Thursday May 06 2010
The financial state of the county
By: Clark Gehlbach, President of the Placer Public Employees Organization
For each of the past six years, Placer County has stated that the next year’s budget had a shortfall. At the end of each of these fiscal years, the Comprehensive Annual Financial Review by the Placer County Auditor reported large surpluses. This is not an accident. This is accomplished by consistently and purposefully overestimating expenses during the budget process. In fiscal year 2003-04, Placer County overestimated general fund expenses by $33.3 million. In fiscal year 2004-05, Placer County overestimated general fund expenses by $24.3 million. In fiscal year 2005-06, Placer County overestimated general fund expenses by $40.2 million. In fiscal year 2006-07, a year in which Placer County reduced health care benefits for PPEO employees, general fund expenses were overestimated by $42.8 million. Total revenues exceeded expenses by $111.2 million. In fiscal year 2007-08, a year when Placer County implemented a hiring freeze due to “difficult economic times,” general fund expenses were overestimated by $39.4 million. Total revenues exceeded expenditures by $73.7 million. In fiscal year 2008-09, a year in which Placer County imposed four furlough days on employees and closed departments during those days (reducing services to the public), general fund expenses were overestimated by $31.3 million. Total revenues exceeded expenses by $55.2 million. In the first nine months of fiscal year 2009-10, a year in which employees were forced to take 12 days of furlough, Placer County’s expenses are even further under budget than last year. So, when the CEO sends a memo to the Board of Supervisors on Feb. 23, stating that there is a projected $23.6 million budget deficit, this claim should be viewed with extreme skepticism. It is almost certain that there is $30-plus million of padding in the projected expenses, which will more than make up for the projected deficit. The analysis of expenses so far this fiscal year bear this out. Placer County residents are being told that employees and county departments need to keep making greater and greater sacrifices, and provide fewer services to the public, to balance the budget. This is not true. Placer County has enough revenue to provide necessary services without cuts. It has enough revenue to fully fund its departments. It has enough revenue to pay its employees. In the 11 fiscal years between 1988 and 1999, Placer County, under a former CEO, averaged general fund surpluses of $1.56 million. Even in tough economic times, Placer County now manufactures surpluses 20 times as large, every year. The CEO recently “responded” to an article by Jim Ruffalo, which cited the massive yearly surpluses. However, in this response, the CEO did not dispute any of the yearly surpluses. He stated that, “Placer County has kept budgets balanced as revenues drop, and ended each fiscal year with a healthy balance that can be carried over to the following year.” This is an admission that the budget does not use realistic projections. A budget is balanced when revenues equal expenditures, not when it produces a massive surplus at the end of every year. He then falsely states that using these carry-over funds to fill vacant positions would be short sighted and likely cause layoffs later on. The actual result of filling these vacant positions would be to reduce the yearly structural surplus that he and the board like spending every year on their own priorities. Carry-over funds are not “one-time funds” if they happen every year, and the current budget is rigged to create them every year. The CEO says he welcomes public input and wants the public to stay informed. However, when every budget discussion starts with the lie that there is a deficit, and all discussions are focused on what expenses to cut, the public is placed in a position of false choices. The decision is not whether to lay off employees and cut public services to solve the $23.6 million deficit, or impose furloughs and cut employee benefits and cut public services to solve the $23.6 million deficit. The real decision is whether to cut services to the public and wages to employees to fund yet another $50-plus million surplus in Placer County, or whether to properly fund county departments without cutting public services and only have a $25-plus million surplus. That is the real decision. The CEO needs to start using real numbers when building a budget and stop crying wolf every year. With expenses constantly overestimated by $30-plus million, and total yearly surpluses of $50-plus million, there is no real deficit. Clark Gehlbach, a local attorney, is president of the Auburn Union Elementary School District. He is also a member of the Board of Governors, State Bar of California and is president of the Placer Public Employees Organization.