Board Of Supervisors — Tuesday, June 24, 2025

a) Consideration of FY 2025-26 Recommended Budget b) Consideration of proposed Resolution Amending the Position Allocation Chart for FY 2025-26 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 2025-26 Final Recommended Budget

We are pleased to present for your Board's consideration the Recommended Budget for Fiscal Year (FY) 2025-26. This Recommended Budget has been prepared in compliance with the County Budget Act. It 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 23, 2025. 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 $418,634,111 (an increase of $21,458,724 from FY 2024-25 adopted budget). General Fund (GF) appropriations are $99,735,475 (a decrease of $1,542,935 from FY 2024-25 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 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 2025-26 Recommended Budget for all County funds totals $418,634,111 including: FY 2024-25 GOVERNMENTAL FUNDS FY 2025-26 $101,278,410 General Fund $99,735,475 $191,936,924 Special Revenue Funds $213,118,663 $18,359,665 Capital Project Funds $26,142,373 $0 Debt Service Funds $0* $311,574,998 Total Governmental Funds $338,996,511 OTHER FUNDS $13,215,662 Internal Service Funds $13,722,144 $7,563,390 Enterprise Funds $8,112,596 $64,821,336 Special Districts and Other Agencies $57,802,860 $85,600,388 Total Other Funds $79,822,203 $397,175,387 Grand Totals $418,818,714 *Armory bond funding held with U.S. Bank This Recommended Budget represents an increase of $21,643,327, when compared to FY 2024-25 ($397,175,387). Year-over-year increases are attributable to additional appropriations to: Special Revenue Funds, like Behavioral Health/Mental Health ($19,483,631) and Roads ($2,054,104); Special Districts and Other Agencies, such as CSA #2-Spring Valley ($3,382,306) and LACOSAN NW Regional System ($2,677,855); Capital Project Funds, like Public Safety Facilities ($9,138,259). I. GENERAL FUND APPROPRIATIONS Recommended FY 2025-26 Fund 001 (General Fund) appropriations total $99,735,475, a decrease of $1,542,935 (1.52%) from FY 2024-25 adopted budget. Adopted Budget Fund 001 (General Fund) Appropriations FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 $56,552,081 $61,163,094 $63,578,629 $80,232,344 $86,001,848 $98,546,266 $101,278,410 $99,735,475 The $1,542,935 decrease is attributable to decreasing the Net County Cost allocation to General Fund Departments due to economic uncertainty, accommodating MOU increases, and projects that may be allocated one-time funding at Final Budget. 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 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 24/25 A FY 25/26 B $23,867,784 $24,880,731 $26,061,168 $30,053,844 $31,140,772 $31,260,271 $33,249,740 $34,546,660 A=Anticipated, B=Budgeted Sales Tax. Bradley-Burns (1%) Sales Tax revenues received through May 2025 total $4,395,260 ($130,682 higher than FY 2023-24, with one month remaining to be received). Prop 172 Sales Tax revenues through May 2025 equal $3,730,369 ($2,913 lower than FY 2023-24). Staff continue to watch these funding sources; geopolitical instability, evolving federal considerations, including tariffs and uncertainty surrounding relied-on safety net programs that infuse funding into our local economy, and ongoing inflation are among concerns that make consumer spending volatility more probable in FY 2025-26. Transient Occupancy Tax. Transient Occupancy Tax (TOT) revenues totaled $834,755 through May 2025, for an increase of ($183,248) from FY 2023-24. Like Sales Tax, TOT requires continual monitoring for impacts to lodging operations. Cannabis Tax. Cannabis Cultivation and Business Tax revenues received through May 2025, total $2,732,799 ($274,946 higher than May 2024). The increase in tax revenues is anticipated due to Board policy changes. 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 2023-24 to increase the General Reserve by $500,000, it stands at $16 million. This balance is approximately 16.0% of the total recommended General Fund appropriations, which is up 0.21% from FY 24/25 because of the current economic uncertainty. $16 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 almost two months. IV. CAPITAL ASSETS Capital Improvements: The FY 2025-26 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) $7,613,424 Lucerne Harbor Dredging and Docking (BU 1781) $106,303 Emergency Operations Center (EOC) Remodel (BU 1785) $1,312,338 Armory Remodel (BU 1785) $15,078,907 Wireless Lan Controller System (BU 1904) $75,000 Mobile Audio-Visual Cameras (BU 2206) $1,050,000 Repeater and Radio Equipment replacements (BU 2704) $56,629 Various roads, bridges, and sidewalks/curbs (BU 3011) $24,151,728 Southshore Expansion Project (BU 4014) $716,632 Landfill expansion project (BU 4121) $2,500,000 Library Improvements (BU 6023) $1,535,331 Cobb Area Community Parks and Trails (BU 7011) $250,000 Clean CA Parks Beautification (BU 7011) $32,000 Hammond Park Improvement Project (BU 7011) $2,700,000 Courthouse Museum Pomo Family Sculpture (BU 7201) $94,000 Grant to purchase remaining property in the reclamation area (Upper Lake) (BU 8109) $6,706,760 LACOSAN SE Infiltration & Inflow Reduction (BU 8354) $1,265,838 Septic Hauler Dump Station (BU 8355) $380,826 Bridge Construction Project- Cache Creek / Upper / Lower Wolf Creek (BU 8462) $3,636,137 Lakebed Recovery Project (BU 8462) $353,443 Construction of a New Well (BU 8462) $875,544 Construction of 2 New Wells (BU 8481) $1,461,360 Fixed Assets: Fixed assets proposed for Recommended Budget generally already have non-General Fund sources secured (e.g. grants). These funded projects are delineated in the Capital Asset list. V. COUNTY WORKFORCE All Funds: This FY 2025-26 Recommended Budget provides for a total workforce of 1,117.10 Full-Time Equivalents (FTE's), a net increase of 0.7 FTE's compared to FY 2024-25's Adopted Budget allocation. The following positions are unfunded: * 3 Deputy Sheriff I/II (Prop 56) (BU 2201) * 1 Deputy Sheriff I/II (SRO) (BU 2201) * 1 Assistant Chief Probation Officer (BU 2302) * 1 Deputy Building Official (BU 2602) * 1 Environmental Health Specialist, Supervisor I/II (BU 4010) * 1 Water Resources Engineer I/II/Senior (BU 8107); and General Fund: Positions funded by General Fund discretionary revenues total 440.80 FTE's, a net decrease of 3.2 FTE's from Adopted FY 2024-25 Position Allocations. Summary of Position Additions and Deletions Since FY 2024-25 Adopted Budget Budget Unit Position FTE's 1012-Administrative Office Administrative Analyst I/II (1) 1012-Administrative Office Administrative Analyst I/II/Senior 1 1021-Auditor-Controller Accounting Technician - Auditor I/II (1) 1123-Assessor Auditor-Appraiser I/II/Senior (1) 1903-Public Works Deputy Public Works Director 1 1903-Public Works Administrative Assistant I/II (1) 1903-Public Works Administrative Assistant, Senior (1) 1903-Public Works Accountant I/II (1) 1904-Information Technology Deputy Information Tech Director (1) 1904-Information Technology Information Systems Analyst I (1) 1908-Engineering & Inspection Assistant Engineer I/II (1) 1908-Engineering & Inspection Special Projects Engineer I/II (1) 1908-Engineering & Inspection Survey Technician (1) 2110-District Attorney Deputy District Attorney I/II/III/Senior (1) 2110-District Attorney Welfare Fraud Investigator/Trainee (1) 2110-District Attorney Staff Services Analyst, Senior (1) 2111-Public Defender Chief Public Defender Investigator 1 2111-Public Defender Deputy Public Defender Administrative Manager 1 2111-Public Defender Accountant I/II 1 2111-Public Defender Legal Administrative Assistant/Senior 2 2111-Public Defender Public Defender Investigator I/II 1 2111-Public Defender Deputy Public Defender I/II/III/Senior 1 2113 Victim-Witness Assistance Victim Advocate I/II/Senior (1) 2113 Victim-Witness Assistance Victim Advocate I/II/Senior 0.8 2201-Sheriff Deputy Sheriff I/II (1) 2302-Probation Deputy Probation Officer I/II (1) 2302-Probation Probation Aide (2) 2302-Probation Probation Program Technician 2 2603-Code Enforcement Code Enforcement Program Coordinator 3 2603-Code Enforcement Code Enforcement Officer 2 2603-Code Enforcement Community Development Technician 1 2702-Planning Senior Planner 1 2702-Planning Office Assistant (1) 2702-Planning Assistant Planner I/II/Associate Planner (2) 2702-Planning Principal Planner (1) 7011-Parks and Recreation Recreation Programs and Events Coordinator 1 TOTAL (3.2) VII. PROSPECTIVE DEMANDS ON THE GENERAL FUND CalPERS. Fiscal Miscellaneous CalPERS Safety CalPERS Year Actuarial Charged Actuarial Charged 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% 41.30% 37.61% 24/25 27.14% 25.64% 44.00% 41.95% 25/26 28.36% 25.73% 46.97% 43.31% The FY 2023-24 Unfunded Accrued Liability (UAL) contribution for the County equals $12,103,922 (July 2024 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: With your Board's policy direction and support, County Departments continue to strive to confront and look being the immediate challenges we face, and work to promote the well-being of every Lake County resident. That remains our steadfast intent in the face of significant State- and Federal-level uncertainty. Lake County's natural beauty and outdoor recreation opportunities are cornerstones that drive vibrant communities and our local and regional economy. Local healthcare institutions and government entities also rely on federal policy that prioritizes maintenance of social safety nets. 52% of the Lake County population is served by Medi-Cal, and Federal investments in Medicaid affect the public and private sectors, alike, in Lake County. Through wildfires and floods, times of pandemic and economic downturn, Lake County residents have remained strong and resilient. Despite any challenges that come, County Departments and Administration are likewise committed to maintaining the fiscal health and resiliency of our County government. Any successes result from effective collaboration and strong alignment with your Board. Administration is confident County Department Heads and staff will continue to demonstrate creative problem solving and community collaboration, and maintain a strong focus on meeting the needs of the people we serve in Fiscal Year 2025-26. The County remains focused on hiring and retaining qualified and talented professionals. The commitment was most recently demonstrated by the Boards support and approval of the new employee MOU's and Resolutions. Many thanks to all who contributed to creation of this budget, approaching their duties with professionalism, integrity and compassion. Administrative Office Staff are very proud to present the Fiscal Year 2025-2026 Recommended Budget for your Board's review and consideration.

RECOMMENDED ACTION: Staff recommends your Board take the following actions: a) Approve, by motion, the FY 2025-26 Recommended Budget Your Approval of this Recommended Budget will enable the County to meet its statutory obligations, and continue operations from July 1, 2025, until the Final Recommended Budget is Adopted (September 23). b) Adopt the Resolution Amending the Position Allocation Chart for FY 2025-26 to Conform to the Recommended Budget Your approval of this Resolution will allow departments to hire new staff as of July 1, 2025. c) Authorize, by Motion, the Purchase Capital Assets Prior to Approval of the Adopted Budget

101 1) Capital Asset List 2) Proposed Position Allocation Resolution Amending the Position Allocation Table for FY 2025-26 to Conform to the Recommended Budget 3) Position Allocation Table for FY 2025-26 4) Fund Summary for FY 2025-26 5) Budget Unit Detail for FY 2025-26

As you will recall, following Closed Session Discussion of Tuesday, June 17, 2025, Supervisor Rasmussen moved to Appoint Susan Parker and Lars Ewing Interim Public Works Directors, effective immediately. The Motion carried 5-0. With this item, your Board will ratify that action.

Ratify the June 17, 2025 appointment of Susan Parker and Lars Ewing as Interim Public Works Directors