Board Of Supervisors — Thursday, September 22, 2022

We are pleased to present for your Board's consideration the Final Recommended Budget for Fiscal Year (FY) 2022-23. Staff has prepared the Final Recommended Budget with the intention of serving your Board's priorities, and in accordance with principles that have served the County well in prior years, which are as follows: 1. Develop a responsible, sustainable budget that will enable the County to maintain its fiscal solvency for the short- and long-term. 2. Minimize and/or completely avoid negative impacts on service levels provided to the public and improve services when possible. 3. Preserve the County's General Reserves; increase reserve designations, where possible, to prepare for future budgetary needs. 4. Avoid utilization of a large number of layoffs, work furloughs or other forms of compensation reductions in order to balance the budget, as such measures negatively affect County employees and the local economy. Balancing the budget and these competing principles is always a very difficult task, and could not be accomplished without the extraordinary work and cooperation of County department heads, your Board and County Administrative Office staff. Recommended appropriations for all funds total $351,946,439 (an increase of $32,560,324 from FY 2021-22). General Fund (GF) appropriations are $84,356,848 (an increase of $1,124,504 from FY 2021-22). Your Board may modify the Final Recommended Budget prior to Approval. The Final Recommended Budget must be Adopted no later than October 2, per section 29124 of the Government Code. FISCAL IMPACT (Narrative): COUNTY BUDGET - OVERVIEW The FY 2022-23 Recommended Budget for all County funds totals $351,946,439 including: FY 2021-22 GOVERNMENTAL FUNDS FY 2022-23 $83,232,344 General Fund $84,356,848 $156,057,105 Special Revenue Funds $161,431,417 $8,709,308 Capital Project Funds $19,737,163 $0 Debt Service Funds $0 $247,998,757 Total Governmental Funds $265,525,428 OTHER FUNDS $10,382,785 Internal Service Funds $11,013,398 $5,257,864 Enterprise Funds $11,664,959 $55,746,709 Special Districts and Other Agencies $63,742,654 $71,387,358 Total Other Funds $86,421,011 $319,386,115 Grand Totals $351,946,439 This Final Recommended Budget represents an increase of $32,560,324, when compared to FY 2021-22 ($319,386,115). Year-over-year increases are attributable to additional appropriations to: Special Revenue Funds, such as Roads (increased by $3,493,282), Behavioral Health ($2,218,034), Social Services Administration ($4,956,651), and Health Administration ($2,610,474); Capital Project Funds, like Public Safety Facilities ($4,768,508) and Capital Projects ($4,876,238); an Enterprise Fund (Integrated Waste Management, $6,407,095); and Special Districts and Other Agencies, such as the Watershed Protection District ($1,478,933), Lake County Sanitation District-Southeast ($1,005,186), Spring Valley County Service Area (CSA #2, $957,157), County Waterworks District #3 Kelseyville ($2,041,230), and CSA #21 North Lakeport Water ($1,737,117). I. GENERAL FUND APPROPRIATIONS Recommended FY 2022-23 Fund 001 General Fund appropriations total $84,356,848, an increase of $1,124,504 (1.35%) from FY 2021-22 $83,232,344. Adopted Budget Fund 001 General Fund Appropriations FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 $60,085,643 $55,165,108 $55,984,784 $56,552,081 $61,163,094 $63,578,629 $83,232,344 $84,356,848 The $1,124,504 increase is attributable to payroll increases not expected to be covered by FY 2022-23 cannabis funds. II. GENERAL FUND DISCRETIONARY REVENUE Property Tax. General Fund discretionary revenues are derived from a variety of sources. However, Property Taxes, by a significant margin, constitute the largest source of discretionary funding. General Fund appropriations ebb and flow, in direct relationship to available General Fund discretionary revenues. As reflected in the following table, Property Tax revenues have steadily increased, over time: PROPERTY TAX REVENUE (General Fund) FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 A FY 22/23 B $24,361,322 $24,986,282 $24,151,826 $23,867,784 $24,880,731 $26,061,168 $30,053,843 $27,699,324 A=Anticipated, B=Budgeted Sales Tax. Bradley-Burns (1%) Sales Tax revenues received in FY 2021-22 totaled $4,292,495 ($121,855 lower than FY 2020-21). Prop 172 Sales Tax revenues in FY 2021-22 equaled $4,768,700 ($1,351,216 greater than FY 2020-21). Staff continue to closely monitor these funding sources, due to ongoing volatility from pandemic reverberations. Transient Occupancy Tax. Transient Occupancy Tax (TOT) revenues totaled $1,001,478 in FY 2021-22, slightly higher than the total received in FY 2020-21 ($977,629). Like Sales Tax, TOT requires continual monitoring for impacts to lodging operations. Cannabis Tax. Cannabis Cultivation and Business Tax revenues received in FY 2021-22 total $6,414,915, a decrease of $1,929,962 from FY 2020-21. In an effort to stabilize our local industry, your Board elected to provide Cannabis Tax relief, temporarily reducing the cultivation tax rate by 50%, and applying it to the canopy area only, as opposed to the total cultivation area. These reductions, coupled with uncertainty surrounding which permitted cannabis businesses will operate this year, make projecting revenue difficult. III. CONTINGENCIES AND RESERVES: Contingencies: Appropriations included in Contingencies remain consistent, at $4,548,360. These can be used for unanticipated needs, including, but not limited to, shortfalls in revenue. General Reserve: Following your Board's action in FY 2020-21 to increase the General Reserve by $3.5 million, it stands at $12.5 million. The Final Recommended Budget includes a requested increase to the General Reserve of $3 million, for a total of $15.5 million. This balance is approximately 18.4% of total recommended General Fund appropriations. $15.5 million may seem considerable, but it is a best practice for Counties to maintain three months' revenue or appropriations in Reserves. The present balance would sustain County General Fund operations for two, possibly three months. Building & Infrastructure Reserve: The Final Recommended Budget includes a request to increase the Building & Infrastructure Reserve by $6,074,348. Presently, it stands at $2,406,103. The Building & Infrastructure Reserve is utilized for short-term loans for grants or projects that require the County to pre-pay and seek reimbursement, for example, and future building and infrastructure projects. IV. CAPITAL ASSETS Capital Improvements: The FY 2022-23 Recommended Budget includes funding for a number of capital projects, many of which are supported by grants or other special funding, including, but not limited to: Various deferred maintenance and roof replacements (BU 1778) $2,489,238 Courthouse solar photovoltaic and electric vehicle charging system (BU 1778) $3,500,000 Kelseyville senior center/event center renovation (BU 1778) $700,000 Jail tower remodel (BU 1785) $500,000 New Sheriff's complex remodel (previously called the armory BU 1785) $5,310,156 Logging recorder (BU 2202) $100,000 Repeater and radio equipment replacements (BU 2704) $376,239 New Recording System (BU 2708) $250,000 Various roads and bridges (BU 3011) $7,783,523 Medical Vans (BU 4011) $495,877 Electronic Health Record Project (BU 4014) $427,971 Landfill expansion project (BU 4121) $6,000,000 Customized Sprinter vehicle to serve as Bookmobile (BU 6022) $196,659 Cobb Area Community Parks and Trails (BU 7011) $1,000,000 Clean CA Parks Beautification (BU 7011) $1,358,545 Grant to purchase remaining property in the reclamation area (Upper Lake) (BU 8109) $10,680,000 Middletown Sewer Treatment Plant Improvement Construction Project (BU 8353) $4,751,250 LACOSAN SE Infiltration & Inflow Reduction (BU 8354) $1,433,401 Septic Hauler Dump Station (BU 8355) $400,000 Bridge Construction Project- Upper Wolf Creek / North Fork (BU 8462) $380,000 SWRCB Grant - Water Treatment Plan Improvement Project (BU 8480) $5,000,000 Fixed Assets: Administration proposes funding a modest list of fixed assets (e.g. vehicles, solar, and other equipment). These are delineated in the attached Capital Asset list. V. COUNTY WORKFORCE All Funds: This FY 2022-23 Recommended Budget provides for a total workforce of 1,057.60 Full-Time Equivalents (FTE's), a net increase of 19.65 FTE's compared to FY 2020-21's Adopted Budget allocation. The following positions are unfunded: * 1 Public Works Fiscal Coordinator I/II (BU 1903); * 1 Administrative Assistant (BU 1903); * 1 Assistant Engineer I/II/Senior/Associate Civil Engineer (BU 1908); * 1 Special Projects Engineer I/II (BU 1908); * 1 Survey Technician (BU 1908); * 1 Senior Planner (BU 2702); * 3 Planners (BU 2702); * 2 Library Assistant/Library Tech (BU 6022); * 1 Branch Library Coordinator (BU 6022); and * 1 Heavy Equipment & Fleet Maintenance Lead Worker (BU 9911) General Fund: Positions funded by General Fund discretionary revenues total 433.75 FTE's, a net increase of 13.25 FTE's from Adopted FY 2020-21 Position Allocations. Summary of Position Additions and Deletions Since FY 2021-22 Adopted Budget Budget Unit Position FTE's 1012-Administrative Office Chief Climate Resiliency Officer 1 1012-Administrative Office Accountant I/II (Confidential) (1) 1012-Administrative Office Accounting Technician/Senior 1 1231-County Counsel Risk Management Program Coordinator/Risk Manager (1) 1231-County Counsel Risk Analyst 1 1231-County Counsel Deputy County Counsel I/II/III/Senior 1 1903-Department of Public Works Staff Services Analyst I/II 1 1904-Information Technology Deputy Information Technology Director 1 1908-Engineering & Inspection Deputy County Surveyor (previously limited term) 1 1908-Engineering & Inspection Assistant Engineer I/II (1) 1908-Engineering & Inspection Associate Civil Engineer 1 2110-District Attorney Staff Services Analyst I/II 1 2201-Sheriff-Coroner Deputy Sheriff I/II (GVRP) 1 2301-Sheriff-Jail Facilities Staff Services Analyst I 1 2301-Sheriff-Jail Facilities Law Enforcement Records Tech/Law Enforcement Tech, Senior (1) 2301-Sheriff-Jail Facilities Deputy Sheriff I/II-Corrections 2 2302-Probation Deputy Probation Officer, Senior 1 2702-Planning Community Development Tech/CD Tech, Senior 1 2703-Animal Control Office Assistant .75 2703-Animal Control Animal Control Assistant 1.5* TOTAL 13.25 *2 positions, each .75 FTE (i.e. 30 hours/week) Note: numbers in parentheses indicate a Position Allocation/FTE has been eliminated. VII. PROSPECTIVE DEMANDS ON THE GENERAL FUND CalPERS. Fiscal Miscellaneous CalPERS Safety CalPERS Year Actuarial Charged Actuarial Charged 17/18 15.567% 16.067% 26.292% 27.331% 18/19 17.261% 18.761% 30.985% 32.485% 19/20 20.208% 20.762% 35.594% 36.522% 20/21 22.272% 22.3% 40.555% 40.8% 21/22 23.62% 24.37% 42.89% 43.64% 22/23 25.26% 23.86% 43.91% 41.94% 23/24 25.9% 45.4% 24/25 26.6% 46.6% The FY 2022-23 Unfunded Accrued Liability (UAL) contribution for the County equals $8,619,029 (July 2020 CalPERS actuarial data). As illustrated in the above table, the percentage charged is lower than the actuarial percentage. UAL is a set dollar value, which adjusts the actual percentage charged, based on actual payroll expenses. CLOSING REMARKS: The Administrative Office is very proud to present the Fiscal Year 2022-23 Final Recommended Budget for your Board's review. Recent events, including the COVID-19 pandemic, marked inflation, ramifications of Global Climate Change and volatility in California's Cannabis market, have brought significant challenges to Lake County's communities. In this environment, demand for public services is great. Our County workforce stands eager to serve, and steadfast in our commitment to helping residents overcome obstacles. County Department Heads and staff have shown resilience and commitment to carrying-out your Board's Vision 2028 priorities, and confronting unforeseen challenges with transparency and insight. We are deeply grateful for the thoughtful and creative problem-solving of departmental leadership and fiscal staff in this year's budget process, and for your Board's earnest consideration. RECOMMENDED ACTION: Staff recommends your Board take the following actions: 1) Adopt the Resolution Adopting the Final Recommended Budget for Fiscal Year 2022-23 as detailed in the attached, incorporating any changes desired by your Board following budget hearings. 2) Adopt the Resolution Establishing New Classifications, the Effective Date Thereof, and Amending the Position Allocation Chart for Fiscal Year 2022-23 to Conform to the Adopted Budget.

1) Proposed Resolution Adopting Final Recommended Budget 2022-23 2) Proposed Position Allocation Resolution Amending the Position Allocation Table for FY 2022-23 to Conform to the Final Recommended Budget 3) Position Allocation Table for FY 2022-23 4) New Position Classifications Table for FY 2022-23 5) Fund Summary for FY 2022-23 6) Capital Asset List 7) Adjustment Summary FY 2022-23 8) Budget Narratives FY 2022-23 9) Budget Unit Detail for FY 2022-23