SANTA CRUZ >> The first in a series of budget hearings for Santa Cruz County kicked off Tuesday with county leaders confronting a volatile financial forecast amid continued protests from the viewing public concerned about the impact of proposed staffing cuts.

The Board of Supervisors approved fiscal year 2025 to 2026 budgets for approximately 15 agencies and departments under its purview shortly before receiving another informational update about spending at the Health Services Agency.

In an unforeseen twist in the morning’s hearing, the board was also suddenly poised to reject a budget proposal for the Collective of Results and Evidence-Based Investments program, or CORE, that appeared on its consent agenda. But it quickly reversed course after its top staffer shared serious concern about the move.

“It’s obviously not going to be an easy year, probably not an easy few years,” said Supervisor Justin Cummings. “We’re going to have to make a lot of really hard decisions as we move into this budget. And I hope that as we move through this process we continue to try to do (our) best to sustain the services that we can provide to the greatest extent that we can. But know that there are going to be some hits to our budget.”

The list of departmental budgets approved Tuesday included the Assessor-Recorder, Board of Supervisors, County Executive Office, Clerk/Elections, General Services, Personnel and Risk Management, General County Revenues, Information Services and Child Support Services.

The meeting began with an overview of the county’s proposed $1.2 billion budget — $170 million less than the current adopted budget — that is complete with a balanced $799 million general fund. While the presentation began with county staff briefly highlighting positive achievements accomplished in the past year, the financial outlook remains bleak, primarily because of uncertainty at the federal and state level.

Assistant County Executive Officer Nicole Coburn explained that more than half of the county’s general fund is derived from state and federal sources, which makes the county and its residents vulnerable to decisions made in Washington. Coburn said her team is paying extremely close attention to a reconciliation bill still moving through Congress that includes billions of dollars in cuts to safety net programs, including Medicaid, or Medi-Cal as it’s known in California, CalFresh and CalWorks.

She is also focused on a budget plan recently released by President Donald Trump that rolls back spending on government programs even further.

More than 86,000 county residents are enrolled in Medi-Cal and, according to Coburn, about one-third, or 30,000 of those residents are at risk of having their benefits impacted by the proposed federal actions.

“I’m super concerned about those who are currently relying on Medi-Cal who may not be covered in the coming months (or) in the coming year,” said Supervisor Monica Martinez. She added that the cuts will “not only devastate our clinics, but also our behavioral health programs, our entire safety net of community based providers and, of course, the families and the people who are relying on this health care access. Because they’re going to keep coming and there are going to be holes.”

County Budget Manager Marcus Pimentel also highlighted the uncertainty around previously promised disaster reimbursements from the Federal Emergency Management Agency. Pimentel said the county received about $14 million less than what it was expecting this year in FEMA reimbursements. This is problematic because the reimbursements are already so delayed that the county was forced to borrow nearly $90 million to keep the lights on, and that borrowed money comes with about $4 million in annual debt services.

Pimentel and Coburn said that while county staff will ask for final budget approval in June, it will likely need to return to the board this fall with potential revisions. This is because budget negotiations at the state and federal levels will continue for the next several months and the county’s somewhat blurred forecast will come into focus once the federal fiscal year begins on Oct. 1.

Continued CORE controversy

While all supervisors were in agreement about the severity of the financial picture, some dividing lines were exposed when it came to approving the CORE investments program for the coming year. The board narrowly approved a three-year grant cycle for the controversial program in November 2024, with Supervisors Cummings and Manu Koenig providing dissenting votes.

The supervisors voted against the annual budget for the program again Tuesday, with both questioning the prioritization of some of the programs that received grants and lamenting a lack of flexibility to pivot the investments based on changing external factors.

Supervisor Kim De Serpa initially joined Cummings and Koenig in opposing the spending plan before County Executive Officer Carlos Palacios jumped in to clarify the consequences.

Many of the community-based organizations that were awarded the grants have already signed contracts with the county and drawn up budgets of their own that included the promised funding.

“It seems like it would be pretty disruptive to come back and try to reallocate those funds,” Palacios said with intensity before requesting that county staff receive additional direction from the board on how to proceed.

De Serpa reversed course and said she’d vote in favor of the coming year’s budget, but asked that the CORE process be revisited at a future date.

Future hearings

But that wasn’t the only controversial moment at Tuesday’s meeting. The session began at 9 a.m. with almost two hours of public testimony sharply critical of county staff’s recommendation to cut 74 full-time positions — nearly 12 of which are currently filled — from the Health Services Agency.

The board received its second informational update from that agency’s leadership during the hearing’s afternoon session, which finished close to the Sentinel’s print deadline. A final vote on the agency’s budget has been set for June 10.

The board will continue with budget hearings on Wednesday.