Sonoma County is projecting a General Fund deficit of $13 million during the 2024-25 fiscal year with more annual deficits to follow through 2025, Deputy County Administrator Peter Bruland informed the Board of Supervisors as part of his five-year fiscal forecast Tuesday. The projection is based on an anticipated decrease in property tax growth, reductions in one-time funding, and an increase in pension costs due to investment declines in pension funds.
The General Fund projections are designed to present a view of the county’s fiscal health and provide advance views into potential future issues or opportunities given existing economic conditions and county revenue sources. While they only cover about 26 percent of the total Fiscal Year 2022-23 budget, they account for most of the county’s discretionary funding and a majority of county staffing costs.
“The development of General Fund projections during the fall sets the basis for programming discretionary sources in the coming fiscal year,” said Sheryl Bratton, County of Sonoma Administrator. “By estimating how much general-purpose revenue will be available, county departments that depend on the General Fund to deliver services and programs to our community can be more informed and better prepared to weather uncertainty.”
On June 17, the Board of Supervisors adopted a balanced budget for FY 2022-23. Revised estimates project a General Fund surplus of $7.4 million based on an anticipated increase in FY 2022-23 revenue from property tax, sales tax, and Proposition 172, a half-cent sales tax in support of local public safety functions. These increases are partially offset by reduced projections in revenue from the Documentary Transfer Tax and Supplemental Property Tax, which are dependent on property sales and may slow as interest rates increase.
Under current assumptions, despite an anticipated FY 2023-24 budget surplus of $1.6 million, absent certain policy changes the county General Fund is projected to enter a deficit of $13 million in FY 2024-25, growing to a projected $16 million in 2027-28.
The five-year General Fund fiscal projections offer an illustration of expectations for General Fund sources and uses for the current year and each year from FY 2023-24 through FY 2027-28. The projections exclude one-time uses and investments, such as those programmed by the Board of Supervisors during FY 2022-23 budget hearings for one-time or time-limited purposes.
Consistent with county policy aimed at creating structurally balanced budgets, projected deficits are intended to illustrate that adjustments to address competing needs may be necessary, and are not a projection that the county will run a deficit. By law, the Board of Supervisors is required to adopt a structurally balanced budget each year.
Budget development is a months-long process that begins in the fall of each fiscal year and culminates with Budget Hearings and the adoption of the budget, which are scheduled for June 2023. Budget workshops take place in April in advance of budget hearings.
The Fall 2022 Five-Year Fiscal Forecast and Budget Update is available here:
https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=5921718&GUID=B81A2F2E-D25E-4C86-BD30-2372A86E461F.
County of Sonoma Financial Policies for 2022-2023 are available here:
https://sonomacounty.ca.gov/administrative-support-and-fiscal-services/county-administrators-office/budget-and-operations/financial-policies-for-2022-2023.
