MONTEREY COUNTY — The County of Monterey is grappling with a projected $39.7 million deficit for the upcoming fiscal year, driven by rising labor and operational costs, the ongoing impacts of multiple natural disasters and a notable reduction in one-time and federal funding.
Financial forecasts also indicate further shortfalls may emerge in the coming years.
At a Budget Workshop on March 25, the Monterey County Board of Supervisors examined the current $2.25 billion fiscal plan and discussed strategies to manage the anticipated shortfall. The workshop provided an opportunity for elected officials and department heads to voice their concerns and request budget augmentations.
According to county officials, “The direction given by the Board included identifying ways to retain filled positions and mitigate operational impacts.” In preparation for the Budget Hearings scheduled for May 28 and 29, county finance staff will work with department leaders to explore options for addressing the financial challenges ahead.
“The Board made difficult budget decisions today while striving to maintain services and keep departments whole,” stated Supervisor Chris Lopez, commenting on the Board’s efforts. “We demonstrated support for key initiatives, including the Chualar Community Plan, temporary parks staff to generate revenue for the lakes, the ERP system, and the Spay and Neuter program, among others. The Board also discussed and provided direction on several important capital improvement projects.” Lopez noted that the final budget adoption is scheduled for June.
Recent updates from various departments reflect changing financial landscapes. Monterey County Sheriff’s Office has indicated that, due to timing issues, their deficit may be closer to $7.6 million, with projections suggesting it could rise to $44.4 million in future years. Meanwhile, the Health Department anticipates it can narrow or close a $5.4 million gap through new fee-for-service revenue.
The Social Services Department reported a $6.5 million deficit for the prior year due to delayed revenue, which is not included in the current forecast; this amount is pertinent only to the previous fiscal period. If the Health and Social Services projections are realized, they could positively impact the county’s overall financial outlook by approximately $4.3 million, though the Social Services gap remains linked to past revenues.
Other departments are navigating their own financial challenges. Monterey County Free Libraries plans to utilize $90,000 from its fund balance to complete projects at the Pajaro and Gonzales branches, while Emergency Communications expects to reduce their fund balance by about $19,000 in FY 2024-25. Rising costs are anticipated due to escalating salaries, pensions and service agreements.
Natividad Medical Center expects a net position increase of $13.4 million from operations, while the Lake Resort’s projected net position will slightly decrease from $3.3 million to $3.1 million. Conversely, the Laguna Seca Recreation Area is expected to end the year with $28.8 million in net position, largely attributed to capital assets.
The Road Fund is projected to see expenditures exceed revenues, resulting in an $18 million reduction to its fund balance. This discrepancy stems from ongoing projects, including the Local Rehabilitation Program and necessary salary increases.
In the Behavioral Health division, expenditures totaling $182.6 million are expected to outpace revenues at $175.5 million, leading to a projected $7.1 million decrease in the fund balance. Increased expenditures are attributed to construction projects and rising operational costs, although revenues are projected to surpass the budget by $10.7 million, crediting a $7.2 million expected increase in Federal Financial Participation.
Residents are encouraged to review the Budget Workshop, now available online on the County’s Facebook page and YouTube channel.
“The Board and County Administrative Officer remain committed to ensuring the County’s fiscal stability in the long term,” officials stated. “We will continue to assess the financial landscape and adjust accordingly to best serve and in the best interest of our community.”
