Board Of Supervisors — Thursday, June 15, 2023

a) Consideration of FY 2023-24 Recommended Budget b) Consideration of proposed Resolution Amending the Position Allocation Chart for FY 2023-24 to Conform to the Recommended Budget c) Consideration of Authorization for affected Department Heads to proceed with purchasing selected Capital Assets prior to the adoption of the FY 2023-24 Final Recommended Budget

We are pleased to present for your Board's consideration the Recommended Budget for Fiscal Year (FY) 2023-24. This Recommended Budget has been prepared in compliance with the County Budget Act and must be Approved no later than June 30 and Adopted no later than October 2. As your Board is aware, Adoption of the budget will take place following Public Hearings presently scheduled for September 12, 2023. Your Board may modify the Recommended Budget as you desire prior to Approval. By Approving the Recommended Budget, you authorize expenditure of funds for operational needs of County departments until your Final Recommended Budget is Adopted. Recommended appropriations for all funds total $380,998,582 (an increase of $27,606,070 from FY 2022-23 adopted budget). General Fund (GF) appropriations are $93,857,015 (an increase of $7,855,167 from FY 2022-23 adopted budget). The guiding principles in preparing the Recommended Budget continue to be 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; 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. We are very fortunate to have a highly dedicated group of people committed to serving the public by preserving the fiscal health and strength of our County. FISCAL IMPACT (Narrative): COUNTY BUDGET - OVERVIEW The FY 2023-24 Recommended Budget for all County funds totals $380,998,582 including: FY 2022-23 GOVERNMENTAL FUNDS FY 2023-24 $86,001,848 General Fund $93,857,015 $161,007,490 Special Revenue Funds $182,340,558 $ 19,962,163 Capital Project Funds $16,394,405 $0 Debt Service Funds $0 $266,971,501 Total Governmental Funds $292,591,978 OTHER FUNDS $11,013,398 Internal Service Funds $10,760,264 $11,664,959 Enterprise Funds $11,924,993 $63,742,654 Special Districts and Other Agencies $65,721,347 $86,421,011 Total Other Funds $88,406,604 $353,392,512 Grand Totals $380,998,582 This Recommended Budget represents an increase of $27,606,070, when compared to FY 2022-23 ($353,392,512). Year-over-year increases are attributable to additional appropriations to: Special Revenue Funds, like Roads ($7,317,299), Behavioral Health/Substance Use Disorder Services ($11,310,778), Public Health/Health Administration ($1,532,349) and Library Improvements ($1,631,994); Special Districts and Other Agencies, such as Flood Zone #5 ($5,798,594). I. GENERAL FUND APPROPRIATIONS Recommended FY 2023-24 Fund 001 General Fund appropriations total $93,857,015, an increase of $7,855,167 (9.13%) from FY 2022-23 $86,001,848. Adopted Budget Fund 001 General Fund Appropriations FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 FY 23/24 $55,165,108 $55,984,784 $56,552,081 $61,163,094 $63,578,629 $83,257,700 $86,001,848 $93,857,015 The ($7,855,167) increase is attributable to Budget Unit 2111 Public Defender ($1,435,811,), Budget Unit 7011 Parks & Recreation ($2,218,325), Budget Unit 2302 Probation ($1,526,717), Budget Unit 2702 Planning ($700,632), and an increase in payroll (1,582,628). II. GENERAL FUND DISCRETIONARY REVENUE Property Tax. General Fund discretionary revenues are derived from a variety of sources. However, Property Taxes, by a great margin, constitute the largest source of discretionary funding. General Fund appropriations ebb and flow, in direct relationship to General Fund discretionary revenues available. As reflected in the following table, Property Tax revenues have steadily increased, over time: PROPERTY TAX REVENUE (General Fund) FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 A FY 23/24 B $24,986,282 $24,151,826 $23,867,784 $24,880,731 $26,061,168 $30,053,844* $28,607,105 $30,499,358 A=Anticipated, B=Budgeted, *Reflects one-time property tax backfill payment from State Sales Tax. Bradley-Burns (1%) Sales Tax revenues received through May 2023 total $4,063,673 ($169,179 higher than FY 2021-22, with one month remaining to be received). Prop 172 Sales Tax revenues through May 2023 equal $4,163,807 ($246,275 lower than FY 2021-22). Staff continue to watch these funding sources; geopolitical instability, reverberations of inflation affecting consuming confidence and spending, and cessation of pandemic-related supports are among concerns that make volatility more probable in FY 2023-24. Transient Occupancy Tax. Transient Occupancy Tax (TOT) revenues have totaled $624,590.58 through May 2023, for a decrease ($129,215.43 or 20.69%) from FY 2021-22 ($753,806.01) with one month remaining to be received. Like Sales Tax, TOT requires continual monitoring for impacts to lodging operations. Cannabis Tax. Cannabis Cultivation and Business Tax revenues received through May 2023, total $1,599,013.59, down $5,127,140.99 through May 2021-22. This is anticipated, as your Board elected to provide Cannabis Tax relief in an effort to stabilize our local industry, 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 remaining 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 2022-23 to increase the General Reserve by $3 million, it stands at $15.5 million. This balance is approximately 16.5% of the 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. IV. CAPITAL ASSETS Capital Improvements: The FY 2023-24 Recommended Budget includes funding for several capital projects, many of which are supported by grants or other special funding, including: Various deferred maintenance and roof replacements (BU 1778) $5,792,240 Armory Remodel (BU 1785) $5,997,864 Heavy Duty Weight Truck (BU2601) $300,000 Repeater and Radio Equipment replacements (BU 2704) $129,415 Various roads and bridges (BU 3011) $8,856,407 Medical Vans (BU 4011) $495,877 Landfill Compactor (BU 4121) $1,200,000 Landfill expansion project (BU 4121) $6,000,000 Library Improvements (BU 6023) $1,619,900 Cobb Area Community Parks and Trails (BU 7011) $1,000,000 Clean CA Parks Beautification (BU 7011) $1,358,545 Hammond Park Improvement Project (BU 7011) $2,326,963 Grant to purchase remaining property in the reclamation area (Upper Lake) (BU 8109) $8,700,000 Middletown Sewer Treatment Plant Improvement Construction Project (BU 8353) $4,751,250 LACOSAN SE Infiltration & Inflow Reduction (BU 8354) $1,434,659 Septic Hauler Dump Station (BU 8355) $400,000 Bridge Construction Project- Upper Wolf Creek / North Fork (BU 8462) $231,174 Lakeport Recovery Project (BU 8462) $533,968 Construction of a New Well (BU 8462) $880,500 SWRCB Grant - Water Treatment Plan Improvement Project (BU 8480) $5,000,000 Lake Intake Modifications and Extension Pipeline (BU 8481) 1,029,444 Fixed Assets: Administration proposes funding most fixed assets which funding has already been secured (e.g. vehicles and other equipment). These are delineated in the attached Capital Asset list. The majority of these are expected to be supported by non-General Fund allocations. Early Authorization: County departments are not permitted to purchase new Capital Assets between July 1 and formal adoption of the budget (September 12, 2023) unless specifically authorized by motion of the Board of Supervisors. The attached Capital Asset list specifies whether the department is requesting authorization to purchase a specific Capital Asset prior to Adopted Budget. V. COUNTY WORKFORCE All Funds: This FY 2023-24 Recommended Budget provides for a total workforce of 1,093.40 Full-Time Equivalents (FTE's), a net increase of 35.80 FTE's compared to FY 2021-22's Adopted Budget allocation. The following positions are unfunded: * 1 Public Works Fiscal Coordinator I/II (BU 1903); * 1 Administrative Assistant (BU 1903); * 1 Administrative Assistant, Senior (BU 1903); * 1 Assistant Engineer Senior (BU 1908); * 1 Special Projects Engineer I/II (BU 1908); * 1 Survey Technician (BU 1908); * 3 Deputy Sheriff I/II (Prop 56) (BU 2201); * 1 Deputy Sheriff I/II (SRO) (BU 2201); * 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 435.5 FTE's, a net increase of 4.75 FTE's from Adopted FY 2022-23 Position Allocations. Summary of Position Additions and Deletions Since FY 2022-23 Adopted Budget Budget Unit Position FTE's 1012-Administrative Office Tax Administrator (1) 1012-Administrative Office Administrative Analyst I/II/Senior (2) 1012-Administrative Office Administrative Analyst I/II 3 1012-Administrative Office Deputy County Administrative Officer I/II 3 1012-Administrative Office Deputy County Administrative Officer I/II/Chief (1) 1012-Administrative Office Deputy County Administrative Officer I/II-Hourly (.5) 1121-Auditor-Controller Accountant-Auditor I/II/Senior 1 1121-Auditor-Controller Business Software Analyst 1 1341-Human Resources Human Resources Analyst I/II/Sr. 2 1341-Human Resources Human Resources Analyst Sr. (1) 1341-Human Resources Human Resources Analyst I/II (1) 1451-Registrar of Voters Elections Specialist/Elections Specialist Senior (2.5) 1451-Registrar of Voters Election Specialist, Senior 2 1451-Registrar of Voters Election Specialist 1 1671-Buildings and Grounds Janitorial Supervisor (1) 1671-Buildings and Grounds Lead Janitor .75 1671-Buildings and Grounds Janitor 3 1671-Buildings and Grounds Facilities Maintenance Worker I/II/Senior / Technician I/II 1 2111-Public Defender Chief Public Defender 1 2201 Sheriff-Coroner Accounting Technician/Accounting Technician, Senior (1) 2201 Sheriff-Coroner Staff Services Analyst I/II 2 2201-Sheriff-Coroner Accountant I/II 1 2301-Sheriff-Jail Facilities Accounting Technician/Accounting Technician, Senior (1) 2301-Sheriff-Jail Facilities Accountant I/II (1) 2301-Sheriff-Jail Facilities Deputy Sheriff I/II - Corrections (2) 2301-Sheriff-Jail Facilities Captain - Sworn (Temporary allocation due to retirement) 1 2301-Sheriff-Jail Facilities Lieutenant - Corrections 1 2302-Probation Probation Aide 1 2302-Probation Office Assistant III (1) 2603-Code Enforcement Code Enforcement Officer (1) 2702-Planning Principal Planner (1) 2702-Planning Deputy Community Development Director (1) 2702-Planning Deputy Community Development - Administration 1 2702-Planning Senior Planner Community Development Tech/CD Tech, Senior (1) 2702-Planning Assistant Planner I/II/Associate Planner (5) 2702-Planning Grant Manger - Writer 1 6131-U.C. Cooperative Extension Agricultural Technician 1 7011-Parks and Recreation Project and Parks Superintendent (1) 7011-Parks and Recreation Parks Superintendent 1 7011-Parks and Recreation Parks Maintenance Worker I/II/Senior 9 7011-Parks and Recreation Parks Maintenance Worker I/II (5) 7011-Parks and Recreation Parks Maintenance Worker, Senior (2) TOTAL 4.75 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 24.82% 23.3% 41.3% 37.61% 24/25 24.1% 40.3% The FY 2022-23 Unfunded Accrued Liability (UAL) contribution for the County equals $8,327,970 (July 2022 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, depending on actual payroll expenses. CLOSING REMARKS: Lake County is rich in natural beauty, and outdoor recreation opportunities are plentiful and varied. Around the lake, communities, businesses and individuals are investing heavily in making their corners of our County better, safer and more prosperous. We have one of the oldest lakes in North America, and a long and diverse history, informed at every step by Lake County's seven Tribal Nations and generations of individuals and groups dedicated to making this a great place to live, work and visit. People within and outside of our County organization are dedicated to sharing what under-celebrated gems Lake County's communities represent. Lake County residents are strong. We endured an unparalleled 18 disasters since 2015, challenged many norms during a global pandemic, and our communities and County workforce remain resilient, and the fiscal health of County government strong. This is a tribute to the commitment your Board, County Department Heads and staff have shown to creative problem solving and community collaboration, and maintaining a strong focus on meeting the needs of the people we serve. Through many of our challenges, the community's Vision 2028 priorities, adopted and amplified by your Board, continue to confront and look beyond the immediate challenges we face, and work to promote the well-being of everyone connected to Lake County. Your Board and the broader community can have every confidence departmental leadership and fiscal staff have approached this year's budget process with focus on professionalism, integrity, people and compassionate service. Administrative Office Staff are very proud to present the Fiscal Year 2023-2024 Recommended Budget for your Board's review and consideration.

Staff recommends your Board take the following actions: a) Approve, by motion, the FY 2023-24 Recommended Budget Your Approval of this Recommended Budget will enable the County to meet its statutory obligations, and continue operations from July 1, 2023, until the Final Recommended Budget is Adopted (September 12). b) Adopt the Resolution Amending the Position Allocation Chart for FY 2023-24 to Conform to the Recommended Budget Your approval of this Resolution will allow departments to hire new staff as of July 1, 2023. c) Authorize, by motion, the Purchase of Certain Capital Assets Prior to Approval of the Adopted Budget

1) Capital Asset List 2) Proposed Position Allocation Resolution Amending the Position Allocation Table for FY 2023-24 to Conform to the Recommended Budget 3) Position Allocation Table for FY 2023-24 4) Fund Summary for FY 2023-24 5) Budget Unit Detail for FY 2023-24