Alameda County Fiscal Year 2020-21 Budget Workgroup Meeting Susan - PowerPoint PPT Presentation

Alameda County Fiscal Year 2020-21 Budget Workgroup Meeting Susan S. Muranishi, County Administrator Amy Costa, Deputy County Administrator Melanie Atendido, Principal Analyst Alma Balmes, Budget Coordinator April 30, 2020 COU N T Y OF ALAM EDA, CALI FORN I A

Overview  Economic Updates  County Financing  FY 20-21 Maintenance of Effort (MOE) Budget  FY 20-21 Funding Gap  COVID-19 Impacts  Pending Factors  Balancing Options − Countywide strategies − Looking ahead 2 COU N T Y ADM I N I ST RATOR’S OFFI CE

Economic Updates 3 3 COU N T Y ADM I N I ST RATOR’S OFFI CE COU N T Y OF ALAM EDA, CALI FORN I A

Unprecedented Rise in U.S. Unemployment 4 COU N T Y ADM I N I ST RATOR’S OFFI CE

19.3M person California work force 3.5M unemployment claims filed (18%) 13% of total claims were issued first-time payments or only 1 in 8 workers California lagging behind the national average 5 COU N T Y ADM I N I ST RATOR’S OFFI CE

Alameda County – Unemployment Rate (March 2020) 6% California 5.3 % 5% National 4.4 % County 4% 3.8 % 3% 2% 1% 0% 6 COU N T Y ADM I N I ST RATOR’S OFFI CE

Local Unemployment  Over 200 employers throughout the County have submitted Worker Adjustment Retraining Notification (WARN) notices to report temporary or permanent closures or laid off employees, impacting over 15,000 workers* *Includes numbers through March 2020 from the City of Oakland 7 COU N T Y ADM I N I ST RATOR’S OFFI CE

Major Losses in Retail Retail and Food Service Sales (Change from Previous Month) 8 COU N T Y ADM I N I ST RATOR’S OFFI CE

Stocks Will Revisit Coronavirus Crash Low 9 COU N T Y ADM I N I ST RATOR’S OFFI CE

Strained Housing Market & Household Incomes  Renters 30% Failed to pay rent by April 1st − Landlords foresee collections weakening in  Federal CARES Act May/June when tenants exhaust savings − Mortgage payment forbearances up  Homeowners to a year skipped mortgage payments 3.4M − Temporary relief from fees and nationwide charges 90% decline in buyer interest − No new foreclosure sales or evictions 80% decline in houses on the market 60% of buyers delaying purchases 11.5% drop in California home sales 10 COU N T Y ADM I N I ST RATOR’S OFFI CE

Modeling the Economic Impacts of COVID-19 “This is a natural disaster. There is nothing in the Great Depression that is analogous to what we’re experiencing now.” - Mark Zandi, Moody’s Chief Economist, Wall Street Journal, April 5, 2020 11 COU N T Y ADM I N I ST RATOR’S OFFI CE

Current Year – Potential Revenue Impacts Major Sales Tax Declines Projected: Revenue Impacts include: − Autos/Transportation − 1991 Realignment − Business/Manufactured Goods − 2011 Realignment − Construction/Building − Prop 172 statewide − Fuel − Measure A − Retail Sales − Unincorporated − Restaurants/Hotels 12 COU N T Y ADM I N I ST RATOR’S OFFI CE

Current Year Projections – Areas of Concern  Significant revenue impacts from Mid-March – June 2020  Dramatic declines in sales tax-based and other revenues − 1991 & 2011 Realignment − Prop 172 Public Safety − Measure A, Gas Tax/Fuel − Medi-Cal  Increased caseloads and unanticipated COVID-19 costs  Spending controls and reductions may be required for related programs and services  Immediate solutions to be implemented while planning for long-term effects to affected programs 13 COU N T Y ADM I N I ST RATOR’S OFFI CE

Revised Five Year Forecast 14 14 COU N T Y ADM I N I ST RATOR’S OFFI CE COU N T Y OF ALAM EDA, CALI FORN I A

Assumptions  Status quo projection on costs − Model does not include costs associated with the County’s COVID-19 emergency response  Model does not include the impact of federal and State emergency relief − Likely to result in increased revenue available to offset a portion of the cost of the emergency response 15 COU N T Y ADM I N I ST RATOR’S OFFI CE

Recession Scenarios Assumptions for Both Scenarios Recessions Modeled as Revenue Events Recession begins FY 2019-20  Moderate Recession Scenario  Severe Recession Scenario Revenue model reflects projected economic impacts of pandemic Spending at “Base Case” forecast level 16 COU N T Y ADM I N I ST RATOR’S OFFI CE

Five-Year Forecast – Projected Budget Gaps (millions) December 2019 and April 2020 $199.9 $200 $182.1 $169.1 $144.8 $142.9 $150 $118.2 $112.4 $93.2 $100 $86.8 $67.0 $50 $0 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 Base Case (Dec 2019) Adjusted Base Case (April 2020) 17 COU N T Y ADM I N I ST RATOR’S OFFI CE

Recession Scenarios – Appropriations & Revenues $4,100 Millions $3,900 $3,700 $3,500 $3,300 $3,100 $2,900 $2,700 $2,500 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 Forecast Forecast Forecast Forecast Forecast Base Case Appropriations Base Case Revenues Moderate Recession Revenues Severe Recession Revenues 18 COU N T Y ADM I N I ST RATOR’S OFFI CE

Prior Year Budget Balancing Strategies ($ in millions) $72.2 $68.5 $67.1 $65.9 $65.1 $60.4 $17.4 $30.9 $23.8 $27.3 $31.4 $25.2 $49.7 $44.7 $41.3 $37.8 $35.2 $34.5 FY 14/15 FY 15/16 FY 16/17 FY 17/18* FY 18/19 FY 19/20 One-Time Ongoing *FY 17/18 Budget Gap excludes the $40 million estimated IHSS cost shift that was restored in VBB as part of new MOE arrangement 19 COU N T Y ADM I N I ST RATOR’S OFFI CE

County Financing 20 20 COU N T Y ADM I N I ST RATOR’S OFFI CE COU N T Y OF ALAM EDA, CALI FORN I A

County Fiscal Dilemma  Increasing demand for safety net services during economic downturns  County revenue raising authority limited by: − Proposition 13 - restricted property tax growth − Proposition 218 - voter approval for tax increases − ERAF* - State shifted property taxes to schools  Progressive loss of control over local spending  Most services are mandated by State/federal government  Mandates have continued to increase; reimbursements delayed  Transfer of responsibility from the State to counties − Realigned programs with inadequate ongoing funding *Education Revenue Augmentation Fund 21 COU N T Y ADM I N I ST RATOR’S OFFI CE

Alameda County ERAF Losses by Year ($ in millions) $600 Total since FY 1992-93: $7.7 billion $520 $487 $500 $456 $428 $400 $400 $367 $297 $320 $335 $326 $320 $322 $330 $347 $300 $263 $273 $206 $220 $236 $129 $130 $135 $140 $147 $158 $170 $187 $200 $100 $30 $0 22 COU N T Y ADM I N I ST RATOR’S OFFI CE

Alameda County Funding Gaps since ERAF ($ in millions) Total since FY 1993-94: $2.2 billion $200 $177.6 $172.3 $180 $155.9 $160 $152.4 $137.9 $140 $116.1 $120 $100.6 $92.0 $100 $88.1 $80.2 $78.2 $77.6 $74.2 $73.9 $80 $73.6 $72.2 $68.5 $65.9 $60.4 $67.1 $65.1 $60 $52.0 $48.9 $40 $13.6 $13.3 $20 $5.8 $6.7 $0 23 COU N T Y ADM I N I ST RATOR’S OFFI CE

Alameda County Assessment Roll Growth 15% 13% 11% 9% 7.1% 7% 5% 3% 1% -1% -3% 1964 1971 1978 1985 1992 1999 2006 2013 2020 24 COU N T Y ADM I N I ST RATOR’S OFFI CE

FY 2019-20 Final Budget Discretionary Revenue – Share of Total General Fund ($ in millions) Discretionary Revenue, $798.2 (26.3%) Debt Service Revenue, $5.9 (0.2%) Use of FMR*, $28.8 Program Revenue, (1.0%) $2,199.3 (72.5%) Total General Fund: $3,032.2 million *FMR = Fiscal Management Rewards 25 COU N T Y ADM I N I ST RATOR’S OFFI CE

FY 2019-20 Final Budget Discretionary Revenue by Source ($ in millions) Property Tax, $484.1 (60.7%) Other Revenue, $46.1 (5.8%) Sales & Use Tax, $23.4 (2.9%) ERAF (Vehicle License Fee), $227.1 (28.5%) Interest, $17.4 (2.2%) Total Discretionary Revenue: $798.2 million 26 COU N T Y ADM I N I ST RATOR’S OFFI CE

FY 2019-20 Final Budget Discretionary Revenue – Share of Total General Fund ($ in millions) Discretionary Revenue Sources Other Revenue, $46.1 (5.8%) Property Tax, $484.1 Program (60.7%) Revenue $2,199.3 ERAF (VLF), (72.5%) $227.1 , 28.5% Discretionary Revenue $798.2 Sales & Use Interest, $17.4 (26.3%) Tax, $23.4 (2.2% ) (2.9%) Debt Service Use of FMR Revenue $28.8 $5.9 (1.0%) (0.2%) 27 COU N T Y ADM I N I ST RATOR’S OFFI CE

Discretionary Revenue  Discretionary revenue is approximately 27% of the General Fund, but 90% is property tax-based  Alameda County receives only 15 cents for every property tax dollar collected in the County * Over time, redevelopment agencies’ share of property taxes should be distributed to the other entities 28 COU N T Y ADM I N I ST RATOR’S OFFI CE

FY 2019-20 Final Budget – Financing by Source Aid from Local Govt, $34.0 (1.1%) Other Revenues, Charges for Services, 63% Other Financing $197.1 (6.5%) $202.3 (6.7%) Sources $53.5 (1.8%) Medi-Cal/Medicare, Available Fund Balance, $168.4 (5.6%) $1.1 (0%) of GF budget is Property Tax Revenues State and $484.1 (16.0%) Other Taxes Federal Aid $119.7 (3.9%) ($1.9 billion) Licenses, Permits & Franchises $9.4 (0.3%) State Aid $1,221.1 (40.3%) Fines, Forfeits & Penalties $12.5 (0.4%) Use of Money & Property Federal Aid, $19.3 (0.6%) $509.7 (16.8%) Total General Fund: $3,032.2 million 29 COU N T Y ADM I N I ST RATOR’S OFFI CE