Are the Humboldt County’s finances being sucked into budgetary Black Hole?

This is a guest post sent to us from a regular reader and “County Budget Watchdog”. (We can’t verify everything in this but it certainly raises interesting questions.)
Measure Z

Humboldt County’s Budget?

“As of June 30, 2013 the county’s total unfunded liability for pensions was $213.1 million — almost double the liability that had existed as of June 30, 2008,” according to the budget report.

It would take over 35 years of Measure Z monies at $6 million per year to pay the above.

General Fund expenses are estimated to exceed revenues by $2.1 million

“Due to the condition of the county’s budget over the last five years, appropriation of General Fund dollars for county building maintenance has been minimal, and often deferred completely,” the budget report states. “The deferral of building maintenance has resulted in an emergency situation

Some of us seem to remember a Department of Public Works Parks building at ACV (Arcata/Eureka Airport in McKinleyville) had a mold issue and a leaking roof during the last few budgets.

 

COUNTY OF HUMBOLDT

For the meeting of: February 10, 2015

Date: January 23, 2015

To: Board of Supervisors

From: Phillip Smith-Hanes, County Administrative Officer -f^^

Subject: Mid-Year Budget Review for Fiscal Year (FY) 2014-15, Budget Outlook for FY 2015-16, and Recommendations for Budget Adjustments (4/5 Vote Required)

3530 – Aviation Enterprise Fund

The Aviation Enterprise Fund began this fiscal year with a negative fund balance of ($525,519). In the first quarter budget report the department was estimating that the negative fund balance would be reduced by $22,139, leaving a fund balance of ($503,780). The department now estimates that the negative fund balance will increase by ($427,974) for a year end negative fund balance of ($953,493). This significant backward movement is the result of unanticipated expenses such as $145,000 in tree topping services and the loss of fuel sales and flights.

Based on the 5 Year Financial Forecast that was before your Board on January 27th the Aviation Fund has an ongoing annual structural deficit of over $700,000.

The Aviation Fund will be unable to submit a balanced budget for fiscal year 2015-2016.”

The county-owned Public Defender’s Office and District Attorney’s Office Child Abuse Services Team office building at the intersection of 4th and K streets in Eureka is also in need of over repairs to comply with the Americans with Disabilities Act. Phase One of the ADA improvements, which would renovate the parking lot and doorways, would cost the county over $630,000.

“While these improvements place the county in compliance with federal ADA requirements, these improvements do not in turn fix the ineffective layout of the building, provide efficient office space and address the extensive deferred maintenance,” the budget report states. “In-kind building replacement is an option and is estimated at $2.4 million.”

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16 thoughts on “Are the Humboldt County’s finances being sucked into budgetary Black Hole?

  1. Sounds to me like someone wants a piece of measure Z. I hope the board uses it for law enforcement priorities and first responders especially in rural areas.

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  2. Looks like Rex and the bunch are asleep at the switch.

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    • This is happening across the state and country. It’s not exclusive to Humboldt County.

      They pretty much have to pay into the retirement funds. That’s why there’s such an uproar since more and more funds diverted to pension funds means less public services. A judge just ruled, however, that retirement payments can be altered as a result of a city or county’s bankruptcy proceedings. We shall see if that judgment gets overruled.

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  3. “As of June 30, 2013 the county’s total unfunded liability for pensions was $213.1 million — almost double the liability that had existed as of June 30, 2008,” according to the budget report.

    It would take over 35 years of Measure Z monies at $6 million per year to pay the above.”

    Measure Z funds do not really play into this issue. The unfunded liability number is an actuarial numbers and is not something the County is required to fully fund. What needs to be looked at for the budget is the required PERS contribution for next year (as compared to this year). Humboldt County is a member of PERS, a statewide pension program that requires contributions from employees as well as employers. PERS had an 18.4% return on investment in fiscal year 2013/14 and their assets total was $300 Billion. Actuarialy PERS is funded at 76%. Their goal was to earn 7.5% (the amount required to meet current and future pension obligations) so they are well above their goal. County contribution rates into PERS are not scheduled to change until 2016-17.

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    • “….Quietly on election night the Eureka City Council passed by 5-0 vote an ordinance to send a so-called “validation” action to the local Superior Court, in essence filing a class action lawsuit against all Eureka residents. The purpose of the action is to “validate” the sale of 10 year “Pension Obligation Bonds” that will refund the current short term obligation due CalPERS but also to circumvent the requirement in the Constitution of the State of California that debt of term longer than one year must be approved by 2/3 majority of the citizens. If this “validation” action goes forward, and some local Humboldt judge rubber stamps it, then you and all your fellow Eurekans will FOREVER be denied the right to vote on ANY PENSION OBLIGATION BONDS OF ANY TERM, TYPE, OR DURATION. This is a ponzi scheme and its desperation hints at severe financial problems ahead for the city of Eureka. It is a long step down the road to municipal bankruptcy. …”

      https://highboldtage.wordpress.com/2013/01/13/city-of-eurekas-validation-action-and-reverse-class-action-lawsuit/

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    • In 2008, PERS suffered epic paper losses because of the financial melt down. If the Stock Market again becomes a Bear Market, your actuarial figures will be out the window. PERS will then mandate higher contributions from participating governments. Humboldt County will not be able to write that check.

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  4. recent talking points circulating among rw and libertarian anti-taxers is showing up here in long winded comments as well as elsewhere.
    I am not on the mailing list, so don’t know where it comes from but three guesses would likely get it.

    I would listen except that these talking points try to drag unions and the professions into the catbox with everything else…and becomes a diatribe trying to articulate how union teachers and public employees are dragging us down with their pensions. As a supporter of unions in general I dismiss these rants.

    However one claim often included does seem to be a cogent point, that pensions are sometimes inflated by a raise in the very last pay periods so as to game the pension calculations..as if each retiree gets to keep the map to the department skeletons as a hostage
    Reform of that practice, if true, may be a good idea but then it wouldn’t be very convenient for smearing public school employees and specifically teachers. As a practice , if it is, it may be to try to compensate for lower than appropriate pay during the working life, to be paid more from then pension plan later…anyway, it’s an interesting point. Maybe.

    And we all know who doesn’t like public schools and the unionized teachers..money, money, money..the worries about public budgets is specious in that context of teacher and union bashing.

    I was reading that the war of Mideast terra has cost by some estimates 3 Trillion dollars…that may have something more to do with the crumbling infrastructure everywhere..a woman barely escaped alive after rotten bridge parts demolished her car. Union teachers did not do that.

    Union pension funds may be partly invested with firms that have offshored their tax obligations as well, teachers didn’t do that either…yet I have heard the usual suspects claim that unions are doing the offshore tax dodge…smh.

    Liked by 3 people

    • The bottom line is that public services suffer because of public pension obligations. There’s no getting around that. If the public pension funds were fully funded, nobody- myself included- would probably even care. Perhaps with the exception of how much at least some public employees make compared to the rest of us.

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      • I see it as a distraction and blame shifting, as well as using the usual go-to scapegoats for their monied interests: school teachers, union workers.

        I see this as a conservative think tank messaging operation….the tell should be obvious, the Reason poll another Clue.

        $3 trillion in the public’s eyes that might be the bigger problem, but instead we are going after unions.
        Again.

        So in spite of the particulars, you can quote chapter and verse I’m sure, I ain’t playing: it’s a Shiny Object…you found some smudges on it to polish.
        Great.

        And recall I did acknowledge the retirement inflation by late raises could be a problem to be fixed, or not.

        I’ll worry about after some Wells Fargo or Chase executives get jail time.

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    • I said somewhere follow the money..privatizing schools a goal for charter schools and the peripheral industries around them.

      http://www.dailykos.com/story/2015/02/11/1363824/-Teachers-unions-take-a-hit

      …………………………………………

      And in another of TE’s story lines this as well, Pasco Washington Police (pop 59,000) have killed more citizens than England and Germany combined if they continue the trend.

      http://www.dailykos.com/story/2015/02/12/1363996/-Pasco-Washington-police-have-killed-more-people-than-police-in-Germany-the-UK-combined

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  5. I might add, as Marmaduke has alluded to, the public employee unions say there’s no problem here.

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  6. The big political picture here for us to remember is public unions and the pensions they fought for are the last bastion of the middle class. They are the final and concentrated target of Reagan’s revolution.

    There is obviously some truth to what the libertarians and conservatives are saying and there probably do need to be reforms. As a public employee with a start date in 2014, my retirement plans are already less desireable from those employees from 2013 and this progression is likely to continue.

    I’d just like us to keep this in mind in our continuing search for scapegoats and I think Marm has nailed it on this one.

    Note: I am an eligibility worker with the DHHS. The opinions stated here are my own and in no way meant to represent official DHHS policies or those of DHHS management or administration.

    Liked by 1 person

  7. Well, we can hope that County retirees and their spouses die earlier than than actuarial predictions. But its likelier that they’ll live longer. This is just one aspect of a generational war being set up because of periodic economic ‘crises’ that all result in wealth being more concentrated and taxes reduced.

    Pension funding is based on long term expectations of revenues. Every economic crisis has gutted those expectations resulting in ever larger predicted shortfalls. Worker productivity has gone up but the increased value of that productivity hasn’t been going into funding for worker pensions. Instead, economic crises have been resolved by new public debt and increasing workers productivity value has been sent to the holders of the debt as interest payments.

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    • “Pension funding is based on long term expectations of revenues. Every economic crisis has gutted those expectations resulting in ever larger predicted shortfalls. Worker productivity has gone up but the increased value of that productivity hasn’t been going into funding for worker pensions. Instead, economic crises have been resolved by new public debt and increasing workers productivity value has been sent to the holders of the debt as interest payments.”

      Nail head, meet hammer. Well done NAN!

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