Board of Supervisors — 2019-04-15

Good evening, everyone. Hello. The . . Hello.

Good morning, everybody. I'd like to call this meeting together for the budget workshops for Santa Barbara County Board of Supervisors for fiscal year 2019-2020. Madam Clerk, can we get a roll call please?

Ms. Hartman? Here. Mr. Adams?

Here

Mr. Williams? Mr. Hart? Here Mr. Lavinino?

Here

Let the record reflect that Supervisor Williams is absent

So we've heard from the public about how they would like more input on our budget hearings and the way that we go about this workshop. So what we'll be doing is, we'll be receiving public comment after each departmental item. We will also have public comment after our general overview just to heads up on behavioral wellness. We're gonna group that public comment together though As you notice, we have behavioral wellness including AOT update and then mental health diversion efforts as a special issue.

But we'll group all that public comment together before we go on to public health. So we do have general public comment to begin the day. Madam Clerk, how many requests do we have?

Chair Lavinino, members of the board, we have one request to speak on general public comment. And that is- Nope,

now we have zero.

Chair Lavagnino, members of the board. We still have one request to speak and that's Ed Kolaski.

Oh okay. Mr. Kolasky.

I'm glad I'm not zero. Thank you. I call my talk today every day I have to live with this. It's been five years now When we presented our project before the Board of Architectural Review, it was pretty clear that all the stuff we went through was just totally a bunch of worthless hoops. You know, we did things, everything... We took pictures of all our neighborhood houses. We did everything the board requested and it basically had nothing to do with getting approval. It's frustrating that they have to do all that for nothing Absolutely nothing wasn't even a consideration.

We went down the 5th meeting. I'd already kind of been warned at the 4th meeting that we were supposed to have made a donation or made an extortion payment. We didn't do that and that seems to be the problem here. We had all seven members of the Board of Architectural Reviews sitting before us, and Alex decided that he wasn't going to show them what we had presented. So my architect's holding the drawing and we sat down and they voted against this. They said we did no changes when we added 300 square feet to a 400-square foot project and kicked us out.

15 seconds. Half year of work, out the door. This is the drawing there that shows our second story is not located solely over the garage. Alex ruled that it is solely over the garage. Therefore, it's in violation of 4.7 which is just a lie. Then we went to the PC to show them this and the PC couldn't understand how that's solely over the garage when it's not solely over their garage so they just basically said whatever SBAR said was fine with them.

It's your fault you didn't make the extortion payment. So then we came here before the Board of Supervisors, unfortunately at that time Janet Wolf was not only on the board but also the chairman and that was a hopeless situation. We appealed to Janet Wolf and that was like it's your fault you didn't make the payment I don't know what the payment was then, but later on I got the indication that eventually they would settle for $1,000. But you can't trust Alex.

If you give him a thousand dollars he could take the thousand and walk in tough luck. It's kind of like our fault that we didn't know that you're supposed to make a donation. So here I am, five years later and we're going to try again. You know, we went through all these little episodes where first we get kicked out then somewhere along the line they send the guard at me with his nightstick and horrified the members and they said okay well have a special meeting and we've had a special meeting we had Dr. Russell there All that. Yeah, just submit anything and we'll approve it." Well, that wasn't the case. And then we went on and had another meeting and yeah, just present your drawings and you'll be fine. Mr. Klasky, you're over your time. That wasn't the case.

Okay, thank you. Thank you.

Okay, that takes us to our first item which is our CEO's report.

Good morning Chair Lavinino, board members. Today we begin a week of presentations of our fiscal year 19-20 budget themed honoring our commitments and transforming our future and I'm going to talk this morning and give you some context and then turn it over to Jeff Frapp while our Budget Director and Assistant CEO who will speak more specifically about the preliminary budget.

But before I begin, I do want to thank our departments and their fiscal officers, many of whom are here today. Betsy Schaefer, our auditor controller, and her assistant auditor controller Ed Price and their staff led by Kyle Slattery and Robert Geis. And finally my budget research team, Paul Clemente, Richard Morgantini, A.J. Kinoveva, Rachel Lipman, Wesley Welch, and Stephen Yee led by Jeff Frapwell.

So thank you to all of you. It's been a lot of work, budget is a year-round process and it culminates with a milestone today which is our budget workshops. Our purpose this week as you know is to hear and discuss departments preliminary budgets and work plans and also hear about multi departmental special issues to receive input from your board and from the public and lastly at the end of each day or on Friday You can provide me with direction on your priorities for funding or work initiatives that you would like to see included in next year's budget. This week there is no final decisions, we will return in June at the budget hearings with the recommended budget for your final approvals.

But before we begin I want to give some context A.J., could you move the slide? Thanks. Next year will mark actually 10 years since we've been, 10 years since the Great Recession and in looking back 10 years I decided to look back actually 20 years to give some historical context and see our pattern in Santa Barbara County. And what I saw was that we have greatly, we've been greatly impacted By changes in the economy, by changes in the business cycle and by changes in state and federal funding. But it's also clear that in this time the county has made significant progress on many huge endeavors. And while there is still very much more for us to do we've managed to do quite a lot and some challenges continue to resurface.

So 20 years ago 1999-2000 budget. Yes, we were partying like it was 1999 because it was 1999! We were doing well. The county was on an upswing. We were starting to seriously fund our strategic reserve setting aside funding for infrastructure and enjoying lower pension costs. We are recovering from a recession that occurred in the mid 1990's and at that time there was low property value growth and we had no strategic reserve set aside at that time Measure U, however, was put before the voters and failed. And that was a sales tax measure to fund a new jail in North County.

In the recommended budget, the CEO's message read in part, the county's economic situation has improved. We've been able to maintain the programs and service level commitments of past years while beginning to embark on new program initiatives such as dealing with mentally ill inmates. At the same time, the county remains vulnerable to the impacts of an economic downturn and to policy whims of future state legislatures.

With these risks in mind we have emphasized the need to continue to build our strategic reserve." And then 10 years later 2009-2010 the party ended. We were in The Great Recession and many of our staff and some board members here will recall what the county went through during that time Property growth fell to less than 1%. It was .84% actually. And actually even though the recession officially ended in 2009, the county would not see property value growth beyond one and a half percent until 2013-14.

So it was time before we actually felt that we were out of the recession. That budget of 2009-10 included 12.9 million in reductions and 138 position eliminations. Because one time funding had been used, the issue grew even larger in the following year with the CEO then citing a $72 million gap to close in 2010-11. Pension costs jumped to more than 39% of payroll and again a sales tax measure was put before the voters to fund a new jail in North County and it failed to receive voter approval.

So since then we've enjoyed steady growth, although it's not as vigorous as before the recession. And if you look at this chart on the left, this is from the assessor's office and shows annual growth in the value of the secured property rule. Before the recession values were between 6 to 11% a year in growth. After the recession, growth has been in the four to five percent range. I mention this because as you know our discretionary revenue is based largely on our property tax revenue and it's a good marker also of how the economy is doing in general.

Staffing levels today are not much different than 20 years ago we have about 4200 employees however it reflects expansions primarily in state and federal programs such as the Affordable Care Act and public safety realignment or expansion of the Northern Branch Jail Therefore, many programs are operating with less staff than before the recession. Still we have been able to make modest restorations or expansions in the past to fund your board's priorities mandates and basic requirements necessary operate and we recognize that we have aging infrastructure deferred maintenance and technology needs which we're trying to address And continue to face increasing employee costs and salaries and benefits, which we attempted to mitigate in part ended with pension cost sharing agreements last year.

This is a recap of just some of the board's major commitments over the last decade. In the last 10 years, the Board has committed to funding plans to address our major projects and liabilities which have succeeded or are still in progress. In 2011 that's when we began the funding plan to fund the operations of the Northern Branch Jail. In 2012, we began shifting a quarter of all new property tax growth to the Fire District to strengthen services and improve facilities. That target should be reached in 19-20 and then hold steady with normal growth thereafter. In 2012, we began a plan to increase reserves in the work comp program which had been underfunded in 2010. And this recovery plan was implemented and completed in 2018. In 2012, the county eliminated retiree health for all new general employees and closed it to public safety members between 2013-2017.

And in 2016-17, a plan was formalized to pay down the unfunded liability by contributing 4% of payroll annually. That means this plan would eliminate the unfunded liability by 2034 if all assumptions are met. In 2014, the county began the funding policy of allocating 18% of unallocated discretionary revenue for maintenance needs. And in 2016, the strategic reserve was fully funded. This was the first time we were able to fully fund it in many years. In 2017, we fell below the target because of additional budget cuts. And in 2018, we removed funds from the strategic reserve to pay for disaster costs.

When we talk about the county's funding priorities, we don't often have a context as to the scale of those commitments. So I included this slide to illustrate that. These funding plans were put in place with no significant new sources of funding and they obligated future general fund revenue as the source and have resulted therefore in limited revenue for other needs. However, we've accomplished a great deal by having these plans in place. The blue bar on the left shows the amount of discretionary general fund dollars allocated for the fire tax shift, the northern branch jail operations and maintenance. And this is just how much has been allocated in next year's budget and it's about $35 million.

The orange bar on the right shows that this is almost equivalent to the total amount of general fund allocated to, and I've shown six departments, community services, public health, behavioral wellness, planning and development, public works and ag weights and measures. So on the one hand it shows we are good at leveraging and maximizing other sources of funds for operations such as state and federal funds, user fees and user charges grants etc.

But it also shows that during the last 10 years, why we have limited revenue for other areas and not just these departments. Departments have asked why can't I have more general fund? And from time to time they may show comparisons with other counties. My response is this, in essence this is the reason why. We've obligated 35 million annually of our discretionary revenue to these priorities. Without significantly increasing other sources of revenue. And while cannabis tax revenue is a new source, it's still highly uncertain and will take time for that market in our regulations to stabilize. But even with this funding commitment we've been able to maintain services and provide expansions in many areas.

So where are we today? Next year is actually a milestone year for the county And it's one for which the board and the county should be proud. The Northern Branch Jail, which I've discussed has been in discussion for over two decades or longer is scheduled to finish construction. The property tax shift of additional revenue going to the fire district should reach its target next year. The Tejiguas Resource Recovery Project will be under construction.

Pension cost sharing agreements that we entered into last year with our unions will result in a net reduction of our pension payment compared to last year, about $600,000. And we're not done yet. The full implementation of that pension sharing is achieved next year. Major capital improvements to address deferred maintenance and necessary upgrades are finally being planned. We brought that list to you of capital projects and potential certificates of participation projects a few months ago.

So next year we have a stable outlook with moderate increases in revenue There are no proposed service level reductions from any department, and this is the first time there have been no proposed service level reductions by any department since 2007. We see reduction in pension costs I mentioned earlier. We have included an anticipated $5.6 million in cannabis tax revenue which is a 3% increase from the current year's estimate.

Prior to workshops, I reviewed requests and allocated a few expansions to address mandates, requirements or high priority organizational needs which Jeff will discuss. And we continue to seek to address your top priorities. Some of the challenges and emerging issues we continue to see is one, recruitment retention and succession planning. I do a survey of department heads every year, and this was their top issue looking at next year. We see that HR has seen an increase of 55% in their recruitments, and with a tight labor market it's more difficult to attract candidates and to timely fill needs for departments to operate.

Changing state and federal mandates continue to be an issue. Although this year, the governor's budget is friendlier to counties. There is one area there's a redirection of 2.1 million of realigned state funding which funds critical public health needs and that's at risk. We continue to work with our state delegation CSAC and the Public Health Directors to oppose this reduction.

Technology needs including a growing need for updated infrastructure was also a top issue cited by departments Replacing and updating our core IT infrastructure isn't sexy. It's not exciting, but it is necessary for us to keep up-to-date on implementing cybersecurity and network standards. And it's also necessary to serve as a foundation if we want to run new business applications or innovative technologies.

Deferred maintenance continues to be a challenge, with over 400 million in our backlog. And Jeff will talk a little bit more about where we are in our 18% policy. Diverting mentally ill individuals from the criminal justice system has been an ongoing effort by multiple departments. There are several diversion programs in existence and we're working on more. This will be addressed later this morning as a special issue.

And homelessness, we are highlighting how we are addressing homelessness this year as many efforts are underway in the county and by our departments and regionally particularly with new state funding being allocated. This special issue will be discussed on Wednesday. So beyond next year where are we? What does the future hold? For sure uncertainty. A recession is possible and there are still varying opinions about when, how long, how severe.

And we've seen that property value sales tax and hotel taxes are greatly impacted by recessions as well as our state and federal revenues. We included the possibility of a recession in our five-year forecast which projected a slowdown to revenues beginning in fiscal year 2020-21. As you know many times because of our systems we lag a year Also, just to remind everyone while the hills of Montecito and Carpinteria show new growth in vegetation after the Thomas Fire there is still a possibility debris flow and risk for another few years.

So until we know more we continue to adhere to sound financial policies and practices to provide a buffer in case there is a recession next year. And these are allocating one-time funds for one time uses and not ongoing uses The board made a policy decision to allocate cannabis revenue first to enforcement, but after that to one-time uses. We're able to restore the strategic reserve to full funding which is projected to be $34.1 million by this year's end assuming our FEMA reimbursements are received and adding more in the recommended budget to get to full funding of $36.4 million.

We're continuing to make investments that yield returns and implement efficiencies and savings with process improvements, and partner with other agencies. And lastly the purpose of Renew22 is indeed to fortify the organization in this uncertainty, to be more resilient and prepared for the next economic or natural disaster. People have come up to me and said you know I thought Renew 22 was really a budget balancing exercise it was about the budget That's how we started it, but that's not where it is today. It's about being a resilient organization and it doesn't mean we don't or won't reduce budgets or services in future years. We may need to, but the whole effort of Renew 22 which will be in its third year next year is attempting a culture change with tangible results to ensure that we can withstand another downturn or disaster and we can effectively and quickly bounce back with less scarring and long-term strain on the organization and the community So with that, I'm going to hand it over to Jeff Rappel who will give more details on the preliminary budget.

Mr. Chair and members of the board, let me walk you through kind of where we are in the budget development process. You'll recall in November we came to your board with a five-year forecast. The goal of the forecast is really try to look forward and see the trajectory of where our revenues are and our expenses are and determine the extent of potential funding gap In December, we came to your board and your board adopted budget development guidelines for the upcoming fiscal year.

In January, we came back to your board to address some special revenue allocation policies. February was in budget priorities and now here we are in workshops. Subsequent to our workshops, we will take the input received throughout this week and use that to formulate the recommended budget for your board's ultimate consideration at hearings in June. Let me talk a little bit about cannabis.

Cannabis was an important source of discretionary revenue for your board. We saw the first, we budgeted roughly $5.45 million in the current fiscal year. As we look forward to next fiscal year, we're projecting 5.6 million dollars in estimated revenue. You can see on the chart here that we believe will have unspent carryover from current year into next year about 323 thousand.

Adding that to our 5.6 estimate for next year gives us about $5.9 million of total cannabis tax revenues available. We're looking at enforcement costs, and this is still preliminary but solidifying we have enforcement costs about 2.8 million dollars projected for next fiscal year We have some additional allocations for tax collection and program administration, and some projects that your board approved during hearings last year from the cannabis revenue that was not spent that will be carried over in the next fiscal year. So all of that if you subtract from the 5.9 is 3.7 gets you down to available cannabis tax revenues about 2.2, $2.1 million.

At this point in the budget development process, we have not allocated that. So that is still remains available to your board to address high priority needs. Consistent with your board's direction though, we do continue to caution or recommend that these funds be allocated to one-time purposes. We know that both statewide cannabis tax revenues are volatile at best and we certainly have seen that here locally as well so we do continue that cautionary note on these revenues.

Looking specifically at the board's policy in 18% funding, let me just walk you through this chart. This policy was put in place adopted in 2014 for the 15-16 fiscal year. The green bar up top is the projected need for funding needs for our maintenance projects both in the roads and for our facilities and parks. And this was driven by largely two sources, although a couple others added to it.

The Jorgensen study took a look at what the county should be investing to maintain its current facilities and he layered that on top of what Public Works put together with respect to investment in pavement condition and those are the two main drivers of the green bar up top. So you can see that went from 16, ideal funding would be $16.5 million in fiscal year 15-16 growing to $18.7 million in the 19-20 year.

The stacked bars below show what was projected in the 2014 projection and you can see the dark color, the solid color is the amount of ongoing discretionary general fund dollars to be applied toward it. The lighter blue in each of those bars is the amount of projected one time general fund funding for that effort And you can see that as it projected throughout this five-year period.

The set of bars directed to the right in the orange colors are the amount that actually happens, so in 15 and 16 a total between one time and ongoing is $2.6 million growing as we move forward into the current fiscal year of six point or seven million dollars, sorry, an estimate actually adopted Plus in addition to that, you'll see the kick-in starting in 17-18 and moving through the remainder of these five year periods of the state SB1 funding available for deferred maintenance on the roads.

So you can see that as we look at this chart, I'm sorry, the top bar for SB1 seems to fade out a little bit in the projected version. You can see that this is the first year that we may actually hit projected number that was identified To get a handle on our deferred maintenance for the county. As we move forward and look at, when we brought to your board the five-year forecast, we also identified fiscal issues that were on the horizon for us. And I'm going to go over a series of these and just let you know how they've been addressed in the preliminary budget as it currently stands.

Deferred maintenance was identified as an estimated value of $438 million. And the preliminary budget includes 2.3 million in ongoing base funding toward these efforts, additional 6.4 million in ongoing GFC as part of the 18% funding and initial 7.2 million in one-time funding for capital projects. Under the solar projects there's about a 4.8 million dollar price tag on that project The sources of that funding for that project, 2.4 from a CEC 1% loan, about $800,000 in on-bill financing at 0%, and $1.6 million has been included in the preliminary budget to make up the remaining balance of that funding need.

We talked about it in the fiscal issues report, the need for countywide cloud based website To improve both redundancy as well as flexibility during disasters where we have a great impact on the need to push information out to our community. That half million dollars is built into the preliminary budget, as well. We also identified the need to initiate a technology replacement and investment fund This is a fund which we will identify and address key infrastructure, the upgrade and replacement of infrastructure to allow us to move forward.

And to put in place key security and network communication between departments. We've talked a lot about the need for set aside money for the main jail renovations. This project was identified a month ago when your board considered those projects to be potentially funded with a COP, so that's how that will be addressed. We've also talked in the last couple months about the need for public safety communication system replacement that has a price tag of about $48.7 million.

The preliminary budget sets aside $2 million to begin to address the portion of that project cost that won't otherwise be financeable through debt finance And so that's how the fiscal issues were addressed in the preliminary budget. There were a couple others identified, and I'll talk about those. We identify the need for jail control room consolidation in the main jail that has a price tag of $1.35 million, and you'll hear about that as the sheriff discusses his expansion requests.

Also from Sheriff, the next two, 1.34 million for data center replacement And 1.1 million for the Sheriff's co-banner MDC replacement, those are the computers that are in the patrol officers' vehicles. Not included in the preliminary budget although is important to keep on our radar screen is Public Works Department has been to your board a few times, two or three times to discuss the potential for applying for grants, federal grants.

HMGP has mitigation grant program These are for projects largely in the flood and transportation areas that could help position the county to prevent damage in future events. So this is not repair of damage from the Thomas fire or the debris flow, these are projects that help strengthen our infrastructure to withstand potential future events. Let me talk a little bit about some pieces of the preliminary budget as we currently see them. Within salaries and benefits, this is the salary and benefit cost per FTE. And you can see this chart growing to estimated FTE costs of $149,000 each.

And you can see in the blue line kind of that percentage year over year increase. So from the 18-19 to the 19-20 it's about 1.9%, 2% growth in our FTE cost Driven by a variety of things including MOU increases as well as modest increases in health benefits. We look at revenue, I was looking for the adjective to best describe our general fund revenues and I guess I would say stable.

I don't think I would use strong we'll look at that in these subsequent charts but general operating revenues about up 3.7 percent are discretionary general revenues up three point three Property tax, this is a secured role. It's 4.4% increase. Our TOT or hotel tax is 21.2 and I'll talk about that in a moment and sales tax up about 2%. If we're looking at general fund operating revenues so this is the largest number for the general fund you can see that's grown from 432.8 million to 448.8 million in the projected budget for next fiscal year And that's about 3.7% growth.

So you can see some steady increase over this five-year period. We're then going further down, drilling down into our discretionary general revenues. You can see a growth from adopted of $267.5 million to $276.4, about a 3.3% growth. The large percentage increase in the 18-19 year Is really driven by a couple factors. Largely the cannabis, so you'll see about 5 million of that total growth was five and half million was roughly cannabis and another 2 million was driven by our cost allocation plan prepared by the audit controller.

Looking as we continue to drill down into pieces of our discretionary revenue or property tax. This is the one that we tend to focus on the most, but it is the important driver in discretionary revenue and of those funds that your board has the most discretion to apply to meet priorities. You can see that's projected to grow at 140.6 million up from 134.7 in the current adopted year.

Looking at our TOT, our hotel tax and our sales tax And so the TOT tax is in the yellow color. And you can see a significant increase. In the current year, we adopted $11.2 million budget estimate and that's growing to 13.6. This is largely driven by two factors. You recall the San Ysidro Ranch which is in the unincorporated area was essentially closed to visitors for the whole fiscal year and so that was built into the projection in the current fiscal year.

are in the process of reopening and we do expect to have TOT revenue from that source next year. In addition, the Miramar long-awaited Miramar has opened and we're expecting that revenue as well so that's the primary reason for the increase from 11.2 to 13.6 million in their TOT sales taxes just continue to be stable if you look at the growth even going back to 16 17 10.2, 10.7, 11 million. Those are all just pretty stable.

No significant increases in the number of retail outlets in the unincorporated area. I want to speak a little bit about and our CEO mentioned in her earlier comments there were some key things that in our review of the budget smelts from departments We felt were important to address before we even got here to workshops, and there's five of those I want to speak shortly quickly too. One is within community services.

We continue to see an ever-increasing need for the number of nights that warming centers are open according to current policy. And so we've built in essentially doubling the amount of funds that the county puts toward this effort. So from a $30,000 to $60,000 in the increase of 30. Within human services, human resources I'm sorry. Clearly one of the key needs we have is the need to address recruitments as CEO Minnesota mentioned we have a 55% increase in number recruitments being done by human resources this is a critical need that departments have identified important for their operations and so we've added two FTE for recruiters in that department.

Within Public Defender, two adds one is for a full-time computer system specialist this is public defender was the only department in our criminal justice system of family of departments does not have a dedicated computer systems specialists and so this need was critical The department relies heavily on data and their systems to manage their caseload. And this was an important investment to make.

Public Defender, the second one here as I guess it really ties the Treasurer Tax Collector. Both departments, the Treasurer Tax Collector in their public conservator ministerial role has seen increased workload, significant increased workload in the number of conservatees going through the system And the need to address that is important in order for the county to meet its mandates in this important and vulnerable population.

So while we addressed those five expansion requests pre-workshop, there are nine departments that have requests which you'll hear more about as departments go through their presentations. They're highlighted here on the chart The nine departments, that totals about 9.6 or $9.7 million in ongoing GFC requests and additional $9 million of one-time GFC. As we look forward the potential for an economic softening or recession in the out years is something that we're being mindful of.

We continue to have unmet needs that were not addressed Current budget that will need to be addressed in subsequent budgets. We will continue to follow all responsible fiscal policies and practices. We're focusing on Renew 22, to improve our systems and technology, to improve our revenues, to augment reserves, and to make sure that we're efficient in the services we do provide.

It's imperative that we are responsive to our customers and our clients, and that we retain and attract quality employees. So next step as we move throughout the workshops this week, you'll hear from departments. And departments as they're making their presentation will focus on these items. They'll have a conversation about preliminary budgets and some numbers associated with that with FTEs as well as operating revenues and expenses.

They'll be discussing emerging issues within their departments impacting their operations. They'll highlight their accomplishments in the current fiscal year Their objectives for next fiscal year will provide your board with an update on any of the new 22 initiatives that they've undertaken within their department. They'll have a conversation and discussion on performance measures, and where applicable they'll discuss their expansion requests.

In addition to departmental presentations your board will hear five special issues. And they are spread throughout today and Wednesday. The first two, AOT or Laura's Law will be discussed as part of Behavioral Wellness' budget presentation. You'll have a special issue on mental health diversion efforts. Both of those will happen today. On Wednesday we'll have an update on the Northern Branch Jail Operating Fund, the county efforts to address homelessness, and community services will present a library update.

Subsequent to workshops as we close out on Friday, we'll be taking the input that we get from your board and the public. We will use that to finalize our recommended budget which were released in May approximately a month before budget hearings so we'll have budget hearings on June 11th and 13th if necessary And our recommended actions, which we'll of course discuss again on Friday.

Really is to hold budget workshops to provide direction if any regarding items to be addressed in the CEO's recommended budget. Provide direction if any regarding special issues or other items and to make our CEQA finding. With that Mr. Chairman, we're happy to answer any questions before we launch into department presentations.

All right do I have any questions from our board members before we get started? Well, I'll make a quick comment and then I have a couple questions. You know, I think it's appropriate at this time to thank CEO Miyasato and your entire budget team, Jeff, for the great job that you've done to get us to this point. The budget is basically a balancing act of what we really need to do and what we want to do. And most of the time that I've been on this board We haven't really even got to talk about what we'd like to do. It's basically keeping the lights on and doing what we have to do, and I think as you said in this is the first budget where we don't have any service level reductions for the first time since 2007 so we have reached a milestone that's not Doing everything that we'd all like to do.

But I think it's a time where we're at least addressing everything that we need. And I also want to say, I appreciate the board members that came before us. Some of the ones that I worked with that made some of the tough decisions and Have stuck with those funding plans, the chart that you put up that had the blue bars. I'm not sure when I made those decisions that I'm kind of glad you didn't put that blue bar up because You do see how much we tie our hands, how much this board has tied our hands but as I've said before those were some adult decisions that had to be made And I want to applaud Supervisor Adam at the time, because he forced the action quite a bit. And I know it's never the funding level of what he would like it to be or what any of us would like it to be but you know, I think the deferred maintenance that part of the blue band, the northern branch jail operations we all knew that was something that we had to do.

We all knew it was never going to get any cheaper. And then I think fully funding our fire department and the fact that we've now got this year, we're finally hitting that number is exciting to me. So I want to thank all the department heads and people have sacrificed, the employees have sacrificed to get us to this point. It hasn't been easy through some excellent leadership by our CEO and our budget team. I think I'm more excited about this budget than I have since I've been here so So I do have a few questions at the start.

So let's talk about cannabis revenue for a second, have we built in any of that 5.6? Is any of that retail or is this still just all

growing at this point? Mr Chair, the numbers that we have presented really did not incorporate retail so Depending on the outcome of your board's action in the upcoming year, that's likely to have a positive impact. But at this point it's too preliminary to make a projection.

Very good. I just wanted to make sure we weren't counting on that but it'd be nice to have at the end. Then let's talk about the TOT which is really good. I think it shows the bounce back of Montecito and Santa Barbara after the debris flow So if we just take the Miramar, do you know what that project with the triple sales tax property tax and TOT tax? If you could give me just a broad number of what that generates. I'm not sure if, I haven't asked you this before so sorry to pounce it on you right now but maybe it's something you can bring back but it's significant and it's not just another hotel. And the reason why I bring that up is and it'd be nice if we get that number later Because I want to throw this question out there too, is that what are we doing as a county?

In a city you have a Chamber of Commerce going out and you're looking and identifying locations. And you're talking to leaders in those industries letting them know that a project can be done. Now I know the Miramar took 20 years to get done. We don't wanna highlight that as a success. But I think from the time that they got serious about it to the time we got serious about it, you know, it did happen. I was at the ribbon cutting. It's actually really there and it's really generating a lot of revenue for the county. So I just want to throw that out there as well is what are we doing as a county? And we can all think about this too and get to it on Friday. What are we doing as a county to identify locations where we could have another one? How do we engage Do we have anybody in the county that is out there actively talking to leaders in that industry and finding out if this economy can sustain another resort of that size and that scale.

But I just think it's something that we need to be a little more proactive in that too, so we can talk about that as we get through. For me, that's it. If anybody else has any opening comments? Supervisor Atom. Yeah, go ahead.

Yeah well first of all thank you for the shout out and as usual I pick out something negative to say and maybe that just goes with the adult part. Compare some numbers on slides 17 and 18. And take a look at that deferred maintenance at 438 million, and then go back to slide 17 and look at our green line there at 18.7 million. And at that rate, it takes 23.4 years to catch up with and I think that we need to do better than that and hopefully we can identify some things we could do within this budget process to speed that up a little bit.

I would agree with that. I know both of us were here though in that first year of 2015 when we were spending $2.6 million and we couldn't figure out another way to get another million in there, so I get it that it's not where it is but I'm sure glad that number hasn't stayed the same or we'd be in a heck of a lot worse position. Supervisor Hartman?

Well, this is my regular refrain that this is a three-legged stool and that the local government has stepped up. The state government has stepped up and it's time for the federal government to step up on a lot of this. And I had an opportunity as SBCAG Uh, former chair to go back and meet with legislators in Washington. And it's possible that an infrastructure bill may in fact move this year. And fortunately our member of Congress is the vice chair for the house infrastructure committee. So there is some opportunity a bright line on the horizon.

Very good before we go to public comment. I know we have one speaker. I just need more clarification on the strategic reserve balance and What the plan is this year because I thought in CEO's Miyasato's initial comments that we were going to fully fund or what's the plan?

Mr. Chairman, you're about to recall in the 17-18 budget We, during 17-18 we borrowed essentially up to $6.25 million out of the teacher reserve in order to address and respond to the Thomas fire and debris flow so that was a permanent hit to our balance in the teacher reserve. In that year we also didn't add to our teacher reserve In fact, we used a million for the 2017 storm event. So the combination of all those kind of served to bring our funding within the strategic reserve below our target number of 8% of general fund.

In the current fiscal year, we set aside an additional amount of money, $6 million potentially in the budget to continue to address the Thomas fire and debris flow. And we did not add it to our strategic reserve And so what we are doing now, since we borrowed from Street Reserve, the first monies we're getting back from FEMA on the Thomas Fire and Debris Flow will go back into the Street Reserve. So we anticipate being able to bring it to full funding in the current fiscal year based on those revenues.

So that's our expectation, to bring it back to roughly $34 million, 34 something. And incorporated in the preliminary budget is to add an additional $2.6 million dollars to that restriction to keep it at its full funding level. So, that's kind of the strategic reserve story.

So when we get to June, we should have a plan that it would be at 36 whatever million that will be at our target for what our...

Okay. It'll be by June 30th. We hope to have some better revisions for your board to consider and approve that are bringing about a 34, I want to say is 34.1. That'd be full funding for the current fiscal year. And because our general revenues are growing next year We have to take a part of part of that growth and that procedure. So upon the adoption of the budget in June for the next fiscal year, we will be at full funding.

OK. Very good. OK, without any further questions, we'll go. Oh, we do have one public comment on general overview.