FRESNO COUNTY – The County of Fresno could be facing a shortfall of more than $15 million in the upcoming fiscal year, according to an initial outlook of the county’s 2025-26 budget.
Increased costs for county services are growing at a faster rate than increases to property tax revenue, County Administrative Officer Paul Nerland said in a presentation to the Fresno County Board of Supervisors on March 11. This, along with potential cuts to state and federal funding, will require the county to look at a variety of solutions to decrease overall costs.
“It may seem like doom and gloom, but what I want to end with is this: I do think that challenging times like this are actually good for government,” Nerland said. “It forces us to look at our services, it forces us to be more efficient, to get more innovative, and that’s exactly what we plan to do.”
Some potential solutions will involve individual department budget reductions, hiring controls and utilizing holiday furlough. Nerland said he has already talked with department heads about budget reductions and would be sending out budget scenarios to departments that show budget impacts for various scenarios.
Nerland said the county has also already implemented “soft hiring controls” but would also have controls within the CAO’s office go into effect that week, requiring approval for any new hires. Another “tool in the toolbox” the county could use is mandatory furlough, where employees are placed on unpaid leave for 40 or 80 hours. Nerland said this saves the county approximately 2% in expenses if 40 hours is used.
Other solutions include evaluating overtime policies, eliminating non-mandated services and reducing the amount of funds set aside for budget mitigation.
“The last few years, we’ve had a cushion; we’ve been fortunate to be able to budget a decent-sized budget mitigation fund, and we’re going to use a portion of that this year,” Nerland said. “We won’t be able to budget as much, if any, next year.”
In addition to slowed revenue growth and increased costs from factors like salary increases, utility rate raises and insurance premium hikes impacting the budget, the county could face an increased deficit depending on what happens at the state and federal levels. Nerland said that while the county normally spends most of its time talking about impacts from the California state budget, this year they are focusing more on the federal level.
Fresno County has about $800 million that is budgeted in federal funds, Nerland said. Beyond that, potential Medicaid funding cuts discussed at the federal level would have a “staggering” impact on the county. Nerland said that of the $4.3 billion Fresno County receives in Medi-Cal payments, which is the state’s version of Medicaid, $2.7 billion of that comes from federal reimbursement.
“We did hear some insight that suggested that some of the Medicaid cuts that have been proposed may not occur or they’ll try to not do that because of feedback, but we’ll see what happens,” Nerland said. “So we are watching that carefully, because anything like that could put more pressure on discretionary dollars if there are mandated services that the county must now cover with those precious, limited discretionary dollars.”
Mid-year budget review
Alongside the initial outlook, the Board of Supervisors received a mid-year budget report for fiscal year 2024-25 and approved a proposed schedule for when the board will review and adopt next year’s budget. Budget Director Paige Benavides said the county had spent about 39% of its budgeted expenses at mid-year and brought in about 28% of its budgeted revenues.
Based on projections from county departments, Benavides said the actual expenses and revenues in the general fund were likely to be 91% of what was budgeted, which is in line with past years. This means that both expenses and revenues in fiscal year 2024-25 were lower than what the county planned for; the county had budgeted more than $2.52 billion in expenses and more than $2.05 billion in revenues.
The share of general fund expenses between county services types is estimated to end the year with 64% going toward justice services, 19% toward administrative and fiscal services, 11% toward human services and 3% each toward land use and development and contingencies and reserves.
County staff will bring the recommended budget to the board of supervisors on June 24, with final budget hearings to follow on Sept. 15.
Although the fiscal year begins on July 1, Fresno County adopts its final budget in September once it has a clear view of its final expenses and revenues from the prior fiscal year. Board Chair Buddy Mendes said when most public entities adopt their budgets in June, “they’re basically shooting in the dark,” and the September timeline allows the board to be more accurate.
Vice Chair Garry Bredefeld reiterated that one of his main priorities as a newly elected supervisor is to adjust the way the county conducts its budget hearings and make the process more open to the public. Bredefeld said he would like to see each department head present their needs to the board as the budget is reviewed and truly hold multiple budget hearings instead of just one.
“I would advocate that department heads come before this board as part of the budget hearings,” Bredefeld said. “It says budget hearings, and so I think we ought to have budget hearings, and it’s just going to be very difficult for me to support any budget that is not done where we’re hearing from department heads, and I really think that that’s our responsibility to do that.”
