Logo courtesy of Sutter County

YUBA CITY, CA (MPG) – Sutter County officials presented a balanced $551.6 million recommended budget for the 2026-27 fiscal year on June 9, warning that rising personnel costs, staffing shortages and uncertainty in state funding continue placing pressure on county operations.

Assistant County Administrator Laura Granados told the Board of Supervisors the county began the budget process with a $5.3 million gap between departmental requests and projected revenues. County administrators closed the gap through vacancy savings, deferred capital projects, reduced discretionary spending and updated revenue projections.

“The budget is balanced,” Granados said during the presentation, while noting significant adjustments were required across multiple departments to achieve that result.

The recommended budget totals $551.6 million in appropriations, an increase of $16.3 million from the current fiscal year adopted budget, according to county budget documents. However, county officials noted the figure includes interfund transfers and internal service fund charges totaling approximately $193.1 million that do not represent additional operating costs. When those amounts are removed, net appropriations total $358.5 million, an increase of $48.1 million, or 15.5 percent, over the prior year budget.

Granados said part of the increase reflects accounting changes tied to implementation of the Behavioral Health Funding Act, which replaced the Mental Health Services Act, rather than major new spending increases.

Personnel costs remain the county’s largest expense category at just under 50 percent of the total budget. Granados said the county employs approximately 1,000 workers and continues facing rising compensation costs driven by inflation and labor market pressures.

To help balance the budget, the county included approximately $15 million in vacancy savings across departments. Granados said the savings are based on anticipated turnover, recruitment timelines and staffing adjustments.

“This approach allows the county to maintain a balanced budget while aligning staffing expenditures with available resources,” Granados said.

Granados warned the staffing reductions could affect county services, including longer wait times and reduced availability in some programs. Deferred maintenance and delayed capital projects could also increase future costs, she said.

Several projects were removed or delayed from the budget to help close the gap, including renovations for the clerk-recorder’s office, continued work at 463 Second St. and renovations at 190 Garden Highway. Vehicle replacements funded through one-time sources remain included in the spending plan.

The budget documents also state the county is maintaining reserve levels near the Government Finance Officers Association recommendation of 16.67 percent, equal to roughly two months of general fund appropriations. The recommended budget includes a $1.1 million contribution to the county’s Internal Revenue Code Section 115 prefunding trusts, including $1 million for pension obligations and $100,000 for other post-employment benefits.

Granados also outlined concerns over continued uncertainty in state funding and increasing county responsibilities tied to public safety, behavioral health and homelessness programs.

She said Proposition 172 revenues are declining and state realignment growth payments remain behind schedule, creating additional challenges for counties statewide. Granados also said trailer bills affecting county funding could continue through October, requiring departments to closely monitor budgets throughout the year.

Despite the concerns, Granados highlighted several positive developments, including a $400,000 award for a Waterworks emergency backup generator and $1.5 million for public safety radios. She also noted progress on the Center Point development project, where homes are expected to begin construction in spring 2027.

Supervisor Flores praised county staff for balancing the budget despite increasing financial pressures.

“When you look at it at first and see a $5.6 million budget gap, it freaks everybody out,” Supervisor Flores said. “But somehow you’re able to pull it together.”

Board Chairman Ziegenmeyer said counties continue facing increasing costs while the state shifts additional responsibilities to local governments.

“What you don’t see is the escalator of insurance that goes up a lot more than 3 percent,” Board Ziegenmeyer said.

Public budget hearings are scheduled for 10 a.m. June 16 in the board chambers. Final budget adoption is expected June 23.