Board accepts midyear budget update as county projects modest revenue slowdown; reserve policy changes recommended

County finance staff presented a midyear budget update March 25 and the Board of Supervisors accepted the report and approved adjustments to reserves designed to increase the county’s fiscal resilience.

Josh (budget director) told the board that the county’s all‑funds budget for the current fiscal year is roughly $815 million and that most discretionary revenue comes from property tax. Staff reported a downgrade to the three‑year property tax growth forecast — now projected at roughly 4% in the next two years and 4.5% the following year — and noted fiscal risks tied to federal grants and uncertain macroeconomic conditions. The county’s exposure to federal funding was highlighted: staff said Marin received more than $100 million in federal grants and program revenues and that a 5–15% cut to those programs could force difficult choices.

Staff nevertheless presented a balanced three‑year forecast under current assumptions and proposed a fiscal policy for prioritizing one‑time savings: (1) fund retiree liabilities and other long‑term obligations, (2) address deferred maintenance and capital needs, and (3) fund pilot programs and service enhancements only after those needs are addressed. Staff recommended increasing an economic uncertainty reserve consistent with board fiscal policies and using $1–$5 million of current year savings to fund one‑time service enhancements such as participatory budgeting, campus improvements, and housing‑related investments.

Supervisors asked for details about sales tax exposure, pension and OPEB progress, and how the county would respond if federal funding cuts materialize. Staff said the county has reserves — pension stabilization, budget stabilization and a state/federal revenue loss reserve — to allow a glide path for restructuring if federal funds are reduced; the board directed staff to continue monitoring and to return with final proposed budget materials in May. The board voted to accept the midyear update and to approve the staff recommendations on reserves.

Budget staff said progress has been made on unfunded liabilities: the county’s pension funded ratio was reported at around 94%, pension obligation bond payments are largely on track and retiree health funding is about 58% funded, with policies in place to continue allocating savings to OPEB. Staff also reiterated that bargaining and labor negotiations continue and that any labor settlements will be reviewed with the board in the May hearings.