Supervisors Call for List of Budget Cuts

Moving quickly to restore order to the county’s chaotic financial situation, the Board of Supervisors on Tuesday ordered its interim chief administrator to immediately begin identifying areas where $5 million in cuts will be made, a “bite-the-bullet” approach that received unanimous approval.

With Supervisor John K. Flynn home with the flu, the board’s fiscal conservatives--Frank Schillo and Judy Mikels--led an intense grilling of Auditor Tom Mahon on changes they say are necessary to bring stability to the budget.

Mahon said he agreed with their suggested reforms, including requiring department heads to explain and make up any shortfall within their own budgets and also to return any surplus funds to the county’s reserves.

“I support that 100%. If you can sell it, I’m all for it,” Mahon said.

Shot back Mikels: “To whom do we have to sell it?”

Mahon hesitated, then said, “The five board members.”

“OK, as long as we’re clear on that,” she said.

The auditor encouraged the board to move decisively, saying the county’s financial standing is at stake. In addition to a looming deficit, the county is facing a severe shortage of cash in its nearly $1-billion budget to pay its monthly bills.

“The rating agencies, the investors, the underwriters are going to be looking at what you are doing today,” Mahon told the board.

The board directed Interim Chief Administrative Officer Bert Bigler to return in January with recommended cuts. Bigler and Mahon will draw up a list of program cuts and vacant positions that can be eliminated in departments countywide.

At least $5 million in reductions will be made, supervisors agreed, and they say even greater cuts will be approved if necessary to bring the budget back into balance by June.

Moving to beef up the CAO’s budget oversight, board members gave Bigler authority to turn down department heads’ requests to shift unused dollars in their individual budgets to unscheduled expenses. Instead, any money left over at the end of the year should be rolled into countywide reserves, supervisors agreed.

“We have bitten the bullet with these recommendations and that is exactly what we needed to do,” Schillo said shortly after the 4-0 vote.

All the supervisors said they are prepared to make tough decisions in deciding how and where to make cuts. Decisive action now will make it easier to deal with any other hits the county’s treasury takes as a result of last year’s ill-conceived plan to merge the county’s social service and mental health departments.

“In no way is the board going to back away from doing the right thing,” said Supervisor Kathy Long, who supported the merger.

Penalties and payouts stemming from the merger have cost $11 million this fiscal year and are the main cause of the county’s current financial problems, officials acknowledged.

In a memo to supervisors, Health Care Agency Director Pierre Durand warned the lost dollars will continue to mount as the county determines the amount of annual Medicare revenue it is losing as a result of a federal review of public health clinics. An appeal of that review is ongoing.

Durand’s memo also documented other costs that contributed to a $4.1-million budget overrun at his agency, including $1.6 million in unexpected costs for housing the mentally ill and $1 million to implement billing supervision required by the federal government in a $15.3-million Medicare fraud settlement with the county.

After the board’s action Tuesday, Durand said he would scour his agency for ways to make up the shortfall. But the net cost to the county of running its public hospital and Behavioral Health Department is relatively small, Durand said.

“We’re going to make an assessment and make sure we are prepared for the budget session in January,” he said. “It will be a full discussion.”

Schillo and Mikels used Tuesday’s 90-minute budget session to intensely question Mahon on the county’s financial outlook and to ask, sometimes accusingly, why he did not act earlier to strengthen the county’s long-term fiscal health.

Schillo demanded, for instance, to know why Mahon and the CAO’s office do not prepare two-year budgets, a strategy he said would better alert the county to upcoming problems. Schillo said he favored having any dollars left over at year’s end be rolled into a reserve and not be made available for subsequent annual budgets.

“I’m trying to point out that there are items that show up in the budget at the end of the year. They should be taken into account when forecasting how bad the deficit is,” Schillo said.

Mikels asked for more detailed reports when department heads are projecting a budget shortfall and on the reason for the expected shortfall. In one testy exchange, Mikels asked Mahon why his reports to the board did not include an analysis of how a department’s projected budget deficit would impact the county’s general fund.

“Now you’re getting into what I like, but other people don’t like,” Mahon said.

Mikels’ retort: “The issue is what works. Not what people like.”

Bigler presented supervisors with a list of 581 vacant positions that are budgeted in the general fund. Some of the slots can be eliminated to make up a portion of the overall shortfall, Bigler said, but he added that this is only one of many options the county should consider.

The county’s law enforcement departments have 263 slots budgeted but unfilled, with the Sheriff’s Department making up the largest chunk with 135 positions. Social service and health departments account for 257 vacancies, administrative departments for 36 and agricultural and environmental programs for 25.

Department heads have been loath to eliminate these positions in past years, because they can use the unpaid salary and benefits as a sort of slush fund to pay for other projects, Schillo said.

“If it’s not in the pipeline for finding someone today, then [the position] is probably not urgent,” he said.

Long, however, advised caution in deciding which positions to chop. There are a number of vacancies in the Probation Department that are unfilled, in part because of a tight labor market, she said. Yet those jobs are critically needed to keep track of the county’s criminal offenders, Long said.

“We need to have a good analysis of which jobs are critical versus which jobs can provide us with extra money,” she said.

Mahon Tuesday called the New York bond rating firms that determine how much interest the county pays on its debt to report the board’s action. Standard & Poor’s said last week the county retains high marks for credit worthiness, but has been placed on a “watch” because of declining reserves and the current cash-flow problem.