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In its final meeting of the year, just eight days before Christmas, the Humboldt County Board of Supervisors received the gift of a silver lining on the dark economic cloud that has descended over the county budget over the past couple of years.

Delivering the county’s first quarter budget update for the current 2024-25 fiscal year, Deputy County Administrative Officer Jessica Maciel delivered a bit of good news as well as some bad. The good: The county appears to have ended fiscal year 2023-24 with roughly $42.8 million balance in its General Fund, which is a whopping $13.2 million more than what had been projected.

We say “appears” because the Auditor-Controller’s Office is still working to catch up on what had become an enormous backlog. It has yet to comple the 2022-23 financial audit or close the books on fiscal year 2023-24, so Maciel warned that the fund balances she was presenting could still change some as the figures are tallied.

The county managed to cut into its projected deficit via one-time revenues, such as earned interest on its cost plan, and various departmental efforts to save money, including through programs such as a voluntary separation incentive program and the county’s ongoing hiring freeze. 

The bad news? The county is still projecting a structural budget deficit of more than $15 million for this current fiscal year. At that rate, the General Fund will run out of money in less than two years.

Other fund balances are running in the negative, Maciel said. For example, the Department of Health and Human Services (DHHS) ended fiscal year 2023-24 $16.3 million in the hole, $10 million deeper than the previous year. Maciel explained that this caused the county to lose $664,863 in interest.

She also said that DHHS expects to eventually turn things around and start operating in the black again, though such large ships take a while to turn around. The department expects to continue losing money until fiscal year 2028-29. 

The county’s Road Fund, meanwhile, ended the fiscal year $7.4 million in the negative.

“[A]s you all know,” Maciel said, “disasters have decimated [the county Roads Division’s] ability to maintain roads in the county, [but] the passage of Measure O will allow them to begin to complete a backlog of road maintenance.” (Passed by voters last month, Measure O is a 1 percent sales tax measure expected to generate $24 million a year for the county.)

Wrapping up her presentation, Maciel said county staff expects to have nearly $15.9 million in available the General Fund balance after covering next fiscal year’s losses, though she added, “It’s critical that we proceed with caution” in an effort to resolve the structural deficit.

In response to the report, Fourth District Supervisor Natalie Arroyo said, “I am pleased, of course, that the outlook is better than we initially projected,” though she acknowledged the looming specter of the structural deficit.

“We’ve just got to keep our belts tight and keep forging forward and doing the best we can,” Fifth District Supervisor Steve Madrone said.

Second District Supervisor Michelle Bushnell joined in the chorus of cautionary warnings, saying, “Although it looks healthy [this budget update], it’s really not.” The trajectory toward a zero balance in the General Fund is “pretty scary,” she said.

First District Supervisor and Board Chair Rex Bohn said that the budget cuts and denials of funding requests are always painful, though he added, “This happens every 12 to 16 years. We get a couple years like this. But the thing is, we’re resilient. We come out of it.”

The staff report on the budget update also mentions an x-factor in efforts to project the fiscal future, though not by name: the re-election of Donald J. Trump.

“The change in federal leadership could have significant impact on the economy and the county budget,” the report says. “It is not yet known how these changes will impact Humboldt County. The county may need to adapt quickly.”

The board accepted the budget update report unanimously. 

Dillingham Out, Evenson In

As its last item of business for the year, the board unanimously accepted the resignation of Auditor-Controller Cheryl Dillingham, which will become effective at the end of January. And the five supervisors also accepted Dillingham’s recommendation to appoint her deputy, Mychal Evenson, as interim A-C for the duration of her term, which runs through 2026.

The vote on those matters only took place after supervisors and staff (plus one former county administrative officer, Phillip Smith-Hanes, who called in from his current home in Kansas) were given ample opportunity to voice appreciation for Dillingham, who came out of retirement to run against former Auditor-Controller Karen Paz Dominguez.

“She has really done a phenomenal job getting us caught back up,” County Administrative Officer Elishia Hayes said. “This is why Jessica [Maciel] can present to you the budget presentation that she just did.”

Bohn through some shade on her predecessor, telling Dillingham that he is “fully aware that we’re not out of the situation that was created for us, but you’ve got us on a path [where] the state isn’t mad at us anymore, and we can actually make decipherable financial decisions.” 

He added, “I have a lot better relationship with our current auditor-controller than I had with the last one.”

The other supervisors expressed gratitude as well, and they welcomed her endorsement of Evenson. In addition to lauding his accounting bona-fides, Arroyo said, “He has the voice of an angel. He can sing some fantastic light opera in addition to [his] other talents.”

Dillingham said she’ll be available to work part time and offer extra help, should the county need it, but added, “I feel that the county’s changed a lot in the 30-plus years that I’ve worked for it, and it’s time for a younger, newer generation to take it forward from here.”

Evenson added his own appreciation for his boss, saying, “She really shouldered a major burden and did something she didn’t have to do for the entire community, and it benefited the community. I think we all, everybody in Humboldt County, owes Cheryl a huge debt of gratitude.”

Evenson also noted a drastic improvement in the Auditor-Controller Department’s communications with other county departments, the community and outside agencies such as special districts. 

“People reach out to us now; they communicate with us; they ask us questions. We answer them,” he said. “Everything is collaborative. We work toward solving problems, not just decreeing what to do. And it has been my pleasure to help build that environment, and I would love to continue doing it moving forward.”