Mid-Year Budget Review Shows County Finances Remain Strong
The County of San Mateo’s finances remain strong but budget leaders yesterday cautioned the Board of Supervisors to remain fiscally prudent as a buffer against future unknowns and to stay focused on providing critical programs and services despite the growing noise of discontent on the national level.
County Manager John Maltbie offered the caution while providing a mid-year budget report and Five-Year Capital Improvement Plan at the Feb. 27, 2018 Board meeting. The Board’s annual mid-year review is the opportunity to ensure expenses and expenditures are in line with estimates and provide direction for preparation of the next year’s budget.
The Board of Supervisors will consider the recommended FY 2018-19 budget in June with adoption in September.
The picture Maltbie presented today was promising. The County closed the last fiscal year with a $31 million surplus which contributed to a general fund reserve of $190 million. For a third year in a row, property tax revenue growth exceeded 7 percent. The general fund is projected to end Fiscal year 2017-18 with a $411 million balance, exceeding the preliminary target by $118 million due to general purpose revenue growth, and considerable budget savings from vacancies and one-time projects either in progress or delayed.
The County is also on track to significantly slash its unfunded pension liability by 2023 and remains one of only a handful of counties in the state with AAA ratings from both Moody’s and Standard and Poor’s.
However, ongoing expenditures are expected to grow approximately $116.8 million over the next five years — essentially the same pace as ongoing revenues, leading Maltbie to ask departments during the next budget cycle to consider hypothetical reduction scenarios.
The County’s strong financial position comes at a time when the local economy is robust as well. Unemployment is at 2.4 percent, office vacancy rates are at 8.5 percent, construction activity for the next 24 months is expected to remain strong, and annual per capita personal income increased 4 percent to $105,721 between 2015 and 2016.
But challenges and unknowns remain and are exacerbated by breakdowns in a sense of community, said Maltbie who further urged the Board not to be distracted from the continuing work of building inclusive communities with affordable housing, stable and connected transportation and access to health care.
“We are fortunate to still retain a sense of community in San Mateo County — an understanding that we are stronger together and that there is much more that unites than divides us,” Maltbie wrote in his budget message. “We share the ‘can do’ attitude of the entrepreneur that solves problems and improves lives. We shouldn’t take this for granted.”
One potential problem Maltbie identified is fire protection in the county. Pointing to the catastrophic fires just north in Napa and Sonoma counties and in Southern California, Maltbie suggested the Board convene a task force to study those fires and lessons learned that can be applied in San Mateo County. Direction from this effort could impact fire and public works budgets, he noted.
Alongside the mid-year update, the Board also received the $852 million Five-Year Capital Improvement Plan (CIP). The $852 million plan, in conjunction with the budget, allows the County to align the appropriate financing and scheduling with the infrastructure needs of the Department of Public Works, Information Services, Parks and the Project Development Unit. The CIP includes rebuilding of the animal shelter in San Mateo, construction of the new Regional Operations Center, County Office Building #3 and a second parking garage at County Center, and Flood Park improvements.
The first two fiscal years of the CIP include planned expenditures but the final three are primarily for planning purposes and do not necessarily include a funding commitment.
The mid-year report and all budget documents and Five-Year Capital Improvement Plan are available online at https://cmo.smcgov.org/budget-policy-and-performance