County Facing $32-$56 Million Shortfall

Written by Neil Farrell

Neil has been a journalist covering the Estero Bay Area for over 27 years. He’s won numerous journalism awards in several different categories over his career.

July 1, 2020

The pain of the coronavirus pandemic has hit literally every citizen in California after the Governor issued shelter at home orders, and shut down the fifth largest economy in the world to fight the spread of the virus.

Along with citizens’ hardships, local governments are facing immense financial difficulties as well, after tax revenues dried up with the Governor’s shutdown order.

The City of Morro Bay is anticipating millions in lost taxes and San Luis Obispo County is looking at tens of millions in lost revenues. On May 19, County officials put a price tag on the economic loss due to the shutdown ordered by the County Administrative Officer in concert with the County Health Officer and the Governor.

According to a news release, SLO County officials said a drop in consumer spending driven by the COVID-19 pandemic will result in a $32 million to $56 million general fund budget shortfall in the next fiscal year that starts July 1.

And while the Federal Coronavirus Aid, Relief, and Economic Security or CARES Act was approved on March 27, the over $2 trillion economic relief package will steer millions to SLO County, the County said there are restrictions on what it can be used for.

“While Gov. Gavin Newsom recommends allocating about $29 million in CARES Act funding to the County,” reads the news release, “this funding appears to be directed at health and human services programs impacted by COVID-19 and is not intended to address the overall budget gap.”

Like most government programs, someone has to figure out how it works and what it covers. “The County is working to better understand the requirements for this funding, which is subject to formal appropriation by the State Legislature. County officials also expect COVID-19-related factors to impact the County’s budget for at least the next three fiscal years.”

SLO County released its draft 2020-21 budget last week and it predicts a 5% to 10% drop in general fund revenues — mainly property, sales and bed taxes, plus fees and fines — which the County said “is on par with what many other local jurisdictions are experiencing. While expenditures related to the local COVID-19 emergency response are affecting the budget, the anticipated shortfall is primarily driven by large drops in consumer spending, which shape local, State, and Federal economies and budgets.”

“We have many tough choices ahead of us,” County Administrative Officer and Emergency Services Director, Wade Horton, said. “To put this shortfall into perspective, the largest single-year gap closed during the most recent recession was $30 million, which is the low end of what we expect.” That deficit took several years to overcome.

Officials said they are addressing the immediate shortfall while continuing to analyze the situation to prepare for a multi-year impact. So what are they actually doing to head off this oncoming train wreck?

“The County has instituted a hiring freeze and is scrutinizing all discretionary spending. The Board of Supervisors will be asked to provide direction on other immediate and longer-term actions to balance the County’s budget.”

The Supervisors will get their first look at the budget at special meetings set for Monday-Wednesday, June 8-10 at the County Government Center. Of course the Coronavirus shutdown means the hearings will be online affairs.

Readers who want to tune in and maybe even make public comments — still limited to 3 minutes — will have to navigate the County’s online instructions and links at:,-Agendas-and-Minutes.aspx.

Or readers can submit their comments by calling (805) 321-0555 at the start of the meeting or just before the item you are interested in comes up. You will hear the meeting being streamed over the phone while you are on hold waiting for your turn to speak. A staff member will come on the phone and place you in the lineup according to the item(s) you wish to address.

A busy signal means there are too many others ahead of you in the queue and you’ll just have to keep calling back until you get through, much like a radio station’s call-in prize giveaways.

You could also call (805) 788-6638 and leave a voice mail message. They want your name (spelled out), the agenda item you wish to address and then leave your comment. Again, you only have 3 minutes including the time it takes to state and spell your name. Limit each voicemail to one topic and if you have multiple topics you’ll have to call back again and again.

Voice mail comments must be received by the Clerk of the Board no later than 9 a.m. the morning of the meeting. And while not all comments will be played aloud at the meeting, the County promises to include all comments in the official record.

And of course one can email or snail-mail comments to the board. Email comments to: Mail comments to: Clerk of the Board of Supervisors, 1055 Monterey St. D430, San Luis Obispo, CA 93408. One must do this days ahead of time to get delivered to the meeting on time.

And the County isn’t the only local government being forced to bridge multi-million dollar chasms. The City of Morro Bay also has a financial cliff on its horizon.

Calling the expected revenue shortfalls “staggering,” the City Council and administration are expecting to face tax shortfalls of $2 million to $3M in the last quarter of the current fiscal year (2019/20), roughly 14% to 20% of the annual General Fund, according to the City’s recovery plan dubbed “Rock Solid Together.”

The anticipated shortfall for FY 2020/21 is $4M to $5M, or about 27% to 34% of the general fund, according to City Manager Scott Collins’ report to the City Council.

The Harbor Department “anticipates approximately $200,000 losses in harbor revenues through the remainder of the FY 2019/20, with an additional cash flow impact of up to $110,000 in deferred monthly rent revenues in the Harbor Fund.”

“Rock Solid Together,” City Manager Collins said, “is built on the foundation that the City wishes to retain local control over core, essential government services.

“With this foundation, Rock Solid Together is comprehensive and attempts to assist the local business community where feasible and administer fiscal first aide to City finances in light of the significant economic wound inflicted by the pandemic.”

Saving police and fire department jobs has been noted as the main goals of the City, something that is contrary to Gov. Newsom’s recent comments that police and firefighters would be among the first public employees to get laid off. His prediction apparently doesn’t jibe with what local officials want.

The County last week got permission from Gov. Newsom to start opening up, including allowing hair salons and barber shops to reopen, and restaurants to reopen dining rooms — albeit with just 50% capacity — and motels and hotels can now book up to 50% capacity as well.

These loosening of the virus’ grip on society come along with the reopening of the Morro Bay boat launch ramp and Morro Rock parking lot.

In an effort to actually discourage tourism, the County spent nearly $10,000 on a social media campaign targeting people in the Central Valley, Bay Area and Los Angeles to discourage them from coming to the Coast.

The City canceled its contract with the tourism marketing firm Mental Marketing, and even closed its visitor’s center in April, ending the contract with the Chamber of Commerce to run that facility.

So while a resumption of tourism would seem to be the economic vaccine both the County and City need to rebound, they continue to discourage visitors from coming here.
SLO County has a special website with COVID-19 information, see: or call their Public Health Information hotline, at: (805) 788-2903.

And the City of Morro Bay also has a website with COVID-19 information, see: and there’s also a COVID-19 hotline manned by City staffers and volunteers, call (805) 772-6278.

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