COVID-19 impacts will result in $32-56-million county budget shortfall next fiscal year
Officials project large decrease in revenue driven by drop in consumer spending
–County of San Luis Obispo officials say a drop in consumer spending driven by the COVID-19 pandemic will result in a $32 million to $56 million general fund budget shortfall next fiscal year, beginning July 1, 2020.
Recently proposed changes to the state budget related to COVID-19 will directly affect the county’s budget. While Governor Gavin Newsom recommends allocating about $29 million in CARES Act funding to the county, this funding appears to be directed at health and human services programs impacted by COVID-19 and is not intended to address the overall budget gap, according to the county. The county is working to better understand the requirements for this funding, which is subject to formal appropriation by the State Legislature. County officials say they also expect COVID-19-related factors to impact the county’s budget for at least the next three fiscal years.
The County Board of Supervisors heard details about the County’s Fiscal Year 2020-21 (FY 2020-21) Recommended Budget at a public meeting this week. The shortfall in the coming fiscal year represents 5 to 10-percent of the county’s general fund budget and is on par with what many other local jurisdictions are experiencing. While expenditures related to the local COVID-19 emergency response are affecting the budget, the anticipated shortfall is primarily driven by large drops in consumer spending, which shape local, state, and federal economies and budgets.
“We have many tough choices ahead of us,” said Wade Horton, County Administrative Officer, and Emergency Services Director. “To put this shortfall into perspective, the largest single-year gap closed during the most recent recession was $30 million, which is the low end of what we expect.”
Officials are addressing the immediate shortfall while continuing to analyze the situation and prepare for a multi-year impact. The county has instituted a hiring freeze and is scrutinizing all discretionary spending. The Board of Supervisors will be asked to provide direction on other immediate and longer-term actions to balance the county’s budget.
The public is invited to provide input at the County Budget Hearing scheduled for June 8-10, 2020.
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