Merced County flags midyear budget shortfall and warns federal HR1 could deepen pressures

At its March 17 meeting the Merced County Board of Supervisors received a midyear budget presentation that projected a year-end deficit for fiscal year 2025–2026 despite some current-year savings. A county staff member told the board that the anticipated shortfall is largely driven by state and federal decisions and rising local costs and that staff will continue to monitor conditions and present updates at the proposed budget hearing in June.

The presentation, delivered as the county works through the midyear review, said the midyear process allows staff and supervisors to evaluate options proactively and prepare for potential adjustments ahead of the formal budget process. The staff member said the county is seeing budgetary pressure from higher local costs and from policy and funding shifts at the state and federal levels.

Board members also received a briefing on HR1 from the California State Association of Counties, which staff described as a federal bill focused on spending reductions, tax revisions and program restructuring that could have significant fiscal impacts for counties nationwide. County staff said Merced County is analyzing the potential effects and identifying strategies to minimize local impacts, while noting that final outcomes will depend in part on how the state responds through its own budget decisions.

County staff emphasized that the midyear review is an early look and that more detailed numbers and proposed adjustments will be presented with the proposed budget in June. The board's next regular meeting is scheduled for April 7 at 10:00 a.m.