County faces financial challenges

San Mateo County officials are struggling to cope with a $29.3 million state funding cut in Gov. Arnold Schwarzenegger’s May budget revision, on top of $4 million already figured into county spending reductions. The new round of cuts in state-funded local programs was described by veteran County Manager John Maltbie as “devastating.”

Anticipated Peninsula reductions would affect justice, health and human services, and child-welfare programs. Approximately 4,500 low-income children would lose MediCal health coverage for the uninsured; 650 unemployed residents would no longer qualify for CalWORKs job training and counseling; 263 blind, aged or disabled legal immigrants would be dropped from a financial assistance program; and 3,000 people receiving various forms of county financial aid would not get cost-of-living increases.

Peninsula criminal-justice programs now stand to lose $8 million from the governor’s budget revise, including elimination of the $5 million crime-prevention program aiding families whose members are stuck in a cycle of criminality. And mentally ill offender services also would lose $1 million.

Compounding the problem is that many of the newly uninsured will have no option except to crowd into the San Mateo Medical Center, which is already the largest single drain on the county budget. As the Peninsula’s only public hospital, the Medical Center is required by state law to treat every indigent patient seeking aid.

The Medical Center has current expenditures of $244.2 million and a staff of 1,350. It has been struggling to contain costs and is expected to save $7 million this year by eliminating 19 positions and keeping 70 more vacant. These steps have helped stabilize the county’s direct subsidization of the hospital at last year’s $72 million level.

However, the state’s newly reduced contribution to San Mateo County finances is only one skirmish in a multi-front budgetary war. The county has embarked on a five-year campaign to neutralize a deficit that is now estimated to reach $92.1 million by 2013 if major changes are not put into effect. The five-year plan adopted by the county in December includes caps on spending and using some reserve funds — which are still above $200 million.

Maltbie’s final budget presentation before his pending retirement as county manager demonstrates the fiscal tightrope that will be necessary. The proposal calls for spending $1.73 billion in 2008-09, which is $4 million below the current budget. It would cut $8 million in operational spending and eliminate 12 jobs. But balancing the budget would also require $26.4 million from the general-fund reserves.

Still, despite the tricky challenges looming ahead, San Mateo County is in relatively better financial shape than some other Bay Area counties that are drowning in red ink — especially from unfunded retiree obligations — and do not have hefty reserves to fall back on.

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