After receiving a clean financial audit with no findings, the County Board of Supervisors approved a recommended budget with a current deficit of $3.8
County CAO Jay Sarina said the approval is the first step in reaching a final budget and county staff have been working on the budget since April to reduce net county costs associated with the general fund.
“The non-general fund also has significant impacts on how we get to a balanced budget,” he said, noting that minimum priorities from the board are included in the budget. He said the final budget will be adopted in September.
“The Board is very aware of the process,” he said. “The Auditor/ controller will need to close the books in July, and then there will be a fund balance we’ll be able to apply to the current deficit and start reducing from there.” He said staff has made $760,000 in reductions and other incoming revenues will assist in reducing the deficit.
Sarina said staff will have to examine funding requests from various departments in the next month.
The board did not act on a $1,000 request from Klamath Chamber of Commerce to upgrade fire suppression equipment and bring a non-working engine back into service.
Berkowitz called Klamath a disaster ready to happen, saying the area needs a tanker that can respond quickly from within the area. He said the budgeted money was to be used for a median cleanup that didn’t occur, so the request would have no impact on the county. Gitlin supported the idea, asking it be placed on the next agenda for consideration.
The Board voted 4-1, Gitlin dissenting, to approve the recommended budget.
Airport Director Randy Hooper said the Border Coast Regional Airport Authority Commission adopted its budget two weeks ago.
“The budget adopted by the Airport Authority is essentially a balanced budget,” he said, “It’s due, in large part, to increases in revenue and modest spending. I say it’s ‘essentially balanced’ because there is $100,000 budgeted under the department allotment line, and that has to do with the 5 percent match on the Airport Improvement Program (AIP) we have already submitted applications for (in) this upcoming fiscal year.”
Hooper later explained the three AIP applications are for obstruction removal, a secondary runway rehabilitation project design and environmental impact mitigation in areas around the airport.
Three AIP application projects’ costs total $2.1 million, and for the 5 percent match, the airport budgeted $100,000. He called the entry a placeholder, predicting the airport will not have to spend the allotment, but is there to show the Federal Aviation Administration that the airport can afford to allocate the money.
Hooper said the construction of the new airport terminal complicated the budget somewhat, but he still feels the budget is accurate in its assessments and forecasting.
“I do see the Airport Authority as a true public/private partnership, but I think a lot of the activities we have done out there, with the enhancement of the Runway Safety Area project, the new terminal, bode good things for the airport,” he said, noting that Contour Airlines has added unsubsidized flights to its schedules. “I think that really says a lot in terms of what the airline feels like we have here in Crescent City.”
He also noted that the airport has added food, due to comments from passengers.
Hooper said Fed Ex and Cal Ore have outgrown their facilities, due to their own success, and hope to utilize the old terminal and TSA screening trailer.
Asked by District 3 Supervisor Chris Howard if airport runway lights could be upgraded to LED units for better sight distance in fog, Hooper said such upgrades have not been approved by the FAA and would be federally funded, if approved.
District 1 supervisor Roger Gitlin said that while the new terminal is a boon to the area, he questioned the County tradition of paying itself back using General fund money.
“I really wonder about the wisdom of taking money out of our general fund to pay ourselves back in (year) 2057 dollars,” Gitlin said, praising Hooper for his work. The budget was approved unanimously with no public comment.
Gitlin continued to question the practice during County budget discussions, suggesting the $96,000 yearly payment be suspended until the next fiscal year. He said the money being spent to repay the loan could fund other programs.
“It’s not going to affect our credit,” he said, asserting that the money could be put to better use.
Sarina explained the Stimson fund comes from the sale of 25,000 acres of land in the Mill Creek Watershed that belonged to the Stimson Lumber Company. The Save the Redwoods League bought the land for $5 million. The fund was created to offset property tax revenue the county lost when both properties were incorporated into public land Supervisors established the internal loan program so the fund would offset the loss of future property taxes.
Sarina explained that the boards since then have opted to keep the fund whole to help support investments, such as the terminal project.
“The idea of the board at that time was that the money would continue to sit in the general fund, and could be utilized for economic development, and possibly other uses as long as that fund was paid back, because there was interest drawn from that which could essentially be offsetting the loss of those property taxes,” he said. “The resolution is still in place and we have discussed it in the past. It is the option of the board of Supervisors to pay that back or not pay that back, but the board has maintained the commitment to paying it back, based on that original resolution. It would always be my preference that the airport pay that back, but that’s where we’re at.”
District 4 Supervisor Gerry Hemmingsen agreed with Sarina, saying the money was leveraged against the terminal and runway safety projects, for economic development. He called it wrong to assume the airport will never be able to help with the payments. He said one option would be a jet fuel tax which could be used to help pay back the fund.
District 5 Supervisor Bob Berkowitz said he was surprised the board has not had the discussion in so long and said it’s time to talk about the policy and ideas for changing it.
“The thing that irks me is that none of these partners have come through with their prior commitment,” he said, “so we have only the Board of Supervisors carrying the water in this situation.”
“The partners clearly stepped up with significant dollars,” District 3 Supervisor Chris Howard replied. “I could name several that are in your district that stepped up with a lot of money back when I was employed there, to ensure that the future of this airport, that would drive economic development was in place. It’s still the County’s airport... so wrestling over whether or not we should pay ourselves back, to me, is a non-issue.”
Berkowitz responded that while it is the county’s airport, the board has no decision power in the airport authority. He said supervisors can be outvoted by members who have no stake in the matter. Hemminsen later disagreed, saying the county has the most say in matters, and the obligation to repay those funds rest with the county. Board Chair Lori Cowan said she would not support suspending the payback.
Gitlin agreed with Berkowitz, saying the board has an opportunity to change a decades-old policy, which is costing the county $96,000 per year. When asked, Sarina said money goes from the general fund to the Stimson Fund.
Sarina told the board there is still time to discuss suspending the payment for a year, but it would need to happen before final budget hearings.