Santa Barbara County has so far navigated the pandemic-fueled recession, but the relentless downturn is not ending anytime soon. The supervisors grappled with the five-year county fiscal forecast on Tuesday, ultimately preparing for three different scenarios.
“I’m shocked at how many businesses have survived through this tough COVID recession,” said 1st District Supervisor Das Williams. “I’m shocked at how many people are still getting by, barely. At some point the shoe drops. And it will affect our revenue.”
Jeff Frapwell, the county’s budget director, explained that he and his team created three different budget scenarios that depend on how severe the recession becomes over the next five years. The first is the mild recession, the second is the baseline scenario, and the third is in the case of a pronounced recession.
Because of the recession, the “gaps” between county expenditures and revenues are larger and have to be filled little by little each year, rather than all at once over the five years. In the best scenario, there is a projected $11.6 million gap to fill over the next five years. In the baseline example, there is a $27.2 million gap. And in the worst case scenario, the county will have to fill in a $39.4 million gap between now and 2025.
Williams quipped that these forecast reports are historically “dour” in nature, but because of the pandemic he believes the projections are spot on this time. The key takeaways early on in the presentation were clear: there are many unknowns to budget around and it may be time to look to cost-cutting initiatives now.
Cannabis may also come in to help fill some of the gaps. The county received $12.2 million dollars in cannabis tax revenue in the fiscal year 2019-20 and its currently projecting $14 million in 2020-21. The five-year forecast assumes it will generate $16.7 million in 2021-22 and 15 percent increases each year after because cannabis is considered “recession-resistant.”
In the forecast, cannabis tax dollars go to fully fund cannabis enforcement and cannabis program administrative activities. It also goes to previously funded board priorities such as libraries and new planners in the county’s Long Range Planning Division.
There were five main themes for the county’s main fiscal issues: legislative and policy changes, deferred maintenance backlog, investment in technology, and facility conditions. Overall, every issue Frapwell and his team predict in the coming five years fall under one of those categories.
For example, a legislative and policy change happened in September when Governor Gavin Newsom signed Assembly Bill 1869, which made California the first state in the country to repeal administrative fees in the criminal system. As a result, Santa Barbara County Probation will take a projected $1.9 million per year hit, the Sheriff’s Office a projected $465,000 per year hit, and the Public Defender’s Office a projected $50,000 per year hit.
Another example is the county’s deferred maintenance category, which altogether has a backlog of $377 million. In the innovations category, the Holistic Defense Program ran through the Public Defender’s Office costs the county $650,000 a year.
Though some supervisors like Williams thought the forecast was severe, 4th District Supervisor Peter Adam felt it still wasn’t enough. This was Adam’s last five-year forecast as a supervisor, so he made his stance known. He felt there is too much “status quo” with budget choices when the pandemic calls for more dire action.
“If this thing [the pandemic] gets as bad as some people are saying it’s going to get when the rope comes tight on all of these lockdowns, I hope you guys have the ability to take some drastic actions and tighten the belt a lot,” said Adam. “Maybe we’ll be the better for it for a decade, instead of running the county into failure.”
The board will review the budget again in December.
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