Local budget mess is back again

Many Mid-Valley residents might have thought the state budget's woes were largely over when legislators agreed to a deal last month.

But for budget planners in Yuba and Sutter counties, the process hasn't stopped, with regular monitoring of what monies are coming in at the local, state and federal levels, and whether they'll match what needs to go out.

Though counties have some discretionary money in their budgets, most of their dollars come from the state with mandates to be spent on certain programs, such as health and human services.

Further complications loom this year, with the state's legislative analyst warning late last week that the state's 2009-10 budget starts with an $8 billion deficit even if voters sign off on all the patches in the May 19 special election. Rejection of those measures would double the deficit.

For now, officials in Sutter County are watching, but not panicking, said assistant county administrator Stephanie Larsen.

"Sutter is in pretty good financial shape. We've got good reserves," said Larsen, who oversees the process of crafting a county budget for the fiscal year that begins July 1. "We don't know what will happen with the special election."

The county largely ducked big blows in the budget proposal previously approved, she said.

But some areas are in flux. For example, voters could approve a measure on the May 19 ballot that would take away county money designated for mental health, she said.

Because that money is designated for programs the county hasn't established yet, she said, that option would be better than cutting from programs already established.

Also uncertain is whether Sutter County will get a new county courthouse.

Larsen said the county ranks 12th in the state for such projects, and administrators have a site in mind near the existing county jail on Civic Center Boulevard, with plans for an underground tunnel to transport defendants between the two buildings.

In Yuba County, assistant county administrator Randy Margo said the budget is in workable shape, but the new $8 billion gap is troubling.

"It depends on whether the state takes the scalpel or the meat cleaver to deal with it," said Margo, who, like Larsen, oversees the county's budget.

The scalpel approach, he said, would be to take away from promised backfills to law enforcement, for example. The meat cleaver would be reminiscent of what happened in the mid-1990s, when the state shifted half of property tax revenues from local governments to the state.

What complicates the situation for Yuba County is that 80 percent of its residents live outside one of the two incorporated cities, Margo said. That means public works, law enforcement and other services are the county's responsibility.

Though state officials hoped the federal stimulus package would solve some of the state's problems, Margo said, the legislative analyst's new forecast acted as if the state would get less than $10 billion from the package.

If that's true, it would trigger another $1.8 billion in income taxes, and $950 million in additional cuts.

However it plays out, another $8 billion cut from the state's budget is likely to reverberate locally.

"Obviously, if they have another $8 billion in deficit, that's a hole they have to fill," Larsen said.

How the hole will be filled is another issue. To date, Democratic legislators say all ideas need to be on the table, while their Republican counterparts — as they did during previous negotiations — have ruled out taxes as a solution.

For budget watchers like Larsen and Margo, state crises are virtually routine.

"It seems like it's always a budget crisis," Larsen said. "You always have to keep an eye on it."

Margo said he wonders how the state grows its economy once this downturn abates.

"We're in a difficult situation, competing with other states, other countries, the globalization that everyone talks about," he said.

Lawmakers and state officials haven't broached how to best work in that environment, he said.

Contact reporter Ben van der Meer at 749-4709 or bvandermeer@appealdemocrat.com.