An update on the status of the County budget and a report on what to expect in planning for fiscal year 2026 – 27 went before the Board of Supervisors on Tuesday.
The presentation included updates on several factors that impact the County’s budget.
SANDAG’s principal economist, Naomi Young, provided details about regional economic conditions. Young said data shows the region’s growth trails the nation and she pointed to a rise in prices, an uneven labor market and greater exposure to federal policies on trade and the border.
When it comes to the state’s budget, County Acting Chief Financial Officer Amy Thompson provided an update on the Legislative Analyst’s Office (LAO) fiscal outlook. State and federal funding make up nearly half of the County’s budget, and those funds must be used to operate required programs like Medi-Cal, CalFresh and CalWORKs. The LAO’s outlook cites concerns over high borrowing costs, new tariffs and uneven business activity and projects a state budget shortfall of nearly $18 billion for the coming fiscal year.
While acknowledging the challenges ahead, County staff did report some positive news. The County’s retirement fund has had a strong performance over the past few years, and savings are being built into next year’s budget.
In addition, a report on the current budget’s first quarter projections showed that three of the County’s business groups had a positive balance. The County had a negative first quarter fund balance projection overall of $7.3 million, impacted by a Public Safety negative fund balance of $28.4 million. This was due to salary adjustments, higher costs for health services contracts for incarcerated people and increased costs to house the daily jail population related to Proposition 36 which reclassified some misdemeanor drug and theft crimes as felonies. Overall, the number represents 0.1% of the budget and the County’s fiscal team is working with the Sheriff’s Office to find solutions.
All of the factors presented to the Board of Supervisors are being considered as part of the five-year financial forecast leading up to the Fiscal Year 2026-27 budget. County departments are required by California Government Code to submit budget requests on anticipated needs. At this point in time, ongoing requests come to more than $180 million and one-time requests to more than $310 million. County staff will coordinate strategies to present a balanced recommended budget to the Board of Supervisors as required by law. In this challenging fiscal environment, the County will focus on mandated programs and review the effectiveness and impacts of discretionary programs, while also considering equity impacts. Staff acknowledged difficult decisions will need to be made as part of balancing the budget.
At today’s meeting, the Board also approved a range of recommendations and budget adjustments following the quarterly report to support a variety of programs and resources. Learn more about the fiscal update to the Board.
County Supervisors will also hold a budget workshop during a Board meeting at 3 p.m. on Jan. 27. An evening session for community input on budget priorities will take place later the same day at 5 p.m.
