Friday, October 20, 2017
Strategic Plan: Attachment B

County's Strategic Plan: Attachment B

ATTACHMENT B

FUNDAMENTALS OF COUNTY FINANCE

County government, at its most basic level, is the implementation arm of the State and Federal governments. Through the County organization, public policy crafted in Sacramento and Washington D.C. manifests itself in services provided to our local communities.

So, while many residents believe that property taxes pay for most County services, the truth is much different... much of County government's funding comes from ongoing State and Federal government programs, while property taxes account for only about one-tenth of County revenues.

On the subject of property taxes, while all of these revenues are collected by the County Tax Collector (e.g. one of the functions of general County government), only a small percentage goes to support County government. Of each property tax dollar collected, the benefitting jurisdictions and amounts are as follows:

Schools 51 cents

Community Redevelopment 19 cents

Special Districts 12 cents

County 11 cents

Cities 7 cents

Restricted vs. Discretionary Funding

Most County revenues, including State and Federal subventions, many licenses and fines, most fees and charges for services, special tax assessments, and some property taxes are restricted in their use. In other words, the County is legally bound to use these monies in a prescribed manner. Examples include, but are not limited to, State and Federal subventions for the courts system, health and welfare programs, and maintenance of the County road system. In some cases, the use of such funding is further conditioned upon a Alocal match@ of a nominal percentage of the grant and/or a Amaintenance of effort@ (MOE) requirement, which stipulates a lower limit for the local match contribution. In other words, the acceptance of a grant or subvention of restricted funds can carry with it the obligation to spend non-restricted funds over which the Board of Supervisors has total discretion.

ADiscretionary revenues are therefore those property and sales taxes, fees and charges, interest earnings, and miscellaneous monies without such restrictions that can be allocated by the Board of Supervisors for programs and services which are in demand by local residents. Only about twenty percent of County revenues are discretionary in nature. For example, out of a total revenue stream of approximately $1.5 billion, the Board of Supervisors will spend about $240 million on high priority services of its choosing in Fiscal Year 1997-98.

General Priorities and Principles

The Board's highest priority for the expenditure of discretionary funds is to fulfill its "Commitment to Public Safety", adopted in September, 1996. At that time, a commitment was made to augment the Sheriff's budget over a several year period with the basic goal of achieving a patrol ratio of one Deputy Sheriff per 1,000 residents, and increasing staff levels in the Jail and in Court Services.

The Board is likewise committed to a balanced budget with appropriations for ongoing operations limited to the amount of ongoing revenue.

In addition, the Board is determined to maintain a Contingency account of between 1.0% and 1.5% of total appropriations. This reserve will protect the County in the event of unforeseen budgetary impacts and give comfort to the financial community, which provides credit to the County.

Finally, the Board is committed to a course of prudent fiscal management, including a conservative investment policy for pooled funds in the County treasury and the judicious use of debt financing for its capital improvement program. A Debt Advisory Committee, made up of public and private sector financial experts, reviews proposed borrowings to insure that the borrowing is necessary, that the terms of the financing are favorable to the County and consistent with Board policy, and the debt load can be supported by projected revenue streams.

Allocation of Financial Resources

Overall County spending is dominated by mandated core functions (such as health, welfare, and criminal justice) which are heavily supported by State and Federal subventions.

As discussed earlier, the Board of Supervisors has discretion over a limited amount of the County's overall financial resources, and the service priorities of the community are reflected in the manner by which the Board allocates its "discretionary revenue" to the countywide services within the General Fund.