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County Budget Unknowns: Actions Needed Throughout Year to Keep Budget Balanced

IMPERIAL COUNTY — Although the new fiscal year started July 1 and an Imperial County budget has been in place since late June, the county won’t likely get the first true picture of its finances until a first budget update at the end of August.

While the county Board of Supervisors passed a balanced fiscal 2020-2021 budget, 3-2, on June 23 anticipating lost revenues and other expenses tied to the ongoing COVID-19 pandemic, the county — at the urging of Gov. Gavin Newsom — has rolled back in some ways that have yet to fully reveal themselves in terms of potential loss of sales-tax revenue.

Some nonessential businesses that were allowed to open to limited foot traffic, have rolled back to curbside delivery. It’s been apparent locally that some of those businesses have opted to close until the county moves further forward in its Roadmap to Recovery and some restaurants have begun to close their operations due to lack of business.   

“It is anticipated that sales-tax-revenue projections will be impacted due to COVID-19 and public health order’s stay-at-home limitations and business restrictions,” county Public Information Officer Linsey Dale wrote in an email.

Dale added that the 2019-2020 fiscal year budget, which ended June 30, will be closed out by the end of this month, at which time there will be an accurate general fund balance for the previous year. 

Accepting a proposal to balance the budget was not a unanimous decision as Supervisors Jesus Escobar and Ryan Kelley questioned staff about transferring funds and other decisions made to balance the overall $531 million budget. They voted against the budget June 23, while Supervisors Luis Plancarte, Mike Kelley and Ray Castillo voted for the budget.

Escobar asked how the county could justify an increase to its general fund when it already faced financial strain before COVID-19.

The county was looking at a more than $17 million deficit in its budget, though that will be made up for in transfers from realignment and trusts, as well as reducing overtime, out-of-county travel, extra help and special department expenses. The county board also approved freezing vacant funded positions to help balance the budget. 

“Overall, this was a particularly challenging budget process,” said Deputy County Executive Officer Mayra Widmann during the June 23 meeting. “We are obviously working through the pandemic. There are a lot of unknowns as far as the true tax impact.”

Some areas of the county’s budget are set to increase, with public assistance, public safety, health and sanitation seeing the biggest increases. They combine for more than $29.5 million of the $31 million increase from the approved 2019-2020 fiscal year budget.

This increase comes as the county faces more than $2.5 million less in projected sales-tax revenue as compared the previous fiscal year. However, intergovernmental revenue is expected to increase by $7 million because of federal and state funding increases to the Department of Social Services.

Overall, the economic picture isn’t looking positive, said Michael Bracken, managing partner and chief economist for Development Management Group, which is a contracted economic consultant for the county.

“Please don’t shoot the messenger, but it’s still bad out there,” Bracken said during the June 23 meeting.

However, the true economic impact of COVID-19 on the budget won’t be known until sales tax figures become available at the end of the (June), he said. Sale-tax figures are released on a quarterly basis.

While the board approved a proposal to balance the budget, there is still much discussion that will take place, Plancarte, who is also board chairman, said at the June meeting.

“Obviously, we need to be very cautious of the budget going forward,” he said. “Over the next week this will be moving tiles. It will be constantly adjusting.”

There are still many unknowns including what the state and federal government will be doing in the coming weeks, he added.

“Today, we took a very important decision and that is to begin the process. We can adjust as we go and we will have plenty of opportunities to fine tune as we go.”


This story is featured in the Jul 09, 2020 e-Edition.