LAKE COUNTY, Calif. – The impact of the COVID-19 pandemic is already showing itself in major ways in county government expenditures and revenue streams, according to a report to the Board of Supervisors on Tuesday.
County Administrative Office staff along with Auditor-Controller/County Clerk Cathy Saderlund gave the board the update on the county’s COVID-19 disaster response expenses so far along with revenue expense concerns for the future during the board’s Tuesday afternoon session.
While counties everywhere are impacted by the pandemic, “There still is no county like Lake anywhere in the United States that has been impacted by disasters like we have year after year,” said County Administrative Officer Carol Huchingson, reciting the litany of disasters beginning with the Valley fire in 2015, and continuing through other wildland fires, floods, the public safety power shutoffs and now the pandemic.
She credited Saderlund for her guidance and coaching of county staff and helping to keep the county “still standing.” Saderlund is helping the county navigate the “tricky” process of filing claims for reimbursement to the government, Huchingson said.
Saderlund presented to the board representative costs that have been identified as COVID-19. “These costs change rapidly, as I’m sure you know.”
She acknowledged that, as Huchingson said, the COVID-19 pandemic is different from previous disasters.
There is a presidential declaration for the COVID-19 pandemic, and the county has been working through the multiple layers of funding mechanisms and the triggers coming from many state agencies, Saderlund said.
Federal Emergency Management Agency Public Assistance funding is giving the county up to 75 percent reimbursement for response costs. Saderlund said that, other than one program, she doesn’t have confirmation from the California Office of Emergency Services that it will give an 18 percent reimbursement to the county to cover the other 25 percent.
She said the state has told her that it will not decide on reimbursements until the disaster is over, and it will be done on a county-by-county decision.
So far, the county has received two grants to address the homeless situation, including $79,511 to the Lake County Continuum of Care, which was advanced to the Hope Harbor warming shelter last month for around-the-clock operations. Another $73,152 is being administered by Lake County Behavioral Health.
Project Roomkey, which is providing funding to put homeless individuals into hotel rooms, requires extensive documentation. The state has offered the county $100,000 upfront to help cover its 25-percent portion, but Saderlund said they’ve received no funding to date.
The Restaurants Deliver Home Meals for Seniors Program is under consideration by local officials, but the county will have to pay for it upfront and seek reimbursement through grants. Saderlund said the county would have a 6-percent share if it can meet all of the reporting guidelines.
Saderlund said the Health Department has received or will soon receive three COVID-19 grants totaling $530,390 to cover salaries and benefits, equipment, supplies and indirect costs, supportive quarantine services and private nonprofit human services for emergency response.
Regarding the actual expenditures to date for COVID-19 response, which includes Public Health quarantine and isolation, Saderlund said that totals $249,147. For Project Roomkey, it’s $104,192. Total costs of resource supplies as of April 28, it’s $101,540.
The federally mandated paid leave, as of the county’s May 1 payroll, totals $284,077, she said. That’s 100-percent county cost, with no reimbursement.
Saderlund said the total transactions and encumbrances to date for COVID-19 are $738,957.
She also reported that of the 921 county employees on the May 1 payroll, 259 employees utilized the federally mandated leave. That accounts for 28 percent of the workforce and 5 percent of that total payroll amount.
Huchingson said that a rough estimate to provide masks to the public in county facilities – as required by board action approved earlier at that same meeting – is $48,000, which isn’t in Saderlund’s costs.
Social Services Director Crystal Markytan said the county has contracted with the Lamplighter Motel in Clearlake for rooms for high-risk homeless individuals under Project Roomkey. They have 15 rooms and now have 10 filled.
Staff reports on sales and property tax impacts
Huchingson said they’re also looking at long-term impacts to see how things develop. Her deputy, Stephen Carter, gave the board updates on key areas of concern, including sales and property tax revenue.
“Our general fund discretionary revenue is very reliant on sales tax collections,” said Huchingson.
Carter said the five-year average for the 1-percent sales tax is $2,726,000, the three-year average is $3,063,000, with $2,790,000 collected so far this fiscal year and two months still to go.
For the one-half percent sales tax that comes through Proposition 172, Carter said the five-year average is $3,032,000, the three-year average is $3,116,000 and year-to-date totals $2,612,000, with three months still not received.
Saderlund said the county’s general fund nondepartmental retail sales and use tax revenues are currently $409,000 under the estimate, with May and June remaining. Due to a delay in sales tax payments authorized by the governor, Saderlund said the county will face a cash flow issue.
Huchingson also discussed state “realignment” funding driven by state sales tax that is expected to “decrease significantly.” Those monies fund critical departments such as Public Health, Behavioral Health, a number of Social Services and public safety programs. The largest draw on the realignment funds is the In-Home Supportive Services program, one of the largest per-capita for a small county.
Until now, these programs have had sufficient funds to pay for these programs. If the revenues don’t come back, these programs would need to face cuts or look to the county’s general fund for support, said Huchingson.
“We’re aware of the concern,” said Markytan, who noted that there are so many things unknown at this time “that it is unsettling.”
Health Department Director Denise Pomeroy said they are monitoring the situation. She said funding has been coming down from the state to support pandemic response, and her department is not relying as much right now on realignment funding.
Another key revenue source for the county that Huchingson said is expected to be greatly impacted is transient occupancy tax, or bed tax, derived from hotels, motels and vacation rentals.
Carter said the five-year TOT average for the county is $595,500, the three-year average is $557,000, with year-to-date funding at $638,000, which Carter attributed to Tax Administrator Patrick Sullivan’s work to collect on vacation rentals.
Saderlund added of TOT funding, “It is pretty volatile and it does vary based on our collection efforts.”
Regarding property tax, an executive order from Gov. Gavin Newsom has allowed counties to consider economic hardship for struggling property owners, and the board previously adopted a resolution to allow a process to waive interest and penalties for those who can’t pay on time due to COVID-19 impacts.
Huchingson said property tax is the primary driver of the general fund revenues, and the impact of the waivers may delay general fund revenue. It makes up between 50 and 55 percent of discretionary revenues.
Carter said the general fund gets the bulk of property tax revenue, with other departments receiving a good-sized portion, including the library and road departments.
He said the five-year average is $24,264,000, the three-year average is $24,335,000, with $18,680,000 received so far this fiscal year.
Saderlund said that, because the county is in the Teeter Plan – which provides jurisdictions with 100-percent of assessed property tax value – the county’s property tax revenues won’t show a decrease because they are allocated on assessed value, not collections. However, she’s concerned that delayed payments will impact the Teeter Plan at some point.
For this fiscal year so far, secured collections are only 0.63 percent less than the same time last year. Saderlund said she will continue to watch it closely.
Huchingson said there also is the concern that another COVID-19 wave in the fall could impact December property tax payments.
Supervisor Bruno Sabatier said he doesn’t think the impact has hit everyone yet. “I think we need to brace ourselves for the impact to happen in the third and the fourth quarter and hopefully we can lessen that blow as much as possible.”
He said he’s also concerned about the Teeter Fund and defaulted property tax sales that originally were scheduled for this spring. Saderlund said she shares his concerns.
Concern for Interest income, pension liabilities
Staff then moved to interest income, which Huchingson said is a smaller but still important revenue source.
Carter said general fund-based interest revenue is $481,500 on a five-year average, the three-year average is $686,800 and $262,500 has been collected so far this year.
Saderlund said the county’s third-quarter interest for the 2019-20 fiscal year is 30 percent less than the previous year. She didn’t yet have information for the fourth quarter, but she anticipated it would look as “dismal,” if not more so.
Huchingson said the primary expenditure area of greatest concern is pension liability. When the stock market dropped early on in the pandemic disaster, CalPERS was hit very hard. While there has been some leveling off since then, it hasn’t fully recovered.
“The economy is very unstable,” said Huchingson.
During the Great Recession of 2008, when CalPERS had lower-than-anticipated returns in the stock market, participating agencies like Lake County were required to pay increased contributions over several years to come, Huchingson explained.
While CalPERS has indicated it is making adjustments and doing what it can to stabilize and fortify investments, and they are encouraging participating agencies not to panic yet, “We just don’t have sufficient information to make a lot of projections for you,” Huchingson said.
Carter, who took part in a recent CalPERS workshop on this topic, told the board that it’s highly likely the county will have to pay increased contributions over a five-year period and then a 10- to 20-year catch up.
“We can only do that so many times, so that’s something we need to watch carefully,” Carter said.
Saderlund said that, with the interest market and huge dips in investments in the CalPERS portfolio, “We know that we’re going to be impacted with our rates. There’s just absolutely no doubt there, and it will probably be on the same scale as what we’ve seen the last time we saw this come up.”
Sabatier asked staff for a quarterly report on the county’s investments, which are handled through the tax collector’s office.
Huchingson also reported that the economic development discussions that the board has planned to have with department heads – an agreed-upon outcome from a board workshop held earlier this year – will start taking place in June.
She said economic development has been a board priority long before the COVID-19 pandemic, and those discussions had been planned to start in April. Now, they will start on June 16, following the board’s consideration of the recommended budget on June 9.
Supervisor Rob Brown said that the pandemic is completely different from other disasters. In those previous events, there had been funding available for the county to respond and start to recover. He warned that it won’t be that way with the pandemic.
There won’t be an offset of good that comes with the bad, Brown said. “This is going to be bad that comes with the bad, so we just need to be prepared for that.”
Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it. . Follow her on Twitter, @ERLarson, or Lake County News, @LakeCoNews.
County officials explain pandemic’s financial impacts to date on government operations
- Elizabeth Larson
- Posted On