The Morning Report
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Monday, Jan. 12, 2009 | In early November, county Supervisor Greg Cox suggested that a $10 million grant program that supervisors use to dish out money to their favorite causes was not long for this world.
With state budget concerns growing, revenue declining and budget cuts expected, Cox said supervisors would have a hard time justifying the program in future budgets. But that hasn’t stopped them from giving out money they’ve already budgeted — even as they have made cuts elsewhere. Since November, Cox and his fellow supervisors have handed out $1.5 million in grants. They sent $300,000 to fund a Verdi opera, $16,000 to build batting cages and $3,497 to pay for a holiday dog festival.
The county government, like all local municipalities, is tightening its belt because of the economic downturn. While some supervisors have signaled they may consider the program’s fate next year, they continue awarding the grants, which they describe as coming from surplus revenue. The county currently has a $50 million shortfall in its current budget and expects to have another $50 million shortfall in the next one.
When the next budget takes effect July 1, services will be cut because of declining revenues, said Don Steuer, the county’s chief financial officer. The county is keeping about 6 percent of its positions vacant to cover the existing shortfall.
Since the global economy crashed in October and Cox made his pronouncement that the program would likely be discontinued, four of the five supervisors have awarded grants. (Bill Horn has not.)
Dianne Jacob earmarked $24,330 to the Northmont Elementary PTA in La Mesa to build two rock-climbing walls, a “twist-N-shout” slide and a playground.
Ron Roberts sent $90,000 to the San Diego World Trade Center, a local business organization that has sent him on six Asian trade missions since 2000.
Pam Slater-Price steered $300,000 to the San Diego Opera for a spring performance of Verdi’s Rigoletto.
Cox directed $3,497 to the Ocean Beach Town Council for equipment rentals, supplies, marketing and venue costs for the 2008 Sandy Claws holiday beach party. The canine-themed event on Dog Beach featured a dog costume contest. Promotional materials describe it as a “tail waggin’ good time for the whole family!”
Cox said the county’s current budget is sound. Asked whether the grant funding would better serve residents by being stashed away for tougher financial times, Cox said the county has ample reserves. Steuer said reserves total more than $700 million, though they have restricted uses.
“I think we’ve been good stewards of the community project money,” Cox said. “We do have reasonable reserves for the county of San Diego. Period.”
The continuing awards have fueled critics, who have long derided the grant program as an opaque reward system used to foster campaign support. They say supervisors have a hard time making a case for continuing the grants when they’re cutting their core functions.
“I love doggie events. But if you were to ask me whether child protective services is more important than a doggie beach parade, there’s no question where the priority would be,” said Lani Lutar, president and CEO of the San Diego County Taxpayers Association. “The choices they’re making this year are going to have an impact on the next fiscal cycle. They could be setting that money aside and they’re clearly not doing that.”
Cox said the Sandy Claws funding was justified. “The $3,497 is a one-time allocation for a community event,” he said. “It may not be important to the overall scope of things in San Diego County, but for the people of Ocean Beach, it’s an important event.”
The county has already cut programs and kept positions unfilled to cope with state budget woes. In December, supervisors unanimously voted to axe several public safety programs dependent on state revenue. The county’s Probation Department was cut $3.1 million, including programs intended to reduce recidivism of mentally ill juveniles and adults. The Sheriff’s Department had $1 million cut, freezing four vacant deputy sheriff positions, including two court security officers. The county suspended beach water quality testing for two weeks when the state temporarily cut funding.
The county has two significant fiscal issues with which to cope. The state, which provides a majority of its $5.2 billion budget, is dealing with a $40 billion budget deficit, prompting a range of cuts to its programs, which the county administers.
The local economic slowdown is also hitting the county. People are shopping less, and so the county’s sales tax revenue — used to fund public safety — is down $25 million this year from the $239 million expected. As residents have their declining home values reassessed, property tax revenue is also down about $25 million from the $543 million expected.
“The unknown for me is the sales tax and when is that coming back. It’s too early to tell,” Steuer said. “It’s not doing real well right now.”
The economic picture is expected to remain tough for the county in its next budget, which takes effect July 1. Each county department is currently being directed to draft proposals for cutting programs and staff.
“Clearly, we’re going to be looking at reduced budgets going forward,” Steuer said. “Nobody escapes. This has to be looked at across the entire enterprise.”
Supervisors signal a willingness to consider cutting or reducing the grant program in the next budget year — but not until then. “Our budget has been adopted for the present year,” Jacob said in an e-mailed statement. “However, once we learn more about the impact of the state’s budget, a great many things could change. It is simply too soon to say.”