Kern County supervisors declared a state of fiscal emergency at their weekly meeting Tuesday in response to predictions of a massive shortfall in property tax revenues because of tanking oil prices.
Surging oil supplies domestically and weak demand abroad have left Kern, the heart of oil production in California, facing what could be a $61-million hole in its budget once its fiscal year starts July 1, according to preliminary calculations from the county’s assessor-recorder office.
Oil companies account for about 30% of the county’s property tax revenues, a percentage that has been declining in recent decades but still represents a critical cushion for county departments and school districts.
“It affects all county departments – every department will be asked to make cuts,” said County Assessor Jon Lifquist in an interview this month. “It just doesn’t bode well.”
Soaring pension costs also influenced the fiscal emergency declaration, which allows supervisors to tap county reserves. Operating costs expected at a new jail facility in fiscal 2017 and 2018 factored into the decision as well.
Looking at an operational deficit of nearly $27 million for the 2015-16 fiscal year, supervisors adopted a plan to immediately begin scaling back county spending rather than making deep reductions all at once in July.
The Service Employees International Union Local 521 urged officials in a statement to “not adopt drastic cuts that could cripple vital community services.”
The union said that although temporary wage cuts and hiring freezes “may be an obvious solution,” such tactics “are never the sole answer to economic problems.”