FY 2020-22 Budget Update 04.28.20.pptx -...

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


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


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


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


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


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)


Slide 8

IMPACT OF SOCIAL DISTANCING

• Social distancing measures significantly increase the depth and length of an economic recession


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


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


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


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)


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


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


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


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


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


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)


QUESTIONS?

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