Federal, state uncertainty complicates county's budget process
Facing budget reductions at the local, state and federal level, Kern County officials will have to take a hard look at which programs it wants to support should outside funding dry up.
Speaking at the Board of Supervisors meeting Tuesday, Assistant County Administrative Officer Elsa Martinez said county funds won't be able to make up for all the reductions being proposed at the state and federal level, meaning certain programs may have to be prioritized.
"Our county has a policy about overmatch. What that means, we have made the policy of the county that we are not to backfill production of state and federal programs," Martinez said. "The impacts (of proposed cuts) are so severe that we believe we're going to have to look at that policy and really prioritize the programs that are important to our community and your board."
Property and sales tax revenues haven't kept up with expenditures and in March, Martinez told the board that department heads were instructed to reduce their budgets by 3% as the county looked to close a $9 million budget gap. But no amount of efficiency cuts can make up for the money some programs receive from outside sources, and if those funding streams end, the officials will have to decide which programs to support using county dollars.
The Public Health Services Department alone faces a reduction of $10 million if all proposed reductions go through.
"You heard your director of public health. She has done restriction of travel, canceled contracts. She still has a $10 million hole that she needs to cover," Martinez said. "We're gonna work with her to try to mitigate but at the end of the day, I don't know how to efficiently cut $10 million in such a short time."
Reserves saved from sales tax revenue could buy the county some time but without a more reliable funding stream, certain programs may have to be paused or canceled.
Roughly 34% of the county's budget is derived from state, federal and other government aid, according to Alexander Alva, budget and finance director with the County Administrative Office. Current projections estimate $69.2 million in reductions to federally funded programs across all county departments.
Reductions to that funding could mean cost-cutting measures, resulting in reduced services and other operating adjustments, Alva told the board. Uncertainty in the budget process makes planning for those reductions difficult.
"It's a very fluid situation, the budget continually changes, we hear in news, every single day, if not by the hour," said Lito Morillo, director of the Department of Human Services, which oversees the county's Medicaid disbursements.
Kern County has roughly 400,000 Medicaid patients, or Medi-Cal as it's called in California, Morillo said. Congress is considering not just reductions to the program's funding, but also changes to eligibility requirements.
"All these reductions that I've shared with you are just current proposals at this point in time," Morillo said. "But if they come to pass in some way, shape or form, they will dramatically impact our ability to provide services here in this county."
At the same time, several departments are looking at additional mandates but no additional funding.
"Proposition 36 has required us to create new expanded substance use services for justice-involved individuals. Care Court mandated the development of an entirely new treatment program and increased coordination with the courts," said Alison Burrowes, behavioral health and recovery services director.
"Most of the new requirements are either unfunded or underfunded," Burrowes said.
Public Health Services Director Brynn Carrigan noted the county is grappling with unfunded requirements and possible reductions from state and federal sources all while trying to manage some of the worst health outcomes in the state.
"The county has the highest mortality rate from diabetes in the state, and leads in reported cases of valley fever, to name a couple," Carrigan said. "Additionally, Kern County experiences disproportionately high rates of HIV and other sexually transmitted infections, further underscoring the urgent need for targeted health interventions and sustained funding support."
Fortunately for the county, the budget process isn't finalized until August, which means officials should have a better idea of how much money to expect. On Wednesday, Gov. Gavin Newsom will release an updated version of his budget known as the May Revision. While the Legislature will ultimately decide the final budget, Martinez said the "May Revise" will signal the governor's priorities.
"However, we cannot backfill every state and federal reduction," Martinez said. "If there are programs that we cannot just use resources or backfill, we might have impacts. We might have layoffs. Again, I don't want to scare anybody. This is not bad news. This is the reality we're living in."
A preliminary budget will be presented June 24, and then updated in July after the assessor finishes property valuations.
Supervisors said they recognized putting together this year's budget would be a difficult process.
"I think the most important line in your entire administrative report for our workforce is on page five, last page, where one of your budget planning goals is to minimize impacts to the county workforce to the greatest extent possible," said District 4 Supervisor David Couch. "I think in an effort to be just open and transparent about this, the methods to achieve minimizing those impacts aren't pretty."
District 1 Supervisor Phillip Peters recommended a board subcommittee look into hiring an outside auditor to assess county programs for their efficiency.
"I would like for us to consider the possibility of getting an outside company, individual, or identifying some third party that can come and take a look at our budgets and help us," Peters said. "(A) fresh set of eyes on where we can identify efficiencies and opportunities for operational improvements that are available."
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And most of them — around 92% — are working, caregiving, attending school or disabled. Earlier estimates of the budget bill from the Congressional Budget Office found that about 5 million people stand to lose coverage. A KFF tracking poll conducted in May found that the enrollees come from across the political spectrum. About one-fourth are Republicans; roughly one-third are Democrats. The poll found that about 7 in 10 adults are worried that federal spending reductions on Medicaid will lead to more uninsured people and would strain health care providers in their area. About half said they were worried reductions would hurt the ability of them or their family to get and pay for health care. Amaya Diana, an analyst at KFF, points to work requirements launched in Arkansas and Georgia as keeping people off Medicaid without increasing employment. Amber Bellazaire, a policy analyst at the Michigan League for Public Policy, said the process to verify that Medicaid enrollees meet the work requirements could be a key reason people would be denied or lose eligibility. 'Massive coverage losses just due to an administrative burden rather than ineligibility is a significant concern,' she said. One KFF poll respondent, Virginia Bell, a retiree in Starkville, Mississippi, said she's seen sick family members struggle to get onto Medicaid, including one who died recently without coverage. She said she doesn't mind a work requirement for those who are able — but worries about how that would be sorted out. 'It's kind of hard to determine who needs it and who doesn't need it,' she said. Some people don't if they might lose coverage with a work requirement Lexy Mealing, 54 of Westbury, New York, who was first diagnosed with breast cancer in 2021 and underwent a double mastectomy and reconstruction surgeries, said she fears she may lose the medical benefits she has come to rely on, though people with 'serious or complex' medical conditions could be granted exceptions. She now works about 15 hours a week in 'gig' jobs but isn't sure she can work more as she deals with the physical and mental toll of the cancer. Mealing, who used to work as a medical receptionist in a pediatric neurosurgeon's office before her diagnosis and now volunteers for the American Cancer Society, went on Medicaid after going on short-term disability. 'I can't even imagine going through treatments right now and surgeries and the uncertainty of just not being able to work and not have health insurance,' she said. Felix White, who has Type I diabetes, first qualified for Medicaid after losing his job as a computer programmer several years ago. The Oreland, Pennsylvania, man has been looking for a job, but finds that at 61, it's hard to land one. Medicaid, meanwhile, pays for a continuous glucose monitor and insulin and funded foot surgeries last year, including one that kept him in the hospital for 12 days. 'There's no way I could have afforded that,' he said. 'I would have lost my foot and probably died.' ___ Associated Press writer Susan Haigh in Hartford, Connecticut contributed to this article.
