Board Of Supervisors — Monday, June 15, 2026

a) Consideration of FY 2026-27 Recommended Budget b) Consideration of proposed Resolution Amending the Position Allocation Chart for FY 2026-27 to Conform to the Recommended Budget c) Consideration of Authorization for affected Department Heads to proceed with purchase of selected Capital Assets prior to the adoption of the FY 2026-27 Final Recommended Budget

We are pleased to present for your Board's consideration the Recommended Budget for Fiscal Year (FY) 2026-27. This structurally balanced Recommended Budget has been prepared in compliance with the County Budget Act. It must be Approved no later than June 30, 2026, and Adopted no later than October 2, 2026. As your Board is aware, Adoption of the budget will take place following Public Hearings presently scheduled for September 15, 2026. Your Board may modify the Recommended Budget prior to Approval, provided revenue and appropriations remain balanced. 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 $440,265,295 (an increase of $20,663,467 from FY 2025-26 adopted budget). General Fund (GF) appropriations are $104,918,207 (a decrease of $123,220 from your FY 2025-26 Adopted Budget). The guiding principles in preparing the Recommended Budget remain the following: 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; where possible, improve services. 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 compensation reductions to balance the budget; 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. This year, our collective task is unusually difficult. In the face of ongoing macroeconomic uncertainty, changes to federal policy that threaten County revenues, and other conditions beyond the County's immediate control, the County Administrative Office recommends your Board act to mitigate the effects of potential revenue shortfalls while avoiding layoffs and maintaining the highest feasible level of services within resource limitations. Your Board's direction will guide work with each department to further optimize the budget. FISCAL IMPACT (Narrative): COUNTY BUDGET - OVERVIEW The FY 2026-27 Recommended Budget for all County funds totals $440,265,295 including: FY 2025-26 GOVERNMENTAL FUNDS FY 2026-27 $100,518,589 General Fund $104,918,207 $213,118,663 Special Revenue Funds $219,126,171 $26,142,373 Capital Project Funds $24,956,447 $0* Debt Service Funds $0* $339,779,625 Total Governmental Funds $349,000,825 OTHER FUNDS $13,722,144 Internal Service Funds $13,970,226 $8,297,199 Enterprise Funds $14,254,707 $57,802,860 Special Districts and Other Agencies $63,039,537 $79,822,203 Total Other Funds $91,264,470 $419,601,828 Grand Totals $440,265,295 *Armory bond funding held with U.S. Bank This Recommended Budget represents an increase in total appropriations of $20,663,467, when compared to FY 2025-26 ($419,601,828). Year-over-year increases include the following: Special Revenue Funds, like Substance Use Disorder Services ($6,456,331) and Roads ($1,388,122); Special Districts and Other Agencies, such as Watershed Protection District ($5,295,955) and Special Districts Administration ($2,004,739); Capital Projects ($3,036,026); and Enterprise Funds (Integrated Waste Management, $5,957,508). I. GENERAL FUND APPROPRIATIONS Recommended FY 2026-27 General Fund (Fund 001) appropriations total $104,918,207, a decrease of $123,220 (0.12%) from FY 2025-26 adopted budget. General Fund revenues total $89,485,269, an increase of $2,457,374 (2.49%) from FY 2025-26 adopted budget. Adopted Budget Fund 001 (General Fund) Appropriations FY 19/20 FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27 $61,163,094 $63,578,629 $80,232,344 $86,001,848 $98,546,266 $101,278,410 $105,041,427 $104,918,207 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 since FY 2019-20: PROPERTY TAX REVENUE (General Fund) FY 19/20 FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 A FY 26/27 B $24,880,731 $26,061,168 $30,053,844 $31,140,772 $31,260,271 $33,249,740 $34,546,660 $35,349,805 A=Anticipated, B=Budgeted Sales Tax. Bradley-Burns (1%) Sales Tax revenues received through May 2026 total $3,793,578 ($601,680 lower than FY 2024-25, with one month remaining to be received). Prop 172 Sales Tax revenues through May 2026 equal $3,860,882 ($130,513 higher than FY 2024-25). Staff continue to closely watch these funding sources; geopolitical instability, evolving federal considerations, including changes to relied-on safety net programs that infuse funding into our local economy, and accelerating inflation this spring are among concerns that make consumer spending volatility more probable in FY 2026-27. Transient Occupancy Tax. Transient Occupancy Tax (TOT) revenues totaled $988,798 through May 2026, for an increase of ($154,043) from FY 2024-25. Like Sales Tax, TOT requires continual monitoring for fluctuations in discretionary spending and other factors affecting lodging operations. Cannabis Tax. Cannabis Cultivation and Business Tax revenues received through May 2026 total $2,942,737 ($249,206 higher than May 2025). This increase in tax revenues reflects Board policy changes. III. CONTINGENCIES AND RESERVES: Contingencies: Appropriations included in Contingencies remain at $5,548,360. These can be used for unanticipated needs, including, but not limited to, shortfalls in revenue. General Reserve: The General Reserve stands at $16 million (approximately 15.25% of total recommended General Fund appropriations). This ratio is down 0.75% from FY 24/25, because costs continue to increase, outpacing new revenue. $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 2026-27 Recommended Budget includes funding for several Capital Projects, many of which are supported by grants or other special funding, including: Purchase of Courthouse 4th Floor (BU 1778) $ 1,200,000 Courthouse HVAC Upgrades (BU 1778) $ 2,600,000 Courthouse Interior Renovations (BU 1778) $ 2,997,789 Jail Medical Center Improvements (CalAIM funding) (BU 1785) $ 1,000,000 Armory Remodel (BU 1785) $ 6,000,000 Jail Phase I Roof (BU 1785) $ 3,300,000 Retrofitting and remodeling new Sheriff's Headquarters (FFE) (BU 2206) $ 800,000 Retrofitting and remodeling new Sheriff's Headquarters (Communications) (BU 2206) $ 200,000 South Main St. Underground Utilities (BU 3011) $ 5,890,400 Soda Bay Road Underground Utilities (BU 3011) $ 2,069,600 Socrates Mine Road Repairs 2.4 (BU 3011) $ 1,100,000 Lakeside Slide-Hill Road MP 7.75 (BU 3011) $ 5,110,400 14C-0015 Clover Creek @ First St (BU 3011) $ 4,286,000 Southshore Expansion Project (BU 4014) $ 1,485,533 Various Library Building Forward Grant Improvements (BU 6023) $ 910,009 Lakeside Regional Park Improvement Project (State Per Capita Grant) (BU 7011) $ 115,000 Hammond Park Improvement Project (State Park Improvement Grant) (BU 7011) $ 1,177,813 Various Bridge Construction Projects (BU 8462) $ 2,971,340 Special Districts Administration Office Roof Replacement (BU 8695) $ 354,638 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 2026-27 Recommended Budget provides for a total workforce of 1,119.4 Full-Time Equivalents (FTE's), a net decrease of 8.7 FTE's compared to FY 2025-26'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 Deputy Sheriff I/II (BU 2205) * 1 Assistant Chief Probation Officer (BU 2302) * 1 Senior Planner (BU 2702) * 1 Office Assistant III (BU 2702) * 1 Community Development Technician (BU 2702) * 1 Environmental Health Technician (BU 4010) * 2 Community Health Worker (BU 4011) * 1 LVN I/II, CHN I/II/Sr, PHN I/II (BU 4011) * 3 Health Program Support Specialist (BU 4011) * 1 Grant Manager (BU 4012) General Fund: Positions funded by General Fund discretionary revenues total 440 FTE's, a net increase of 9 FTE's from Adopted FY 2025-26 Position Allocations. Summary of Position Additions and Deletions Since FY 2025-26 Adopted Budget Budget Unit Position FTE's 1671-Buildings and Grounds Capital Project Manager (2) 1903-Public Works Assistant Public Works Director (1) 1903-Public Works Public Works Fiscal Coordinator I/II (1) 1903-Public Works Staff Services Manager 1 1908-Engineering & Inspection Capital Projects Manager 1 1908-Engineering & Inspection Public Works Construction Project Manager 1 1908-Engineering & Inspection Deputy Public Works Director I/II-Engineering & Capital Project 1 2110-District Attorney Welfare Fraud Investigator Supervisor (1) 2111-Public Defender Deputy Public Defender I/II/III/Sr. 1 2111-Public Defender Deputy Public Defender Administrative Manager (1) 2201-Sheriff Deputy Sheriff I/II 1 2302-Probation Probation Aide 3 2302-Probation Legal Administrative Assistant (2) 2703-Animal Control Deputy Animal Control Director (1) 2703-Animal Control Staff Services Analyst (1) 2703-Animal Control Animal Control Office Supervisor 1 2703-Animal Control Animal Control Shelter Supervisor 1 2703-Animal Control Kennel Coordinator (1) TOTAL 0 Existing Positions Moving from Non-General Fund to General Fund* Budget Unit Position FTE's 1903-Public Works Deputy Public Works Director-Maintenance 1 1903-Public Works Deputy Public Works Director-Operations 1 1903-Public Works Deputy Public Works Director-Administration & Comm. Serv. 1 1903-Public Works Administrative Assistant /Administrative Assistant, Senior 1 1903-Public Works Accountant I/II 1 1903-Public Works Staff Services Analyst I/II 1 2702-Planning Staff Services Analyst I/II 1 2702-Planning Accountant I/II 1 2702-Planning Accounting Technician/Accounting Technician Sr. 1 TOTAL 9 *The former Public Services Department has consolidated with Public Works. Therefore, the Public Works Department has requested that administrative staff previously allocated to Solid Waste (BU 4121) be reallocated to Public Works Administration (BU 1903). Additionally, the Community Development Department has requested that three administrative positions move from BU 2602-Building & Safety to BU 2702-Planning. While these positions are not new, they were not previously General Fund obligations. VII. PROSPECTIVE DEMANDS ON THE GENERAL FUND CalPERS. Fiscal Miscellaneous CalPERS Safety CalPERS Year Actuarial Charged Actuarial Charged 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% 26/27 26.11% 25.11% 48.90% 44.24% The FY 2024-25 Unfunded Accrued Liability (UAL) contribution for the County totals $13,105,540 (based on July 2025 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: Times of great uncertainty require us to make difficult choices. Strong alignment with your Board, and effective collaboration with County Departments, is essential to ensuring decisions made in such environments promote the long-term interests of our organization and support the well-being of every County resident. As alluded earlier in this memorandum, we recognize many elements that will inform the economic environment in Fiscal Year 2026-27 are beyond the immediate control of the County. International conflicts have reverberations that manifest in higher material and shipping costs. The Legislature and Governor Newsom continue to balance their own budgetary challenges with the need to support people in these historic times. More than 30,000 Lake County residents are served by programs like Medi-Cal and CalFresh that have seen reduced federal commitments; there are consequences to these policy decisions. However, Lake County's communities and residents are resilient; Lake County's people are strong. With your Board's policy direction and support, Administration and County Departments look forward to fighting for Lake County's most critical needs, confronting and overcoming challenges together. We have seen moments of great trial bring out the best in our friends, neighbors, and communities; truly, that is the Lake County difference. Like many of our surrounding Counties, we are now facing possible revenue shortfalls, claw backs, and reductions in Federal and State funding. To successfully navigate these fiscal threats, we must recognize costs are rising, and revenues are not growing at the same rate. In prior years, revenues have been higher than budgeted; that has facilitated critical one-time investments. This year, due to significant uncertainty, Administration recommends your Board forego consideration and approval of one-time funding requests until Final Recommended Budget (in September). Additionally, a hiring freeze on permanent and extra help employees is recommended to minimize ongoing obligations. County Departments and Administration have long been committed to maintaining the fiscal health and resiliency of our County government, and we will continue to demonstrate problem solving and community collaboration in Fiscal Year 2026-27. Many thanks to all who contributed to creation of this budget, approaching their duties with professionalism, integrity and compassion. Administrative Office Staff are proud to present the Fiscal Year 2026-2027 Recommended Budget for your Board's review and consideration.

Staff recommends your Board take the following actions: a) Approve, by motion, the FY 2026-27 Recommended Budget Your Approval of this Recommended Budget will enable the County to meet its statutory obligations, and continue operations from July 1, 2026, until the Final Recommended Budget is Adopted (September 15). b) Adopt the Resolution Amending the Position Allocation Chart for FY 2026-27 to Conform to the Recommended Budget Your approval of this Resolution will allow departments to hire new staff as of July 1, 2026. c) Authorize, by Motion, the Purchase 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 2026-27 to Conform to the Recommended Budget 3) Position Allocation Table for FY 2026-27 4) Fund Summary for FY 2026-27 5) Budget Unit Detail for FY 2026-27