Kern County provides midyear budget report
Kern County is to expect a $16 million surplus in the 2022-23 fiscal year, according to officials in a presentation to the Board of Supervisors on Tuesday.
Officials presented the county’s midyear budget report, which details the expected and resulting revenues and expenditures and compares the difference. According to officials at the meeting, expenses are on track with the $3.62 billion budget signed in August 2022 and adjusted to $3.68 billion in December.
“The budget prioritized funding for mandated and essential services with an absolute priority on critical and urgent needs, including our public safety,” said Elsa Martinez, Kern County’s chief financial officer.
So far, the county has spent $1.4 billion, or 39 percent of its budget. Nearly 80 percent of the budget goes to specific spending, like staffing and operations. Expenses in operations increased by nearly $43 million while staffing expenses stayed the same.
The $16 million surplus itself comes from an unexpected increase in sales tax revenues. Officials recommended the board set aside the money for needed improvements.
“We recommended to the board to put that money aside, not use it for operations, to improve our 911 communications system,” Martinez said. “It is over 20 years old and we need to replace it.”
That said, according to Martinez, county property taxes are stagnant, which she blames on inflation and rising interest rates. Values for residential, commercial and agricultural properties rose 7.32 percent.
Property tax revenue estimates for 2022-23 are based on property tax values as of Jan. 1, 2022, and are subject to fluctuation after the adoption of the budget. The final assessed value of Kern properties is $115.3 billion, up $11.7 billion compared to last year’s assessments.
“If you look at the graph, it’s been pretty flat in the last 10 years,” Martinez said.
Martinez said that despite continual
It is important to remember that oil and gas valuation has become unpredictable.” — Elsa Martinez, Kern County’s chief financial officer
decrease in property tax revenues from oil and gas, real estate and sales taxes have kept Kern in the green. That said, oil and gas property values rose 41 percent.
Since 2015, oil and gas property values have sat below $20 billion, and account for roughly 15 percent of the county’s tax revenue, “half of what they were in 2014.”
“It is important to remember that oil and gas valuation has become unpredictable,” Martinez said. “In 2014, oil and gas accounted for 33 percent of the total assessed value, last year it was 11 percent and this year it was 14 percent.”
Of the $3.6 billion, the largest amount of revenue goes to public protection and public assistance, and sets aside money for positions that remain vacant. In June 2022, county unemployment was approximately 9 percent and by December, it dropped to 7 percent, according to data from the U.S. Bureau of Labor Statistics.
“The county continues to struggle with vacancies across all departments,” said Joseph Arriola, a county fiscal and policy analyst. “Kern County has experienced historically higher unemployment rates than the U.S. and other California counties.”
Officials said the highest vacancy rates exist in the public safety category.
“Our attorneys, detention deputies, patrol deputies and some social workers as well,” Martinez said.
As a result, wage increases have been made for positions such as coroners, detention deputies, accountants, veterinarians, nurses and social workers — positions that in recent years have become increasingly vacant in the county.
“Given the recent trends as described in the labor market and vacancies in hard-to-fill positions, your board and human resources have worked to implement positive wage adjustments for various classifications throughout the county,” said Alex Alva, a county senior fiscal and policy analyst.
While things are nominal for now, officials expect that next year, due to increasing interest rates and higher housing costs, there will be a “reversal of this trend.”
Martinez said that they will have more information available for the public when they come back to the board on March 14 to begin talks for the new fiscal year. By then, they expect to have new property tax data in hand.