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Just because all the news recently has been about the city of San Diego’s budget woes, doesn’t mean that the county of San Diego is in the clear. Not in the least. On Friday, County Chief Administrative Officer Walter F. Ekard sent an e-mail to county employees telling them to expect the worst.

Here it is:

My Fellow Employees:

Times are tough … for all of us in San Diego and across the nation. Every day, the news on so many fronts gets gloomier. The stock market has tanked, home equity has plummeted, employers are struggling to make payroll and families are just trying to make ends meet.

Unfortunately, local government revenues have not escaped the impact of the economic downturn. Even here at the County of San Diego, with our well deserved reputation for the strictest of fiscal discipline, we are bracing for a difficult next few years.

It is certainly not my intent to unduly alarm anyone at this point in time. But I believe it only fair to let you, my colleagues, know the seriousness of our financial picture as we look ahead to 2009.

Counties in California rely on various funding streams to pay for the services we provide.  Property tax, sales tax, vehicle licensing fees and recording fees are the most important. In this year alone, we face a potential shortfall in these revenue sources of $90 million! Our situation is made far worse by the fact that we cannot get a clear picture of the fiscal situation at the State level.  As a result of the State budget just adopted in September, we are still attempting to manage significant cuts made to our Health and Human Services Agency and other departments.  Now, just eight short weeks later, the State has indicated that it faces a $28 billion shortfall, a deficit that, if real, creates a significantly greater financial mountain we’ll have to climb. It also means a strong likelihood of significant additional cuts in the money the State pays us to provide State services, as well as a potential raid on local revenue sources.

It’s an uncertain, but pretty bleak picture.

So, what does that mean for us?  First, the positive news.  Our past fiscal discipline has provided us with some flexibility in managing the economic crisis for the current 2008-2009 fiscal year.  We believe we have the ability to weather the current year’s storm utilizing funds we have saved from prior years, scrutinizing our expenditures and by not filling vacancies as they come open.

The bad news is that these actions only give us one year of flexibility.  We will not be able to sustain our existing service levels into the next fiscal year. We anticipate a significant structural deficit, (the dollars we collect don’t match the dollars we spend) will exist by next spring which will require us to reduce services, and potentially, our workforce.  I know that causes anxiety for many of you and I wish I could be more optimistic that the situation will right itself over the next few months. Hopefully, the economy will turn around quickly.  But all indications are that any economic recovery will be slow and that the mess in Sacramento will continue for the foreseeable future.

Needless to say, we intend to do everything possible to mitigate the impacts of our current circumstances on the people we serve and on you, our valued County employees.  As information becomes available and as we fully formulate our plans, we will keep you apprised.

Best regards,

Walt

DAVID WASHBURN

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