Despite international volatility, the local economy continues to improve, according to the County’s Fiscal Year 2017-18 Financial Forecast presented to the Board of Supervisors and the public on Oct. 11. However, pressures from the pending closure of Diablo Canyon Power Plant could begin to affect the County of San Luis Obispo’s budget as early as next year.
The financial forecast estimates that the County’s budget is expected to grow by at least 3 percent, with the range of discretionary funds expected to be $6 to 10 million, in fiscal year 2017-18.
“This expected growth reflects the County’s disciplined approach to budgeting to ensure long-term financial stability,” said Assistant County Administrative Officer Guy Savage, who presented the financial forecast on Tuesday. “This forecast provides a conservative, yet realistic estimate, which helps us identify the fiscal capacity for next year’s budget and helps the Board of Supervisors establish its priorities in the coming fiscal year.”
As one of the first steps to developing the budget for the coming fiscal year, the financial forecast is typically presented to the Board of Supervisors in the fall of the current fiscal year. According to this year’s report, local economic conditions continue to improve. The forecast projects that assessed property values will increase by 4 percent. This overall growth rate is slightly lower than the increases projected in FY 2015-16. While the upwards trends are good news, the County has limited additional options to increase revenues since nearly 75 percent of revenues are derived from the State/Federal governments programs and property taxes. As a result, the County is continuing to keep an eye on expenses to maintain a balanced budget.
“To ensure long-term fiscal stability, the County will need to carefully evaluate increases to contingencies, reserves, and designations while paying close attention to additional expenditures for programs and services, and employee compensation,” Savage said.
This forecast also assumes that local taxes will not increase. As a result, increases in revenues from those areas are based upon historical rates, with adjustments made for known, one-time activities, such as large construction projects.
Additionally, the local housing market continues to improve. While sales prices are up compared to the prior year, some of the improvement continues to be driven by a decline in the number of distressed properties in the region. Overall, building activity, as measured by the number of building permits is up approximately 6 percent compared to the FY 2015-16, while permit valuation is down by $3.5 million over that same period. For more information, visit www.slocounty.ca.gov.