As noted above, County expenditures and revenues at mid-year were within acceptable parameters given the Board approved budget. The difference between budgeted expenditures and revenues are due to prior year encumbrances, restricted reserves, and other carry forwards. The variances in anticipated expenses and revenue receipts are noted at the mid-year.
Revenues
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Revenue from State and federal sources are typically late in being realized because much of it is based on expenditure claims paid in arrears. Normally departments that rely on State and federal revenue experience a two to three-month lag in revenues.
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Prop 172 combined public safety sales tax revenues were down compared to the same months in 2015. The County's sales tax consultant projected little growth for FY 2016/17 and it is expected that the budgeted amount will not be realized in the current year.
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AB109/Public Safety Realignment revenue is budgeted at $21.5 million and is being allocated by the State on a monthly basis as anticipated.
Expenditures
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Normally salary costs are understated at mid-year. Some reduction in permanent salary costs is anticipated in the second half of the fiscal year due to retirements, which tend to occur in March, however, the majority of these savings will be spent in retiree pay-outs.
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Employee benefit costs are normally understated at mid-year because the budget includes appropriations for health insurance cost increases that do not become effective until the end of the second quarter. Actual expenses for employee health insurance will increase the second half of the year. These increases will be significant this year due to negotiated changes to healthcare subsidies.
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Service and supplies costs are generally understated throughout most of the fiscal year because of the time required to process payments to vendors and contractors. This payment cycle averages one month in arrears. Additionally, departments tend to wait later in the year to make purchases to ensure that resources are not needed elsewhere.
General Purpose Revenue
General Purpose budgeted revenues total $409.2 million spread over 28 accounts. These revenues consist primarily of $341.3 million in taxes for current property. Of the taxes for current property, $204.6 million is current secured, $5.0 million is supplemental, $8.3 million is unitary, $116.6 million is Property Tax in Lieu of Vehicle License Fees (from non-realignment vehicle license fees) and $6.8 million is current unsecured. The current year budget included a 5% property tax growth rate. The actual growth rate was 6.01%. Other significant budgeted revenue is real property transfer tax ($7.0 million), sales tax ($14.0 million), and earnings on investments ($2.0 million). Based on six months of experience, General Purpose Revenues are expected to exceed budgeted amounts by approximately $19 million, almost half of that is due to one-time RDA subordinated pass through payments from prior years.
The over-all County budget is balanced and individual departments, with the exception of the District Attorney and Public Defender, balance as summarized below:
District Attorney
At mid-year the District Attorney’s Office is projecting an over expenditure of approximately $585,260. The department’s expenditures are currently projected to exceed the budget for temporary salaries by $1.66 million and for outside professional services by $542,845; however, the impact on net County cost is partially mitigated by cost savings from vacancies within the department. In addition, Proposition 172 sales tax revenue is estimated be under budget $475,573. The County Administrator’s Office has been providing quarterly updates to the District Attorney’s Office on the status of Proposition 172 sales tax revenue during the year and will continue to work with the District Attorney’s Office in an attempt to achieve a balanced budget by year-end.
Public Defender
At mid-year the Public Defender’s Office is projecting an under expenditure of $2,865. The department’s expenditures are currently projected to exceed the budget for temporary salaries by $92,000 and for witness fees and expenses by $53,000; however, the impact on net County cost is slightly mitigated by cost savings from minimal vacancies within the department during the year. The Public Defender’s budget is highlighted in this report due to the sensitivity of the two cost drivers discussed above and the potential for each to result in an over expenditure for the department at year-end. The County Administrator will continue to work with the Public Defender’s Office in an attempt to achieve a balanced budget by year-end.
Conflict Defense
At mid-year the Conflict Defense program is projecting an over expenditure of $1,300,000. The Contra Costa County Bar Association provides indigent defense services the accused in cases where the Public Defender has declared a conflict of interest or refuses to represent a client due to caseloads. Over the course of FY 2016-17, the Public Defender has continued the practice of refusing representation due to caseloads for misdemeanors, but has increased this practice for felony filings, which generally take substantially longer to adjudicate and at a higher cost than misdemeanors. The County has a statutory obligation to provide for indigent defense services, including for defendants represented by the Bar Association.
Conclusion
As noted, the overall County budget including the General Fund budget is balanced. The County Administrator will return to the Board of Supervisors on April 18 with the Recommended Budget for FY 2017/18 and the Planning Budget for FY 2018/19. It is anticipated that the Board will adopt a Final Budget on May 9.