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As the Humboldt County Board of Supervisors prepares for another round of budget negotiations next month, staff convened a special meeting today to discuss the state of the General Fund balance, which is projected to run dry in the next two years due to an ongoing structural deficit. 

Deputy County Administrative Officer Jessica Maciel presented the board with key findings of the 2025 General Fund Financial Forecast, a five-year overview of the county’s finances based on current conditions. “The main takeaway from the financial forecast … is expenditures will continue to outpace revenues at an increasing rate, and the General Fund is anticipated to go negative during fiscal year 2026-27,” she said. “This culminates in the final year of the forecast period — fiscal year 2029-30 — at negative $77 million.”

One year ago, staff told the board that the General Fund was expected to dry up before the end of the 2025-26 fiscal year, one year earlier than the current prediction. While the board and staff have made progress in reducing the county’s structural budget deficit from $18.4 million to $15.1 million through various cost-cutting strategies, it’s “not enough to make the correction needed by fiscal year 2026-27,” Maciel said, adding that the board cannot adopt a budget if the General Fund is in the negative.

Staff largely attribute the current budget deficit to the simultaneous loss of Measure S tax funds and unprecedented raises in fiscal year 2021-22, the General Fund Financial Forecast states. “If any number of these factors change for the better, such as improvements in property or sales tax revenue, forecast figures would need to be revised and the fund balance issue would not portray such a bleak picture.” 

For example, Maciel said a one percent change in property tax values could generate roughly $590,000 in revenue for the General Fund. Still, there are various other external factors at play, including federal funding cuts, which were not taken into account in the financial forecast.

While it remains unclear how some of the federal funding cuts will impact local programs, the Department of Health and Human Services (DHHS) is bracing for a significant hit.

“If we just focus on Medicaid, the proposed federal cuts result in cost shifts to states, counties, hospitals, clinics, and community-based organizations,” said DHHS Director Connie Beck. Numerous other Public Health services will suffer, she said, including substance use disorder prevention programs, HIV services and immunizations. “These cuts will destabilize the health care system for all patients with all insurance types. We probably will see a loss of health care jobs and, as a result, see an increase in morbidity and mortality.”

DHHS has taken numerous steps to reduce county spending. Since 2023, the department has deallocated 119 positions and consolidated some of its programs to operate more efficiently. 

“These measures are designed to streamline operations, maximize available resources, and ensure that the department continues to meet the needs of the community while maintaining fiscal responsibility,” said Deputy Director of Finance Travis Green. “We’re doing everything possible to have the least impact on services to the community while doing these reductions.”

They’ve also gotten rid of landlines for staff with work cellphones and only use color ink for copies when absolutely necessary. 

“We’ve learned that color copies cost six times more than black and white,” Beck said. “Obviously we are changing our settings on printers to ensure we use black and white whenever possible.”

Following DHHS’ presentation, the board thanked staff for their dedication and acknowledged the difficult times ahead as budget discussions continue. 

“Thank you for bearing with us and helping to steer the ship through some unbelievably rough waters. That goes for everybody in this room,” Fourth District Supervisor Natalie Arroyo said to the room full of department heads and staff. “This is a day I sort of dreaded just because it’s such a hard thing to get through.”

Second District Supervisor and Board Chair Michelle Bushnell echoed Arroyo’s statement, acknowledging the “heightened anxiety” surrounding the federal funding cuts. 

“The anguish that is happening around the cuts that are coming is real,” she said. “It’s also real in our community.”

The board received detailed informational reports from several other county departments and offices, including the Clerk-Recorder/Elections, Treasurer-Tax Collector, District Attorney, Humboldt County Library, Public Works, Auditor-Controller, Aviation and UC Cooperative Extension. The Planning and Building Department will present its report at Tuesday’s regular meeting.