El Dorado County (June 21, 2024) – El Dorado County’s Board of Supervisors approved a $1.03 billion budget for the 2024-25 fiscal year, acknowledging the need for significant efforts to achieve a structurally balanced budget. Property and sales tax revenues are projected to grow at reduced rates, exacerbating fiscal challenges. The approved budget falls $10.7 million short of board policy requirements and includes substantial cuts to departmental requests. Key budget measures include a retiree health “rate holiday” and reduced capital project designations, both deemed unsustainable by county officials. Despite the constraints, the budget provides for emergency reserves, road maintenance, and significant facility improvements, with final adoption set for September.
A “structurally unbalanced budget” refers to a financial situation where a government’s regular, ongoing revenues are insufficient to cover its regular, ongoing expenditures. This imbalance means that the budget relies on non-recurring sources of income, such as one-time grants, reserves, or temporary measures, to balance the books. Such a budget indicates underlying issues that need to be addressed to achieve long-term fiscal sustainability. Here are the key characteristics of a structurally unbalanced budget:
- Ongoing Deficit: Regular revenues (like taxes and fees) do not meet regular expenses (such as salaries, maintenance, and services).
- Reliance on Temporary Solutions: The budget may use one-time funds, such as reserves, surplus funds from previous years, or temporary borrowing, to fill the gap.
- Unsustainable Practices: Measures taken to balance the budget are not sustainable in the long run, meaning the same shortfall will recur in future budgets unless structural changes are made.
- Need for Reform: Long-term solutions, such as increasing revenue, cutting expenditures, or improving efficiency, are necessary to create a structurally balanced budget.
