County reports midyear budget improvement but DHHS and roads remain in the red
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Summary
Deputy CAO Jessica Maciel told the board the FY25‑26 midyear shows an improved outlook (projected general fund net costs down to $9.1M shortfall, $11.7M better than adopted) and an available FY26‑27 fund balance of $26.4M; DHHS, roads and aviation funds still carry negative balances. Board approved staff recommendations by unanimous consent.
Deputy County Administrative Officer Jessica Maciel presented the county’s fiscal midyear review and FY26‑27 outlook on Feb. 11, telling the Board of Supervisors the midyear shows a meaningful improvement over the adopted FY25‑26 budget but ongoing structural pressures remain.
Maciel said the FY25‑26 budget was adopted with a $12 million structural deficit and $20.8 million overall deficit. Midyear projections show general fund net costs exceeding revenues by $9.1 million — an $11.7 million improvement over the adopted budget — driven largely by $4.2 million in increased discretionary revenues (property tax, Measure S, transient occupancy tax and interest), departmental expenditure savings and limited use of contingency reserves.
She flagged continuing negative balances in several funds: the Department of Health and Human Services (DHHS) reported a cumulative negative balance primarily tied to social services and behavioral health funds, while the road and aviation funds continue to run deficits. Staff recommended policy steps including modest general fund allocation increases for departments, a conservative approach to one‑time requests (one‑time appropriations capped at $250,000 each), and deallocation of unbudgeted positions to improve transparency.
"The anticipated fund balance available to fund FY26‑27 is $26.4 million," Maciel said, while warning the predicted FY26‑27 shortfall is about $17.78 million and structural deficits persist. She recommended setting contingency to cover ongoing labor negotiations and urged caution in committing long‑term expenses.
Supervisors discussed Measure Z allocations, the possibility of using prior fund balances, and the administrative cost of review processes. After discussion Supervisor Bushnell moved to adopt staff recommendations for the midyear adjustments and related actions; the motion was seconded and approved by unanimous consent (5‑0).
The board asked staff to return with implementation details on any recommended program allocations and to continue working with departments to manage deficits and vacancy/deallocation strategies.