Quick Take
"Unprecedented" has become an overused term since the pandemic, but Santa Cruz County faces budget struggles brought on by natural disasters that are unique in the county's history.
After a surprise atmospheric river tore through the Central Coast on New Year’s Eve 2022, hundreds evacuating as rivers and mud flowed into neighborhoods, the Santa Cruz County government responded with emergency shelters, first responders and rapid road repair. That storm would be the opening salvo in a cataclysmic series of disasters to injure the county over a three-month span.
Cataclysmic, and expensive. The county is still digging out from under the debt imposed by that winter. The emergency response and repairs for just that first storm cost the county $1.6 million out of its emergency fund, according to budget director Marcus Pimentel.
Amid what some have called unprecedented financial pressures facing the county, that same contingency fund used for emergency response — typically flush with more than $7 million — will be squeezed to only $1.5 million, less than the cost of only one storm in 2023. That’s far from the only shortcoming.
Hazel Dell Road in Corralitos had a significant slip-out during the March 2023 storms. The cost: $460,000. The county’s money to fix it: $0.
Over on Capitola Road near Live Oak, the county agriculture commissioner’s office not only has a leaky roof, but the land under the building’s back corner is sliding, putting the entire structure at risk. The county has no money to fix it. Necessary improvements to the county jail and a $30 million upgrade to the outdated 911 emergency communication infrastructure are just some of the other examples facing the same fate.
“During the Great Recession, governments were talking about how they could avoid spending money to replace a firehose,” Pimentel told Lookout. “That’s a place you never want to be. The conversations we’re having now are worse than that. The fact that a building is slipping and we can’t fix it is wild.”
Last week, Pimentel and chief county executive Carlos Palacios formally introduced the county’s 2024-25 proposed budget, and painted a bleak financial trail ahead, colored by a collision of natural disaster debt and unfunded mandates from the state government. More than $161 million tighter than the financial plan adopted last year, the 2024-25 budget could end up as the first substantially slimmed-down total budget, year over year, that the county has adopted since 2011, and the first tightened general fund since the Great Recession in 2009-10.
Playing a role is the end of pandemic-era money that helped fund several temporary positions in the Health Services Agency. Those 28 positions will end at the end of this current budget cycle; however, the county is proposing to eliminate another roughly 15 vacant positions from the agency. As of last week, the HSA had 171 vacancies. The Santa Cruz County Sheriff’s Office could gain two full-time positions, and the public defender’s office could add three.
The county is also using all of its credit to take out an $85 million loan to pay for disaster repairs it has already fronted. The Federal Emergency Management Agency has slow-rolled the county on disaster reimbursements to the tune of $144 million. The county in 2024-25 will not have the financial means to operate while waiting on that FEMA payback.
“It’s alarming to me to have such limitations on our ability to maintain services,” Pimentel told Lookout. “It is something that makes me not sleep well at night.”
Even with an $85 million loan, the county does not have any capital for what would otherwise be routine, no-brainer infrastructure fixes, such as the ag commissioner’s building, 911 communication technology, or much-needed upgrades to the jail. Some money remains for road projects, but the funds fall well short of the need.
“There are literally hundreds of these projects all over the county,” Palacios said, pointing to the slip-out at Hazel Dell Road, “that we’re struggling to keep pace with.”
District 1 Supervisor Manu Koenig told Lookout that the county, broadly speaking, is facing the culmination of years of failed practices, from restrictive zoning policies, to lack of investment in infrastructure and health. He said the proposed budget does not go far enough, and that county officials need to begin seriously discussing where cuts need to be made, and where more investment is necessary.
“We’ve been given a status quo budget but I don’t believe we can just keep going with the status quo,” Koenig said. “We’ve got to set a course to get us out of this situation.”
Koenig said the one place he’d choose to prioritize is the housing and planning department, where executive positions are vacant. Koenig said investments in areas that will more rapidly produce housing could help the county build its struggling tax base. However, greater investment in one area means cuts in another.
“We’re still having those discussions. Do we cut all departments evenly? Do we pick on just one?” Koenig said. “We need to at least change our stance and our budget a little bit.”
The county will host three more budget hearings: May 21 and 22 and June 4. The county does not host town halls or surveys regarding budget priorities, so the public hearings at the supervisors meetings are a critical opportunity for residents to have their voice heard.
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