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Nosedive in revenues has Placer supervisors bracing for spending talks

Revenues continue to drop, with state providing major hit
By: Gus Thomson, Journal Staff Writer
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Placer County staff and supervisors signaled Tuesday that they’re girding for more tough budget decisions spurred by an increasingly smaller revenue stream. With millions in funding grabs from the state all but certain and the county’s own tax revenues continuing to weaken, more potentially painful decisions on spending will have to be made this month, the board was told by a four-member budget team and County CEO Tom Miller. “These are truly unprecedented times,” said Jeff Bell, chief budget analyst. Last week, with a budget pact finally in place with the state, the county got its first glimpse at what amounts to a further $17.5 million drop in revenue from state takeaways and reductions. Additional decreases in sales tax, property tax and other revenues mean staff and supervisors will be trying to dig the county out of a $26 million hole when a budget workshop takes place Aug. 18 and 19 in Auburn. Bell, who worked for the state for nine years, including the Department of Finance for five, said he’d never seen anything like what he witnessed this year in the Capitol. The county now has to deal with “the mess that came out and the hit we’re going to take at the local level,” Bell said. After finding ways to tighten an initial projected $18 million shortfall in this year’s budget, the county emerged in June with a tentative spending plan that anticipated a bigger shortfall as the summer progressed and a divided Legislature and governor worked out from under a $26 billion deficit projection. This year marks the first time in recent memory that the county will not increase its overall budget. It was tentatively set at $769 million in late May and represents an 11.1 percent drop from last year. Now it’s bound to drop even lower, supervisors were told. The single greatest impact from the state budget is the suspension of Proposition 1A and a property-tax “loan” of between $8 million and $11.1 million from the general fund. The loss in tax funding to the state will give the county that much less money to help prop up other programs reeling from state cuts, including Health and Human Services. The estimated impact on that department’s budget is $5 million to $6 million. Miller compared it to a large bucket with property tax money that used to fill smaller buckets now being itself emptied. Supervisors said they expect the state cuts to continue. “We have to realize that the state was running a structural budget deficit in good times and is going to continue to do so,” Supervisor Kirk Uhler said. “I don’t see how the budget or the state is going to fix itself,” Supervisor Robert Weygandt said. “It won’t turn around – as it has done in the past – completely. We need to look at three or four years down the road.” The Journal’s Gus Thomson can be reached at gust@goldcountrymedia.com.