Mendocino County supervisors approved a series of staff recommendations Tuesday that reduce the projected budget shortfall for next year from $17 million to $2.6 million.
During a workshop at the board of supervisors meeting, CEO Darcy Antle said declining sales tax revenue and previously approved employee raises are the primary drivers of the deficit. Sales tax revenues are expected to fall by $314,000 this year and $270,000 next year.
“The budget team continues to work with the departments to fine-tune the budget,” Antle said. “It is requiring all departments to be creative, look at all funding streams to ensure all the dollars are going to the highest and best use.”
Antle attributed the decline to tariffs and persistently high interest rates, which have impacted sectors such as gas stations, auto sales, transportation, and construction.
She said six county department heads submitted proposed reductions totally $624,327 since the last budget workshop.
Supervisor Bernie Norvell asked whether the $1 million for road repairs allocated at the prior meeting would be eliminated. “Are you asking for the $1 million for roads to come off today?” he asked.
Supervisor John Haschak replied, “Well, it doesn't have to come off today, but I think the reality is that at some point, we'll have to really reconsider that.”
A significant portion of the discussion focused on how to allocate Proposition 172 funds — a half-cent sales tax earmarked for public safety. The board previously agreed to give fire agencies 5.46% of the tax proceeds, meaning reduced funding for the District Attorney’s Office, Sheriff’s Office, jail, and probation.
Supervisor Ted Williams proposed absorbing the cuts primarily from the District Attorney’s budget, citing past underspending.
“I looked at past years and it seems like the DA comes in under budget. It won't make any difference. There's money available,” he said. “Whereas I think the sheriff's budget is more likely to go over. No fault of the sheriff. It's just responding to crime. He can't predict.”
Supervisors also discussed whether an additional $87,000 for fire agencies should come from public safety funds instead of the general fund. Staff cautioned that combining dollar amounts and percentages could become confusing. Supervisor Mo Mulheren said she wanted to see detailed math before offering support.
Another area of debate centered on cannabis business tax revenue. Voter-approved advisory language recommends spending that revenue on marijuana enforcement, mental health services, road repairs, and emergency response. With revenue projected at just $1 million, the cannabis tax will barely cover the county’s cannabis department operations.
“I don't think the voter intent was some of those should get zero,” Williams said. He asked whether the county was ear marketing enforcement dollars for licensed growers or for growers who are violating the law. “I would think that enforcement is to address unlicensed cannabis in the county, not run the legal program. The legal program was intended to be run from cost recovery fees paid by the applicants.”
Williams continued: “Nobody in this room was in charge of it at the time, but what it looks like to me is the county set the fees well below the actual cost of running the program and then backfilled using this tax, arguably inappropriately. How do we get on the right foot going forward?”
Supervisor Norvell agreed. “Until voters decide otherwise, I think this is what we live with, and the majority is supposed to be spent on those four categories.”
Interim Cannabis Director Steve Dunnicliff gave a brief overview of the department’s role.
“The mission statement is, um, really processing, um, cannabis cultivation business licenses. And as a component of that, um, we're matching cultivators up with the program requirements and getting them legalized,” he said. “So, to that end, we are receiving applications, reviewing those applications against the cannabis regulation, we're renewing licenses, and again ensuring that there's compliance with the existing regulation. We're doing site inspections, and the program includes a certain percentage of random site inspections that are done each year. Um, so that's how we're enforcing cannabis regulation.”
Dunnicliff said the department includes three full-time planners, a program administrator, and one administrative support staffer.
While no new model for allocating cannabis tax revenue was adopted, the board agreed on the need for better tracking and reporting of those funds.
To address the shortfall, staff also proposed a Voluntary Separation Incentive Program (VSIP), offering financial incentives to employees based on years of service. The separations would be subject to review by department heads and the CEO and require approval from the board of supervisors. Vacated positions would be frozen for two years and employees who took part in the incentive program would not be eligible for rehiring for two years.
A recommendation to eliminate most vacant positions — except those related to public safety — reduced the number of open positions from 281 to 78. Of the remaining 78 open positions, 26 positions are for the sheriff’s office, the jail, and probation. Sara Pierce, acting assistant CEO, made clear that the staff recommendations, which totalled roughly $14 million, include an assumption about employee turnover, which is estimated at 6%. Combined with a hiring freeze, staff estimates the county can save $8 million by not backfilling positions after people leave. “The county's true turnover rate is about 9.9%,” Pierce said “So almost 10%. We did take the conservative approach um at 6%, taking that kind of consideration along with economic factors, people may not be wanting to change jobs to come up with a lower rate.”
In addition staff recommended exploring use of Measure B and opioid settlement funds to offset Naphcare services at the county jail as well as changes to cost plan charges to special districts and grants.
The board also explored revenue-generating opportunities. Supervisor Williams proposed expediting the auction of unused county-owned properties. While staff noted the process is lengthy, the board agreed to invite the Auditor-Controller-Treasurer-Tax Collector to a future meeting to further explore the idea. Williams also suggested reassessing under-assessed properties to boost revenue.
Board members expressed concern over limited access to departmental information during budget deliberations.
“Part of the budget process that's so frustrating to me is that we don't receive all of the information that we are trying to make decisions on,” said Mulheren. “I very frequently ask that departments submit reports through the CEO’s newsletter at the end of the month. To be told that there are departments that don't have an update has me greatly concerned. I would love to know what you've done for the month. Even if you're telling me the same data points each month, there should be a report and a response.”
Mulheren requested that all departments present their budgets to the board during its June meeting to increase transparency. She asked them to include how many employees they have and what their employees are working on.
“I very frequently ask that departments to submit reports through the CEO’s newsletter at the end of the month,” she said. “To be told that there are departments that don't have an update has me greatly concerned.”
The next budget workshop is scheduled for May 6. The board expects to adopt a final budget in late June.
