Merced County leaders adopt ‘fiscally judicious’ temporary budget amid economic concerns
Merced County supervisors adopted a proposed $983.4 million budget for the new fiscal year Tuesday, outlining a “fiscally judicious” spending plan officials say will guide the county through an uncertain economic future.
The proposed budget will serve as a temporary operating plan until the county’s final 2022-23 budget is approved in September. The board unanimously voted to adopt the preliminary spending Tuesday.
As presented at the Board of Supervisors meeting, the budget is balanced with local revenues projected at $112.9 million.
Revenues rose by $7.6 million from last fiscal year’s $105.3 million. Interest, sales tax and property tax accounted for much of that increased.
Local revenue has remained relatively stable throughout the COVID-19 pandemic compared to other counties that rely more on tourism and related industries.
But Merced County officials acknowledged that an influx of federal and state stimulus packages have played a notable role in cushioning the county’s finances.
“However, the federal and state stimulus packages are one-time revenues and the county remains cautious about the future of the economy,” the proposed budget overview said.
County staff and officials on Tuesday emphasized their belief that one-time revenues should only be applied toward one-time investments, as ongoing future financial obligations will require stable and reliable funding resources.
If the final fund balance shows growth from initial estimates between the proposed and final budgets, county staff recommended supervisors prepare the county for the future by putting those additional resources toward reserves, capital projects and paying off unfunded liabilities.
Assistant CEO David Mirrione echoed that guidance while addressing the board Tuesday, stating, “With economic uncertainty dominating the headlines, we would encourage you to continue this (cautious) approach.”
Soaring gas prices, inflated costs of necessities and weakening consumer confidence have shaken up U.S. residents’ faith in the economy, with some speculating about a possible recession in the near future. Still, President Joe Biden said recently that he doesn’t believe a recession is inevitable, despite those concerns.
Some supervisors voiced their own doubts about the economy’s fate during Tuesday’s budget talks, but stated that they felt the proposed fiscal plan positions the county well to weather a potential downturn.
“The crash is coming,” Supervisor Lloyd Pareira said. “I’m just thankful for a good and solid budget.”
More on the Merced County 2022-23 budget
The preliminary budget plan represents an increase of $138.6 million from last year’s final budget of $844.8 million, according to budget documents.
Much of that boost is due to the $79.6 million in appropriations related to the John Latorraca Correctional Center expansion and renovation project. Another $25.2 million in is attributed to appropriations for American Rescue Plan Act projects and $24.1 million for health and human services programming.
An additional $8.5 million in appropriations is tied to public safety, plus another $1.2 million related to increases in justice system programming, management infrastructure and municipal support.
Of the overall budget, the county’s general fund accounts for $684.1 million. That’s a 7.8% increase since last budget year. Both general fund revenues and expenditures have steadily increased since the 2018-19 fiscal year.
General fund dollars pay for basic county services like public safety or health and human services. The general fund is the portion of the budget that county supervisors have most control over.
Health and human services accounted for the largest chunk of the general fund budget at $400.1 million. Public safety represented the next largest portion at $144.2 million.
Support services and capital improvement projects took up $75.7 million of the general fund while municipal and county-wide services accounted for$64.1 million.
County staffing also went up by 68 positions since the 2021-22 approved budget. Many of those additions were within the Human Services Agency, county officials said. This fiscal year’s proposed budget includes a total of 2,350 permanent county positions.
