Use of Tobacco Funds to Reduce Deficit Approved

Ventura County supervisors Tuesday unanimously approved chief administrator Harry Hufford’s plan to get the county back on strong financial footing by setting aside tobacco settlement dollars and continuing a hiring and spending freeze.

Supervisor Frank Schillo, who earlier criticized the plan, had a change of heart over the holiday weekend and said Hufford’s proposal was a responsible way to reduce the county’s projected $5-million deficit.

Hufford has said the county could have a balance of $11.4 million in its general fund by July, when the new fiscal year begins, by carrying over the available $7.5 million in tobacco settlement funds and continuing a freeze on hiring and new programs that combined would save $3.9 million.

That’s still short of the $15-million balance officials had hoped for by July 1. But the strong economy, which analysts credited with containing the county’s fiscal problems, could help close the remaining gap.

For example, better than expected car sales--a major source of revenues--is one benefit of the bustling economy. This year, the county estimates that it will draw $39.4 million in vehicle registration fees--about $3.3 million more than expected.

“It’s tremendously important,” said Barbara Lopez, chief deputy auditor. “Obviously, it’s good for the county.”

Although the county won’t get detailed vehicle statistics until late this spring, Lopez said analysts believe the increased popularity of sport utility vehicles has played a significant role in the jump. Registration fees are paid on a sliding scale, proportionate to the value of a vehicle.

The county also expects to reap $6.5 million in sales taxes this year--$400,000 more than predicted.

And a strong real estate market should mean an extra $108,000 in property taxes, despite an unusually expensive year for the county in terms of successful property tax appeals by homeowners and commercial building owners.

All together, increased taxable spending by county residents has helped offset the nearly $19.8-million hit the county has taken this year.

The drain on county coffers comes largely from a multimillion-dollar federal settlement in a lawsuit over the county’s health care billing system, and also from higher-than-anticipated costs in running the county’s public hospital and providing for the mentally ill.

But Hufford said other county departments have also contributed to budget problems by failing to plan for pay raises and by spending more than they had.

Although supervisors had projects they would have liked to see funded this year with tobacco settlement dollars--about $15 million in projects were proposed--most were resigned to instead using at least some of this year’s installment to cover cost overruns.

Schillo had objected to using the money to bail the county out and instead advocated cutting departmental programs to recoup the costs. He’d hoped to spend $4 million to expand housing and other programs for mentally ill county residents.

But he said Tuesday he is confident Hufford’s plan won’t preclude his project.

“I’m convinced if we do a good job in reducing the budget, we’ll be able to have those [tobacco] funds intact,” he said. “Right now, [the funds] will be a buffer.”

Schillo said he also wants to require studies comparing each county department’s spending and productivity to its counterparts in other California counties. Supervisors are expected to consider that suggestion at their next meeting.