.Supervisors Approve Budget

Santa Cruz County's new budget is in the billions despite growing deficit that is expected to reach $24 million in coming years.

The Santa Cruz County Board of Supervisors on Tuesday unanimously approved the $1.1 billion proposed budget for the 2023-24 fiscal year, including a $731 million General Fund.

While the county’s financial outlook takes into account slowing revenue growth, it funds community priorities such as the South County Government Center on Westridge Drive, a new Children’s Crisis Stabilization Center, design of the Freedom Campus Health Care Center, completion of the Live Oak Library Annex and Aptos Library and the creation of a Master Plan on Aging, says county spokesman Jason Hoppin.

The budget talks this year were underscored by the financial consequences of recent natural disasters. The CZU fires and the storm and the flood damage from the atmospheric river storms in January, February and March have have put the county in what budget manager Marcus Pimentel described as “testing, trying times.”

“When we were in the middle of it in January and February, it was hard to see an end that looked smooth,” Pimentel says. “And yet it got there and I think it’s due to the dedication of people that are putting in 70, 80, 90 hours in a week to make sure they were doing all their dual or triple duties.”

The county is still waiting on $100 million in federal and state reimbursement–$67 million from the former and roughly $50 million from the latter, Pimentel says.  

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“We all know that this particular budget cycle has been incredibly challenging,” he says. 

Budget managers nationwide are also girding for an impending recession that financial experts say is all but a certainty. Pimentel predicts a growing deficit that could reach $24.5 million by 2027/28.

Also included in this year’s budget is funding for inmate medical and behavioral health care, and completion of a new DNA laboratory.

Part of the county’s financial troubles stem from the way it collects its taxes.

With a 9% sales tax rate, the unincorporated county collects less revenue than Watsonville and Scotts Valley, which collect 9.75%, and the city of Santa Cruz, which collects 9.25%.

In addition, the County collects just 13 cents out of every property tax dollar, which is lower than most counties. This despite half of County residents living in unincorporated areas, which is a much larger share than other counties.

The county is also facing increasing costs due to inflation, employee retention and retirement costs and increased costs for disaster response due to climate change. All of these are problems that county administrative officer Carlos Palacios says are likely to worsen.

“As we know we live in the second most unaffordable county in the whole country, when you combine bouncing prices to median wages,” he says. 

The approval was the conclusion of a multiple-day hearing beginning in late May that included presentations from every department.

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