Madera County could face bankruptcy; $7M in cuts, new taxes proposed. What's at risk?

Amid rising costs and cooling tourism, a dark financial forecast says Madera County could face bankruptcy without dramatic action, including $7.1 million in cuts and potentially a new sales tax.

The majority of the needed cuts would come from public safety services and could put the county in a place where it has to wrestle with reduced deputy patrols and fire station closures, county officials said during their last board meeting.

“This board will always prioritize public safety services above everything else, but these are all tough conversations to be had,” said District 1 Supervisor Jordan Wamhoff, who is also an officer with the Fresno Police Department.

Though poverty in Madera County is high, it has experienced a recent development boom and succeeded in reducing its deficit to just over $1 million in recent years through hiring freezes and other cost-control measures. But it now expects the deficit to shoot back up to $7.1 million by 2030.

The county’s reserve fund — just over $1 million — will be gone by the end of the year to cover the current deficit. Supervisors recently authorized the use of a $4 million federal grant to replenish those reserves.

District 2 Supervisor David Rogers said it’s time for the county to consider raising its 9% hotel-stay tax and asking voters to approve a new sales tax, among other strategies to get ahead of a financial crisis.

“We have to (get ahead), otherwise we’re bankrupt,” said Joel Bugay, assistant county administrative officer.

Rising costs, cooling tourism revenues for Madera County

Rising county expenses are to blame for the projected deficit spike, Bugay said. Expenses are expected to increase 11.6% to $477.5 million between now and 2030.

Helping to drive that increase is a 2.7% rise in the cost of staff pay raises and inflation, Bugay said.

The county now expects this year’s revenues to be $741,644 less than originally projected. That’s because the county is likely to receive fewer dollars from a state public safety sales tax that bases allocations to local governments on their sales tax volumes.

Bugay said the county’s share of that state tax’s revenue grew during the Great Recession as fewer tourists chose to visit Los Angeles and San Francisco.

“Now that tourism is leveling back, some of that revenue is leaving (Madera County),” he said. “We don’t feel there’s a lot more to gain on the discretionary revenues side.”

County tax, fee increases possible amid worries about public safety cuts

Bugay said county staff believes it’s impossible to make the needed cuts without “impacting negatively” the services residents care about most.

He said 25 positions are already unfilled and not funded at the Sheriff’s Office — the maximum that department can handle before cuts start to hurt deputy patrol levels.

Bugay suggested the county start talking about raising its 9% transient occupancy tax, known as “TOT.” The tax is paid by people who stay in local hotels — often visitors rather than Madera County residents, Bugay said.

“That’s a definite possibility,” Rogers, the District 2 supervisor, said about raising the hotel-stay tax.

“Conversation probably needs to ensue concerning a sales tax initiative, too,” Rogers added. “That’s definitely got to be on the table, because I would hate to see us cut fire and sheriff at all.”

County voters rejected a local sales tax to pay for public safety services by a 12-point margin in a 2017 election. The county is preparing to launch a public safety services and funding study that may find it necessary to try another sales tax initiative.

Wamhoff, the District 1 Supervisor, pointed to Merced County’s decision to close fire stations in recent years as it faced its own budget concerns and staffing shortages.

“Our piggy bank has run dry,” he said. “We could be potentially having these same conversations in a year or two.”

Current fee rates cost Madera County millions

A separate presentation at Tuesday’s board meeting found the county is only recovering about 58% of the costs of services it provides. If it raises its fees to a 100% cost-recovery level, a study found, the county would recover $5.6 million more per year in departments that perform animal services, issue permits and provide other services.

It’s not yet clear how exactly the county will raise its fees, but Jamie Bax, the county’s director of Community and Economic Development, suggested looking at smaller fees first and holding workshops for larger fees.

Rogers said though the county has worked to keep fees low, “people have to understand costs go up all the time.”

“It’s apparent this was necessary when you look at the deficit overall,” he said.

Erik Galicia

The Fresno Bee

Erik is a graduate of the Missouri School of Journalism, where he helped launch an effort to better meet the news needs of Spanish-speaking immigrants. Before that, he served as editor-in-chief of his community college student newspaper, Riverside City College Viewpoints, where he covered the impacts of the Salton Sea’s decline on its adjacent farm worker communities in the Southern California desert. Erik’s work is supported through the California Local News Fellowship program.