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County adopts reserve policy |
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Policy aims to restore
Contra Costas fiscal health, credit rating |
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By Rebecca F. Johnson,
STAFF WRITER |
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MARTINEZ — The Contra
Costa County Board of Supervisors approved the implementation Tuesday of a
reserve policy as a measure to shore up the countys fiscal condition in
future years. Over the past few years, the county has balanced its budget by
dipping into rainy day money — including $20 million this year alone — as a
way to avoid further cuts. But if this trend continues, the county will deplete its
reserves by the 2007-2008 fiscal year, staff members said. While our budget shortfall in the coming year is not any worse
than in any of the recent prior years, we no longer have the reserves that
have been available in the past to help bridge those shortfalls, County
Administrator John Sweeten said. The reserve policy aims to establish at least a 5 percent
cushion of general fund revenues. Any additional money saved would be
deposited into an account for capital facility projects. The policy also stipulates that the reserves can only be drawn
for an unforeseen emergency, to fund a non-recurring expense or to fund a
one-time capital cost with a four-fifths majority vote. In addition to restoring the countys fiscal health, the reserve
policy is intended to raise the countys credit rating, which was recently
downgraded by Moodys. To avoid further downgrades, the county must close its
structural budget gap and stop using reserves to balance the budget, said Jason
Crapo, capital facilities administrator. A lower credit rating causes the cost of bond insurance to rise
and decreases the uninsured bonds market value, Crapo said. The reserve policy is not a magic bullet, but would serve as a
necessary first step to charting a new road for the county in terms of fiscal
practices, board Chairwoman Gayle Uilkema said. This is not the be-all, end-all solution to everything that is
on this countys plate, she said. To solve the countys structural woes resulting from increased
salary, pension and health care costs, the county must reduce the cost of
programs and services in the short-term as well as create a more sustainable
compensationpackage for workers, Sweeten said. If the county balances its budget in the 2006-2007 fiscal year,
the process to achieve the targeted reserve balance will take four to five
years to complete, said Lisa Driscoll, senior deputy county administrator. Kris Hunt,
executive director of the Contra Costa Taxpayers Association, said the group
lauds the new fiscal attitude and supports the idea of boosting and
maintaining reserves. However, it
becomes an empty gesture until the county actually takes the financial steps
to create that reserve and reverse the financial trend we have seen in the past,
she said. Reserve policies are not legally mandated for counties but many
government bodies, such as school districts and cities, have such policies. Rebecca Johnson can be reached at (925) 416-4882 or rjohnson@angnewspapers.com. |