
significant ($5m - $8m per year)• No contribution to Facility Reserve ($5m)• Goal of increasing ongoing funding for summer road
program is on hold ($4m)
County Administrator’s OfficeBudget Update04/28/20
Slide 13
UPDATED GENERAL FUND PROJECTIONSF Y 2 0 2 0 - 2 1 S H O R T F A L L I S $ 7 M - $ 1 1 M
($7.3)($10.3)
($15.7)($19.6) ($20.7)
($10.9)
($20.7)
($32.3)
($43.4)
($55.6)($60.0)
($50.0)
($40.0)
($30.0)
($20.0)
($10.0)
$0.0
PlanFY 2020-21
PlanFY 2021-22
ProjectedFY 2022-23
ProjectedFY 2023-24
ProjectedFY 2024-25
Milli
ons
Limited Impact Prolonged Recession
*Does not include use of budget stabilization strategies
County Administrator’s OfficeBudget Update04/28/20
Slide 14
BUDGET STABILIZATION SCENARIOS
• Over the next five years, projected annual shortfalls range from $7 million to $55 million
o Reduce annual Facility Reserve contributions firsto Budget Stabilization and Pension Stabilization Funds
are used where appropriate • Limited Impact Scenario
o Stabilization Funds provide balance for next yearo Budget reductions will be needed in year 2
• Prolonged Recession Scenarioo Additional Stabilization Funds are needed to balance
next yearo Budget reductions will be needed in year 2o Longer term structural deficit is significant
County Administrator’s OfficeBudget Update04/28/20
Slide 15
REVISED BUDGET INSTRUCTIONS
• “Rollover” of baseline budget with current service levels
o No new spending or enhanced services
• Reconsider one-time and ongoing budget allocations in September
• Prioritize existing vacancies for COVID-19 support or departments with high vacancies
o Analyze revenue-supported positions to ensure they can be sustained for 2-3 years
• Defer inflation-based fee increases to October 1st
County Administrator’s OfficeBudget Update04/28/20
Slide 16
CURRENT YEAR PROJECTIONSS U R P L U S I S U S E D F O R 1 - T I M E P U R P O S E S
• $11.1 million in anticipated surplus
o Similar amount last year
• Surplus is primarily comprised of:
o Salary savings from vacancies
o Unanticipated one-time revenues
Investment earnings
Property taxes
County Administrator’s OfficeBudget Update04/28/20
Slide 17
INITIAL ONE-TIME FUNDING RECOMMENDATIONS$ 1 1 . 1 M I L L I O N
• One-time Allocations for FY 2020-21 Budget
o Additional Reserve Contributions
Budget Stabilization ($6.0m)
o Maintain current project-based staffing ($500k)
o Set aside remaining funds for high priority projects ($4.6m)
Will return to your Board in Fall 2020 with recommendations
County Administrator’s OfficeBudget Update04/28/20
Slide 18
WRAP UP AND NEXT STEPSB U D G E T M I L E S T O N E S
• May Revision to State Budget
o Federal stimulus allocations
• FY 2020-22 County Budget Hearings (June)
o Updated projections
• Quarterly budget updates
• Budget Instructions for FY 2021-22 (November)
County Administrator’s OfficeBudget Update04/28/20
QUESTIONS?