San Benito supervisors hear Baker Tilly review showing multi‑year budget ‘snowball’; direct CAO to amend budget

Baker Tilly consultants presented a multi‑year analysis of San Benito County’s finances and told the Board of Supervisors the county is facing a structural imbalance between recurring revenues and ongoing expenditures that has accumulated into a multi‑year shortfall.

The analysis, presented by Steve Toler and Matt Stark of Baker Tilly, found large year‑to‑year swings driven by one‑time revenues (pandemic/grant receipts, developer fees, insurance settlements), conservative revenue assumptions and multiple capital projects that were budgeted but not completed. Steve Toler said, “what it identified is that there is a structural imbalance between the revenues … for the next year and the expenditures.” Matt Stark summarized the pattern: “the county was able to, budget for what looked like significant deficits,” then close them with one‑time items and underspending, producing large swings in fund balance over successive years.

The consultants’ numbers and board discussion

Baker Tilly reported that adopted budgets in recent years showed large deficit gaps (the adopted fiscal 2026 budget was discussed at roughly $98.7 million in appropriations), but actual year‑end results repeatedly benefitted from higher‑than‑budgeted property taxes, episodic one‑time revenues and lower‑than‑budgeted spending. The firm said the county’s general fund preliminary close for fiscal 2025 showed an estimated deficit of about $9.6 million (which could change as year‑end closing continues); consultants noted a projected transfer tied to Proposition 172 of roughly $4.3 million that had not been booked at the time of their pull of the data.

Baker Tilly outlined reserve and policy context: current county reserve targets discussed were an operating reserve of about 15% of the operating budget, an emergency reserve of about 5% and a small disaster reserve (the consultants cited a prior county policy that had produced segmented reserve buckets). They reviewed special revenue and capital funds, noting special revenue fund balances had been large in prior years (combined totals the…