MARTINEZ -- Contra Costa County Administrator David Twa painted a guardedly upbeat picture of the county's finances this week as he unveiled a draft general fund budget projected at $1.35 billion next year.
Fiscal 2014-15 will be the third year in a row that the county's general fund budget will be balanced, Twa told the board of supervisors this week.
A recent upgrade of Contra Costa's credit rating to AAA by Standard & Poor's shows that agency's belief that "we have essentially moved away from the crisis that we've been in for the last several years and are on good footing moving into the future," Twa said.
The general fund represents about half the county's expenditures. It does not include the Contra Costa County Fire District, the county hospital and clinics, the Contra Costa library system, road funds administered by the Public Works department and other funds. The combined expenditures of all the county funds is projected at $2.69 billion.
A looming concern is the county's rising pension bill. Retirement expenses are projected at $329 million next fiscal year, up $58 million. The increase is due partly to a recent drop in the assumed rate of return on the Contra Costa County Employees Retirement Association's investments, from 7.75 percent to 7.25 percent a year -- a rate some experts regard as optimistic. The lowering of the assumed rate of return necessitates greater contributions by the employer. Of the $329 million in retirement expenses, $203.7 million will come from the general fund.
The other main reason for the increase is the projected hiring of new employees to fill positions made vacant by unprecedented numbers of retirements in recent years -- 617 in 2011 and 388 in 2012 -- officials said.
Some $773.7 million, or 57 percent of the general fund budget, is projected for salaries and benefits next fiscal year. That figure does not include county firefighters or county hospital workers, and some other employees.
The county recently signed labor agreements with bargaining groups representing about 65 percent of the county's 9,695 employees; agreements with the rest of the employees are expected to be signed within the next few months.
Most are getting a 4 percent wage increase this month to make up for a pay cut of 2.75 percent three years ago that was coupled with a larger share of pension-and-benefit costs, finance director Lisa Driscoll explained Wednesday; another wage increase of 3 percent is scheduled for July 2015.
By service category, the draft general fund budget allocates 54 percent to Health and Human Services, including some subsidies to the hospitals budget, followed by law enforcement and justice at 28 percent, leaving $242.9 million for general government functions.
The proposed budget is about 1.3 percent higher than last year's, which represents a leveling off after last year's budget jumped from $1.19 billion in 2012-13 to $1.34 billion, surpassing the pre-recession peak of $1.29 billion.
The county's property tax revenue rose by 3.45 percent in fiscal 2013-14 and is projected to increase by 6.5 percent next year, although as a matter of prudence, the draft budget assumes a 5 percent increase, Twa said.
It is unknown at this point how much the county will save from implementation of the Affordable Care Act, which is expected to reduce the number of uninsured patients at the county hospital and clinics.
On a list of concerns in Twa's presentation is the Contra Costa Fire District and its structural deficit, projected at $9.8 million in a $110.1 million expenditure budget next fiscal year.
The board agreed to continue the public hearing on the budget to May 6 and instructed department heads to be on hand that day to make brief presentations and answer questions. The board is expected to vote on the budget May 13.
Contact Tom Lochner at 510-262-2760. Follow him at Twitter.com/tomlochner.