 Our first item is item number 62, which is the Board of Supervisors shall recess in order to permit the Board of Directors of the County of Santa Cruz Flood Control and Water Conservation District Zone 5 to convene and carry out a regularly scheduled meeting as outlined in the Zone 5 agenda, included the Zone 5 December 12, 2017 agenda packet. And now, wearing my Flood Control and Water Conservation District hat, I would welcome you to the Zone 5 meeting of December 12, could we have a roll call? Director Friend. Here. Coonerty. Caput. McPherson. Harlan. Here. Christensen. Chair Leopold. Here. Are there any late additions or corrections to the agenda? None. Then we will move on to the regular agenda, which is oral communications. This is the time to address the Zone 5 Flood Control and Water Conservation District Board about an issue that is within our purview. You'll get three minutes. Thank you. Good afternoon. My name is Becky Steinbruner. I'm a resident of the Mid County Groundwater Basin. And I am interested in water issues. And I would like to ask this board to consider inviting Dr. Helen Dahlke to come speak to the county about her work with the University of California at Davis regarding using storm water, flood water supplies to actually do very effective groundwater recharge projects. I know there are a couple of projects. One underway in the Pajaro Valley on the Thomson Kelly Farm. And I know that the county in partnership with Soco Creek is looking for other sites within the Mid County Basin. But I think that our county would be well served to have this professional come. We do have an excellent source of information with Dr. Andy Fisher at UCSC. I think that having Dr. Dahlke come and provide additional information would serve our county well. And I'd like to ask your board to invite her to come. Thank you. Thank you. Are there any other oral communications? Seeing none, Director Harlan. Thank you. I have a couple. I asked for some more information about the system and maps and so forth which I've received, map of the drainage ditches and the drainage pipes and so forth. And our situation in Capitola is that we need to meet in the next six months or so and go over the maps because this map shows some of the drains that we think are yours. And then we have a map that we think some are ours and then some are, we think are some are yours. So we need to do some negotiating. And just get it straightened out where the lines are and who they belong to and who's going to take care of them. And along with that we need to come up with a funding source of how to maintain them. So that's a big, big problem that we need to discuss in the next year, I think. And my other request is that in the next meeting we have, in the next quarterly report we have some more details in the reports about our expenditures, just a little description of maintenance and operation and some of these programs of where they are, what specifically. And I know we have a little bit more information that was very valuable this year, but a little more specificity. Where were they in Capitola or where, in Soquel or, you know, exactly where, kind of where were they or maybe pinpointed on a map, that would be helpful. So those are my requests just to have a little more information so that I can explain it to people how we're spending our little money that we have. And then to begin to think about how we can raise more money so that we can maintain this infrastructure that we have. We've sort of been ignoring it for many years. And now I'd like us to look at it, decide who owns what, and then we can figure out how we're going to pay for that maintenance and cleaning and so forth for the future. Thank you. Okay. Now Director Christensen has something. Oh, I just want to support Mayor Harlan on that whole issue herself because I really agree that I think Capitola is acutely sensitive to the failure to maintain storm drains or stormwater system and it really had catastrophic consequences during one of the storm years in Capitola a few years back. But in regards to paying for it, I just wanted to alert staff that Senator Hertzberger, who is the chairman of the Senate Committee on Natural Resources and Water, is introducing a new bill to rectify what was the result of a lawsuit back in 2002 to permit districts to impose a stormwater management fee more easily without it being a tax and be possible way that if we did have a stormwater system, we could actually start to raise some money perhaps to start addressing some of the issues that we have in this county on drainage. So I have that here, I'll just give it to you. You know, I can say that this is a statewide issue that there's a lot of drainage districts having the same problem and trying to raise capital for these projects. I can go up and down the state and name a number of counties. We do have SB 231. We're waiting for the first county to take initiative on that and implement it and that's where you take your drainage flows and reuse those, that drainage somewhere else like groundwater recharge or use it for domestic water uses, things like that. So we are waiting for that. We have not taken that leap yet but that is something that's being discussed at a statewide level. So SB 231 has been passed? Yes. Senator Hertzberg expected that it would since that the previous fee collection was stopped in 2002 that lawsuits would, it would start to be challenged initially and so people are kind of waiting, that's what you're saying, right? Yeah, it redefines what stormwater is, whether or not you can put it in with domestic water use or sanitary sewer and so that's how it's been defined. It's just that we're not sure how to implement it at this point at a statewide level, so great. I'd like to further, I was just at the California Association of Water Agencies last just a couple of weeks ago and they have a groundwater committee and they're deadlocked on whether stormwater is a benefit, capturing stormwater is a beneficial use and they have not been able to resolve that for about eight or ever since 2002, eight over eight years. Well, yeah, it was just a whole bunch of water agencies can't even agree so, but it is still worth watching, watching forward to see, it would be really helpful to get that. Maybe a future report if there's any action that you see statewide. I would also like to just ask for an item on our next zone five agenda to review our fees, our drainage fees on accessory dwelling units. The Board of Supervisors has had a lot of discussion about reducing fees and there was a, there's a fee charge for drainage, they still require to do the drainage, but if we can reduce fees that is shown to be successful in helping build accessory dwelling units. So if we could have an item about that so we can discuss it at our next meeting. So that closes oral communications and next we'll move on to item two which is approval of zone five minutes. Motion by Caput, seconded by Coonerty. Is there any public comment? Seeing none, I'll bring it back to the board for action. All in favor signify by saying aye. Aye. Any opposed? Motion carries unanimously. Next we'll move on to item three which is as the Board of Directors of the Santa Cruz County Flood Control and Water Conservation District zone five, except in file report on the first quarter 2017-18 zone five expansion construction revenue as outlined in the memorandum of the district engineer. Good afternoon Mr. Presley. Okay, so good afternoon John Presley, your district engineer for zone five. We're asking your board to accept and file this report on the first quarterly report for the 2017-2018 zone five expansion construction revenue. We brought in about $578.15. We estimate we're going to have about $197,000 at the end of next year. Are there questions from members of the zone five board? Are there comments from anybody in the public? Then I will bring it back to the board for action. Motion by Coonerty, seconded by McPherson. All in favor signify by saying aye. Aye. Any opposed? Motion carries unanimously. We move on to item four, which is except in file report on the fourth quarter 2016-17 zone five expansion construction revenue as outlined in the memorandum of the district engineer. Okay, we're asking your board and zone five board to accept and file this report on the fourth quarterly report for last year, 2016-2017 zone five construction revenue. The current revenues for four quarters are $143,621.31 and our projections are $188,617. We're a little bit below that. What we found out is we found another 26 that fiscal is now looking at will be added into the $143,000 and brings up to about $169 for the year. So $169,621.31 is what we have in our budget for the end of the year. Okay. So there are some changes there. Any questions? I don't. Director Christensen. Well, I just noticed that the total last year was significantly higher. I was just wondering. It all depends on development. Development? Yeah, and we have good years and bad years when it comes and large, obviously large projects bring in a little more drainage money for the zone five. So does that, do you have a prioritization of projects to do based on that? Yeah, most of this goes to maintenance purposes. So yeah, so we'll give you a report back on that as you requested. So. Thanks. Some projects, but most of you. Supervisor Caput. Oh, sorry. It kind of does jump off the page. Capitola, what, oh, okay, that's Capitola, $14,000. That's not, you know, that's not much at all. That was for last year. A few years back when they had the mobile homes flooded, it was that, then it was significantly higher. You know, a few years back upstream of that where they had the break in the pipe, we actually put about a million dollars into some flood control pipe pipes up there in Capitola. Right. This, I think the city of Capitola was responsible for that drainage pipe that failed in Capitola. So that was, we don't, we don't believe it was our, under our jurisdiction at that point. Okay. That's, that's all been settled by the way. So. Okay. This is an opportunity for members of the public, if you have anything that you want to add about the 2016-2017 revenue. Seeing no one, I'll bring it back to our board for action. Move approval. Motion by Coonerty. Second. Seconded by Harlan. All right. All in favor signify by saying aye. Aye. Opposed? Motion carries unanimously. Our last item on the board is approved the 2018 schedule of Zone 5 meetings as recommended by the district engineer. I can't say much more now. We have four dates identified for you in your board letter, and we're asking you to, to conceptually approve those dates. Are there any questions? Director Christensen. I just want to ask, would the emergency, I guess, how does that work, calling of an additional meeting? We would send out an email or call you as board members and ask for an emergency meeting if we, if we chose to do that. We can, we can take that request from any, any board member here. Okay. I'm not anticipating anything, but I just was wondering what the mechanism is, and you would just put it into another county board of supervisors agenda. Yes. Okay. Now I'll see if there's any member of the public who wants to speak about the calendar of meetings. Seeing none, I'll bring it back to the, to the, to the Zone 5 board for action. Move the recommended actions. Motion by friend. Seconded. Seconded by Coonerty. All in favor signify by saying aye. Aye. Any opposed? Motion carries unanimously. Thank you very much. Thank you for the work and good to see our other directors. Thank you. No. Now we will move back to the regular agenda of the Santa Cruz County Board of Supervisors, item number 63, which is a public hearing to consider proposed changes to the unified fee schedule and adoption of a resolution confirming the fee changes as outlined in the memorandum of the county administrative officer. There's a resolution about the unified fee schedule in exhibit A and B. And there's Ms. Daniels. Good afternoon. Good afternoon, members of the board. I'm Trish Daniels from the county administrative office. Twice each year in June and December, your board considers adopts amendments related to the unified fee schedule. On November 7th, 2017, your board set a public hearing for today for the latest proposed amendments. As the board did defer the amendments to the affordable housing ordinance earlier this morning, the proposed fee changes related to that program will not be considered as part of today's public hearing with the exception of items related to the accessory dwelling units that your board previously considered. So the first 500 feet of ADUs will be exempted and additional square footage will be charged at $2 above that. Park has fee changes related to the swim center as well as administrative language changes. Probation is eliminating fees related to juvenile hall placement, work follow, and adult drug testing. The sheriff's department has proposed changes, including language clarifying forensic evidence analysis for outside agencies as well as a proposed fee structure for the alcohol nuisance abatement ordinance. And while the affordable housing fees are not being considered, the planning department does have fees related to the recordation and expungement that were presented as additional materials to your board as well as hosted rental permit fees. Public word to language changes related to ADUs in conjunction with the planning department. Representatives from those departments are here to answer any of your questions, and it's recommended that your board open the public hearing for comment. Upon closure of the public hearing adopt the resolution revising the unified fee schedule. Okay, thank you very much. I will see if there's board member questions before we open the public hearing. Supervisor Friend. Just to point of clarification, although I think I know the answer, the staff report refers to an annual renewal permit on the hosted rentals. I believe that's supposed to be an every five year renewal, isn't that correct? There should be staff here from planning to answer that. Kathy Malloy-Prevzic, planning director. That will depend on the version of the hosted rental ordinance that the board ultimately decides to adopt on January 23rd. You've expressed at their last meeting an intention for a five year renewal period, and I expect that the Planning Commission will agree with that, and that's what you'll be taking action on, and that's the actual fee structure is silent on the renewal frequency, but the board letter said annual. Yeah, so that it won't be annual. It'll be whatever that ordinance requires. Thank you. Any others? Seeing none, I'll open it up to see if there is anyone who wants to testify about the unified fee schedule. Good afternoon. Good afternoon. My name is Joaquin Casillo. I prepared a very short statement. I'm a resident here of the city of Santa Cruz, and I'm a program coordinator for Pajaro Valley Prevention and Student Assistance. That's a nonprofit agency that in Watsonville that works with on preventing substance abuse in regards to our students down there. So first I would like to thank the board for passing the alcohol beverage retail outlet ordinance. I work directly with these families and the youth, and I know the positive impact that measures such as this have directly on them. So I'm also here to advocate for the full funding of the ordinance so that education and enforcement operations can be adequately implemented to benefit the community's health and safety. As we know, similar ordinance such as a tobacco retail license fee, adequate funding for comprehensive implementation is key in ensuring the substance are not sold to minors and that retailers are educated on best practices. So all the components of the ordinance, so monitoring, education, enforcement all work together to ensure that these measures are successful. So therefore, they should be funding enough to support two officers, a deputy and a program coordinator. And furthermore, I work with youth down in Watsonville as well, and we're hoping that, your action here today and your leadership here today will also incentivize them to adopt similar measures to protect the community down there. Thank you. Thank you. Good afternoon. Good afternoon. I'm Jenna Shankman, coordinator of Community Prevention Partners and community organizer at United Way. I just wanna thank the board for adopting the alcohol ordinance and providing this tool in the community and kinda echo some of the points that Joaquin was saying of just the importance of having all the components so it's really need to be supported by the two officers, the deputy and the program coordinator in order to be able to go kind of through the full spectrum of the yearly compliance checks, also providing the technical assistance and education and correction of any thing that's out of compliance as well as enforcement when necessary to really build that relationship and really have an in-depth program to address some of the alcohol, fueled health and safety issues in the community that we spoke about of length during the last meeting when that ordinance was adopted. So thank you. Thank you. Good afternoon. Good afternoon. My name is Casey Conway. I'm with Plaid Survey Research. I was here last month presenting some of the data from our study on the place of last drink of individuals who were arrested for DUIs. And I just wanted to reiterate our top line results of that which showed that about 47% of all the DUIs that we learned about origin came from a bar restaurant establishment. And I'd also just like to say we are an independent organization so I'm not gonna weigh in on policy and regulatory questions other than to say as a research organization we value any policies that data collection is gonna be involved where we can be as consistent and rigorous in the policy as possible so that our data reflects, so we're better able to understand the effects of those policies through the data that it's consistent and then the staff and the implementation are very consistent. Thanks for your mention. Thank you. Good afternoon. Supervisor Rudy Escalante, Santa Cruz County resident with Janice of Santa Cruz. Conceptually, I support the idea as well. I think my experience who supervised and managed an alcohol enforcement unit while I was at Santa Cruz, we had a lot of positive relationships with the business people. They were able to use us as a resource, the alcohol enforcement unit, when they were having trouble with either underage drinking or shoulder tapping or people with fake IDs that were trying to purchase alcohol at their business and we were able to respond much more quickly with them. We were able to help them with training opportunities and design around their landscape to prevent criminal activity. So we developed a really good partnership with them. The trust level became much, much higher and it was just an all around win-win for everyone. So conceptually, I support the idea based on my experience over the years. Thank you. Good afternoon. Good afternoon. Becky Steinbruner, resident of Aptos Hills. I have questions about the public works, change in fees, that there would be no roadside improvement fees charged when there's no parking required. That speaks to the ADU issue, I think. And I know that the law is that parking is not required for ADUs when it is located within a half mile public transportation. But how will that be rectified, I guess, for lack of better words if the occupant of the ADU does have a car or cars? So I'd like some discussion about that. What if there are cars? And in the packet, there was no trip generation rate schedule information provided, as was alluded to in the document. I also wanna thank the probation department for not charging youth and their families for being involved in the juvenile delinquency system. And I'm glad that now that's being expunged completely. I want to also chime in on the alcohol nuisance abatement fees and hope that a good amount of these efforts and resources go to sting operations. I think those are very effective. That ripples out and has effects beyond the area. I wonder what the rate of charge will be for gasoline stations. I see a lot of alcohol bought at gasoline stations and people get in the car and open one up and off they go. So I would like to know how that will be addressed. And I also wanna make sure that a good amount of effort gets put forth to the education of the ABC required staff education and training that was discussed a lot here when your board considered this by ABC certificate holders that it's very difficult, it's required, but it's difficult to get their staff down to Salinas when there's really no resources there to do it. So this is a step I think in the right direction to help make our roads safer, to help educate people and our youth. And again, I wanna point out that it's become very trendy to drink at all of the brew pubs and wineries that the county is licensing. In closing, I just want to say that regarding the hosted rental, I have a question as to why a renewal would cost more than an original application. And I'll look forward to hearing these answers. Thank you very much. Thank you. Good afternoon. Good afternoon. Hi, my name is Jen O'Brien Rojo and I'm here wearing several hats. I'm the chair of the community prevention partners and also a small business owner and a parent. So lots of hats there. As a small business owner, I fully understand the impact that fees and taxes have on a small business. And as a small business owner, I also understand that my community provides me with my livelihood and it's really my duty to step up and support that community that supports me and supports my family. And I'm in full support of the alcohol ordinance and coming up with and supporting this fee structure. And as it's a way for our government and our business community and our community in general to come together and to tell our young people that they matter, that they actually do matter more than profit. They matter 70 cents to 10 bucks a day. Because when you break down that fee structure, for example, if a business is open five days a week, I know lots of them are open seven, but five is your number, right? 260 days a year, you divide that it's between 70 cents and $10 a day. And our young people are worth that. And I think this tells them that, that from our government as well as our community, we're acknowledging that they're worth that. And they depend on us to step up and to make that statement together as a business community and as our government as a community. So thank you very much. Thank you. Is there anyone else who would like to address us? Seeing none, I'll bring it back to our board for action for discussion. So I guess we should answer the question about the hosted fee renewal. I know the answer, but we should. Well, as envisioned, the initial hosted rental permit is basically kind of checklist. Do you comply with the second time around? Probably five years later. That will be when we review the report, which would be I guess a five year report of activity. So there's additional steps involved that also tends to be programmatically, we're gonna get some questions and requests for information and complaints, et cetera, from surrounding neighbors and the community. And so there's additional time programmatically to engage with and respond to all those questions and concerns of the community. And so that those costs are spread over the cost of the renewal permits. Great. So, sure, so I'm in favor of moving the fee schedule with the exception of the alcohol fees because it doesn't reflect I think the direction that I gave in the last meeting that was supported by a majority of the board, which was to come back with a fee program similar to the city of Santa Cruz. And by that, I meant to have a tier but also have it cost the same so that as I said, if you're not a winery on one side of 7th Avenue and a winery on the other side of 7th Avenue, you aren't getting charged more than three times as much for the same service. And I think from my experience in the city of Santa Cruz, the alcohol program operates there. It operates well. We heard from business owners, we heard from the police that it operates well. And in the city, you have more high risk, you have a similar number of outlets, but you have more high risk venues than you do in the county. And so I'm glad we have this ordinance. I think it's really important and I think it's important that it's funded by fees. But I think the fees should be commiserate or small county, they should be commiserate with the city of Santa Cruz where we've heard testimony that the program really works. So we should be following that model in terms of costs and structure. So I'll make a motion to approve the unified fee schedule continuing with the exception of the alcohol fee, alcohol retailer fee to return the next board meeting in January with a similar in cost and structure to the city of Santa Cruz. So there's a motion by Coonerty. I'll second it. Supervisor Friend seconds it. Let's have some discussion. I know I have some comments. I'm not sure if others do. I have some questions. That's okay. Sure. Do we have a definition of what a small grocery market is versus a large grocery market? Supervisors, good afternoon. Craig Wilson, operations chief, the sheriff's office. For purposes of this ordinance, we're looking at initially probably 5,000 square feet or more to be the difference between a larger market and a convenient store or a small market, something like that. So there are 12 markets in the unincorporated area that are larger than 5,000 square feet. And there are a number of convenient stores that are less than that. So okay, in regards then to that question, if you were a 6,000 square foot grocery store, but you had a very small alcohol section because it wasn't primary to what you did versus say, Safeway, there's no price differential between that store and a Safeway? There is not. Okay. I still think, okay. I'm still, I appreciate, by the way, I appreciate that there was an attempt to go back and cheer the fees. I do think that it's still, I'm not totally sold yet on the Nexus, but I do think that there needs to be, well, if the motion is to really work on the city's structure works on the type of, would be the best way to describe this, but basically the Nexus directly between what that outlet is and the issues that it causes in the community. Square footage may not necessarily be the only way to do that. I mean, I think you know that better than I would. But I do think there's a second component here, what I'm concerned is gonna happen to supervisor Coonerty's motion is if we come back with a city of Santa Cruz model that the general fund will just be asked to make up the rest. I think that what needs to be introduced into the motion is a little bit more complexity about how we define what the funding will be because if we harmonize just with a, by definition, if something's half as expensive in the city, it'll bring in half the amount of revenue right now. And I assume that there's not gonna be, there isn't a proposal from the sheriff's office to scale the program back, correct? Could you, what do you mean by scale it back? So if the amount of, if we came back with the city of Santa Cruz revenue structure that brought in say $100,000 as opposed to 204,000, you wouldn't create a $100,000 program, you would request that the general fund make up the difference for the other $100,000, correct? It is correct to say that we've identified one deputy for sheriff full-time and one program coordinator full-time in order to run an effective program. Okay. I'll open up, I wanna make sure other people have a chance to speak. I may wanna speak some more on it. Thank you, thank you, Chief. Supervisor McPherson. Yeah, I'm kind of on track too. This is a countywide problem, I think or issue that we should be addressed. And I too, I'm not sure that we should put it all on the outlets of restaurants or whatever it may be. I think it might be best to see if we can get a share of it covered by the general fund. I think it's a big hit on a lot of, well, outlets that, this time around I didn't hear much of because frankly I've heard this was not gonna be discussed today and it was gonna be discussed later. And so I don't think I've heard from some of the others about this new tiered fee schedule. So I'm a little hesitant to go ahead with it right now. I'd like to look into what Supervisor Friend had said about what it would mean for us if we wanted to share this general fund and the stores, restaurants, nightclubs, whatever the case may be. And I have a couple of comments. First of all, there was no clear direction other than creating more sophisticated tiers than what we had last time. And so this was an honest attempt to do that. The issues in the county are different than the issues in the city and has to do with, you know, how compact the area is. You know, we're gonna have one officer who's gonna have to visit 260 outlets. They're not in a five block range, right? They're 40 miles apart and, you know, it's the winery up in the hills of Coralitas or winery in the Davenport area. You gotta cover some miles. So there are different costs. Plus, in the county area, we don't have the same kind of law enforcement on duty at any one time that they do in the city per capita. The other part about this, I would say, is one of the reasons why this was an attractive way to address a problem, a clear problem in our community, is that we have models in which we've done this before. The pharmaceutical industry, the needle manufacturers, tobacco retailers, even the garbage trucks pay a fee to deal with the harm that they create. And this fee structure is very similar to the vast majority of the other fees that are charged statewide, that they don't completely cover. This would not completely cover the cost, but it covers a good portion of the cost. And that's what we ask when we ask the pharmaceuticals and the needle manufacturers or the garbage company or the tobacco retailers, that's how we do it. This is in keeping with a standard that we have for lots of other areas. We're gonna be hearing a presentation in our next item about what the budget looks like into the future. And it should give us pause. I think after talking with a sheriff and staff that to effectively run this program, they have the most minimal staffing they could possibly have. Two people to cover 260 outlets to do an effective training program, to do an effective investigation to have adequate enforcement. And in keeping with the models in which we've used in other places, I think it's realistic to ask those who make money from the alcohol to help pay for a portion of it. There are probably lots of places where our fee schedule does not sync up with the city of Santa Cruz. And one of the things in my original conception of this ordinance was to charge one fee for everybody because we were trying to keep the administrative costs down and to get the actual work done. And after conversation with the business community and conversations board, it has expanded. But when you expand, it means that someone's gonna pay a little less, someone's gonna pay a little bit more. And that's the nature of having tears. And so I think it's to just simply try to match what the city has may not be the most effective model and it will require that it has a bigger general fund participation, which I don't think it's necessary. I mean, I don't, if the board's direction is to have the general fund pick it up, then that's the board's direction. But I think there's an opportunity based on our previous models to have those that contribute some part of the harm to our community help pay for the cost of the program. So, your advisor friend. Thank you, Chair, for that. Thank you for those comments. I just wanna comment on a couple of things here. I wasn't, in fact, I was directly saying the opposite regarding the general fund. In fact, I'd like to amend the motion to specifically say that the general fund not contribute to this, considering that be a friendly amendment. That wasn't the intention. I'll explain in a second. William, so you just made an amendment to the... To his original motion, yeah, that the general fund not be a contribution in this. That wasn't my, I wasn't arguing to have this be a general fund cost. The point that you raise is exactly right, that they're not one for one as far as the city and the county. I'm aware of that. But I'm also aware and briefly reviewing the ASR data that the last drink from the wineries was one person. One person. So, I don't know. I mean, one person, every winery gets charged $200. I mean, if we're doing a nexus, like the city actually does a nexus. They say that if you're the catalyst, you have a certain number of calls for service and you create a certain number of problems. You're gonna pay a lot more than somebody that doesn't. Corralitos Market in my district, which is by no stretch is a major alcohol purveyor, but it's 5,500 square feet is the same prices, safe way. I don't, I mean, so I'm not... Not accurate, but if you look at the list, it's not accurate. But it is 5,500 square feet. And if 5,000 square feet is the cutoff, then it would be the same price as the safe way. So, that's why I'd asked that question about the square footage earlier. And so, but yet, I don't think that, and considering that they sell mostly local wines at astronomical prices. And so, I don't think a lot of people are going there to... I don't think they're contributing a lot of alcohol-related problems to the community. It's just sort of my point, right? Where I think that we may be in agreement about a 7-11. We're in agreement about nightclubs or bars, like what we have in our districts. And so, what I'm trying to do is harmonize the fees. This is what I thought. We had a pretty extensive discussion the last time, and I appreciate that you had, that your interpretation of the direction was just to have tears. I left with the same impression that Supervisor Coonerty did that we were more specific than that. And even at the last board meeting when we had the second reading of the ordinance on consent, Supervisor McPherson made a very specific statement that he was only supporting the ordinance with the understanding that we'd be coming back with a reasonable fee structure. So, I think it's fair to have the discussion about the fee structure, about what the interpretation of reasonable is. I think it's fair that we had spoken specifically about the city as a model by which that be what it based on, what it be based on. So, we may have a recollection difference on that, but that's what it was. But I would say it was a 5-0 vote to create the ordinance. It's not like there isn't support to actually create this. We've all in agreement that we should give these additional tools to the Sheriff's Office. It's just a simple question of whether $200 plus is a reasonable operational cost, whether this distribution really correlates or even more than correlates, but it has a strong nexus to the impacts that are created by these individuals, that's all. I mean, I think that's what the discussion is about right now, which is why I'm in agreement with Supervisor Coonerty's motion with that amendment. I think it's, you know, I try to listen to the law enforcement professionals who talk about what it takes to run this program effectively and to put a cap on saying no general fund participation, but then say you can't charge enough fees to operate the program, be clear about what you're doing. You are not running an effective program. You are limiting the ability of this program to be successful. You cannot have it both ways and say I support the program, it makes sense, I've seen it work, and then not provide enough resources to actually do it well. So, you know, we can continue to tinker with the fee schedule and I encourage the active involvement of my colleagues in coming up with a fee schedule that they would find to be useful or amenable but don't pretend that you support this program and the sheriff and all the community partners that do this work that support this program and all of our alcohol and drug commissioners who support this program and say we're gonna do that program if you will not provide the funding. There is a way to pay for this and to get those who sell alcohol, who make money from alcohol, who have a responsibility to help pay for the harm that it creates to our community, which is considerable, to pay for the program but to also limit the general fund, you just can't have it both ways. I guess, I mean, we're all in support of the program, we're all in support of having significant funding to go to the program. I don't want sheriffs driving up to Davenport to talk to wineries about shoulder tapping. That doesn't seem like a good use of resources. The focus on what I'm trying to do is scale this back. We also heard from all the, everyone who testified last week, they don't want the training programs because they can go online and get the training programs as mandated by the state so we don't have to provide a training program. This doesn't seem to be a, it doesn't seem to be, we get COPS grants all the time, we get drug Medi-Cal grants all the time that say, here's a grant, do as much as you can do. There's either, this may not be enough but you can implement the program and then the grants go away and then we figure out whether we wanna do it. So the question is, can we go from nothing to a 100,000, I'm not even sure what the number is, $100,000 a year program to address a very real problem. And if it is a major driver, if a couple outlets are a major driver of police calls, can we dedicate, can we redirect existing resources to those sting operations that are major public safety violations? It's, I just, we just, I mean, we've heard over from in testimony that the city of Santa Cruz won with the same number outlets work other than drive time, there's less high risk, there's less shoulder tapping, there's less issues with late hours. So can we then have those similar resources apply in a way that works and see how it works? And if in a year from now, we have shoulder tapping and other things going on all over the county and we need to increase the fees, we're gonna increase the fees, but let's see if we can make an impact on the places that are causing the most damage to our community. I don't remember the data about shoulder tapping being less in the county than it is in the city. Was that data that was presented at some point? No, no, I'm assuming that 20,000 college students, half of whom are underage, are out shoulder tapping more often by just the demographic percentage in the city than they are in the unincorporated areas. I'm gonna pass on saying about what I guess and try to point to the data. It's clear that you wouldn't have the same program at a Davenport Winery as you do at a bar in Aptos. It isn't a one size fits all program. The officers would use their knowledge and their awareness and their skills to be able to work with individual retailers. We did hear that individual retailers like the interaction in the city of Santa Cruz. And so it's that communication and education and connection that strengthens the relationship. It's not about just simply looking at the high risk outlets, right? I mean, if we acknowledge that we have a problem here in Santa Cruz, I think that the sheriff's office has been smart enough to know that the castaways on Portola might or the over the hill gang saloon might cause more problems than cafe crews. Because they're ours and everything else, maybe they allocate resources that way. But in trying to figure out how we can make a dent in the impact that alcohol makes, this is the, these are the tools in which law enforcement is told us they want. And I'm just trying to make sure that we fund an effective program instead of funding half a program and then go see it didn't work. Makes no sense. Other others. Can I ask a question? You may know the answer, which is, or actually chief, if you wouldn't mind, you would know the answer to this. Of the total staff, the two staff, what's the breakdown of the two from a salary standpoint? So I know where the 250 ish thousand comes from. I think it's 204,000 of revenue, but I know there was some that was. We need approximately 217,000 revenue for the two positions. And the program coordinator accounts for about 85,000 of that. Okay. And, but you are, you do actually have three staff technically in one of them, you're just absorbing within the current budget. That's a special investigations lieutenant, correct? This is a manager level. All supervision and management will be done with existing resources. Add will some, as well as some value ads that we talked about earlier, when the new investigators should it be funded, coordinates with patrol and some other resources for some of these activities, because as Supervisor Leopold mentioned, the county and the city comparison isn't exact with the, not only the distances, but the usage patterns and impact and densities are all different. And that's why I have some reservations about adopting the city of Santa Cruz, alcohol, fee structure, just bringing it across as it is. I'm not sure it will work like it does for the city. Thank you. Chief Wilson, if you only had half the amount of money for this program, what would it look like? Would you be able to do it? Well, probably not. And that's because to have the program, the most, I mean the enforcement and part of the outreach is done by a deputy sheriff. The program is gonna be funded. It sounds like, based on at least two of your thoughts, by a fee structure that substantially gets that. In order to have that fee structure, someone has to do a billing cycle and a receipt cycle and a scheduling cycle for inspections. I mean, there's quite a lot of administrative infrastructure with the program. And what we learned when we talked to some, the other 20, 19, 20, 21 jurisdictions that have this, is that having an administrative support by whatever its name and a police officer is the most common combination to have. There's just, it's not just a matter of a police officer going out and doing this work. It's not random work between the inspection cycle and the undercover work. There's some planning involved and administering a fee structure, collecting revenues, keeping out notices on new applications. That's all administrative work that someone needs to do. And the police officer's not the most ideal person to do that for a variety of reasons. So you mentioned wineries. There's probably 17 according to the, that have tasting indoor off on site sales, off site sales according to the representative that came out from the wineries. So you can see that this fee structure that we put into play, because we were listening closely to some of your concerns. The winery is coming out 200 annually. And so if you, if you removed, if you chose to remove that, we're looking at a very small amount of revenue for the entire program. However, there are some advantages by keeping all alcohol outlets in. And it has to do something with the education component. So as you look up, I mean, my experience is that large markets have a lot of calls. They may not all be necessarily alcohol related directly, but there's a great deal of activity. And the larger the market, the larger the activity that we go to, without naming specifics, I can think of two large markets in the inter-corporate area that account for hundreds of calls. Constantly. And when you apply this fee structure, there's going to be some discretion in how we do this. There has to be. That's the nature of any program of this nature. So the information that I got from the assessor's file puts the market that you had some concern with at less than 5,000 square feet. And that's why I didn't make the list of 12 markets that are known to me that have that. So those are the kind of things that, you know, we would need some fee structure to, we would actually need to go in detail into the probably 260 to 270 outlets. It depends exactly how you measure them to fit them in that category. Some are quite obvious and some are a little bit more challenging, but we would apply fair and consistent rules and hear back from outlets that wanted to present material that they were miscategorized. So it wasn't that we didn't listen to any direction that you were at at the last hearing, but I didn't hear that you were looking for an identical structure as a city of Santa Cruz and I'm not sure that it can work. There may be variations of it. I wonder if there would be a friendly amendment to have it come back the fee schedule and have the sheriff's office and the CAO's office work to see if there's a way to fund this program. So you could actually have it, rather than just saying no general fund. That seems like a level of severity that we don't have on anything else. And if we acknowledge that it's a good program, there may be opportunities to think about ways in which that can be done. Go ahead. I mean, I'm not married to the exact structure of Santa Cruz. I'm just trying to have it be roughly comparable. So if you're a restaurant in Santa Cruz and you're a restaurant in the unincorporated area, it's roughly the same fee. My understanding was it's not, we're not saying don't spend general fund resources so cut the program. We're saying don't come with a proposal to bring new general fund resources. But if you have five markets or that are generating hundreds of calls and you wanna reallocate some resources for an operation that reduces those calls, obviously that makes sense. So if the direction to the CA's office and the Sheriff's office is to work on a fee schedule that takes into account what the city's does is takes into account the risk and the volume and has comparable rates then and doesn't require a new general fund supportive of that. I don't, then I'm just trying to figure out if you say no new general fund money, you were saying that either the fees have to figure out a way to pay for it which you don't appear to be saying because Chief Wilson has said that that will not do it and then just come up with it somewhere else. So you would like them to cut some other part of the Sheriff's budget to pay for this. I'm just trying to figure out if we care about a program, let's figure out how we pay for it and not put unnecessary restrictions, let's let the CAO's office, the Sheriff's department, try to see if they can put something together without those kind of severe restrictions and then come back to us. Carlos, I mean, Mr. Palacios. Yes, I think we understand the general direction you want in terms of the fee structure and the program. So let us have a chance at it and we'd be happy to work with the Sheriff's office and see if we come up with a compromise that tries to meet the differing goals that the board has but still has a successful program. So I think we could have our analysts meet with the Sheriff and see if we can come up with something that could be a sustainable compromise that would also be a successful program. If we're clear on that, maybe you want to restate the motion so we're clear on what it is we're voting on. Sure, so I'm moving the unified fee schedule with the exception of the alcohol sales permit fees which the CEO's office and the Sheriff's office will return to us in the first meeting in January, trying to develop a fee structure that is tiered and is comparable to the city of Santa Cruz. Could we just make that the second meeting in January? Give us a little bit more time. Second meeting in January. Is the clerk clear on what the action is and is the second clerk clear? Is the rest of the board clear? Any other comments? Then let's vote. All in favor? Opposed? No. I look forward to this coming back on the second meeting in January. I appreciate the support from the community members and the Sheriff's office and the creation of this program. So we'll move on to the final item on today's budget which is item number 64, which is considered the county preliminary budget projection report and study session for fiscal year 2018-19 and providing additional direction or priorities for the FY 2018-19 proposed budget as outlined in the memorandum of the county administrative officer. China, a brief break as we get all the chairs back in the original location. And there is one more item after this one. Oh, and a different chair, Mr. Palacios. Okay. Good afternoon. Good afternoon, Carlos Palacios, county administrative officer, chair Leopold and members of the board. What we're doing today is giving you a preliminary budget overview. Normally, we do this mid-year in February. Usually the first or second meeting in February and the auditor controller along with the CAO's office gives a presentation. The issue is that we do that because of the timing of the financial data being available to us. And so that's why it ends up being second meeting in February often, because that's when we have the results from the first part of the year and that gives us the most accurate financial update. The only issue is that when we try and get input from the board on the makeup of the following year's budget, it's already late in the process because by February, the departments have already pretty much are very much deeply into their budget development. And so typically we issue budget instructions right now in December. And so that's why we wanted to separate the two presentations a little bit, which would provide you to get a preliminary view of the budget and provide any input you might have prior to us giving the budget instructions out. And just to give you the heads up about what our budget instructions are gonna be for the coming year. So that's the impetus for this budget presentation occurring at this time. So this is the agenda for today. We are gonna be in the County Administrative Office. We're gonna be presenting an overview of the 2017-18 budget. That's our current fiscal year, next fiscal year's preliminary forecast, and then our five-year forecast. We'll also go over a number of emerging issues, including we have the Director of Human Services, Ellen Timberlake and Director of Health Services Agency, Jiang Wen, who will be giving impacts on their departments which have significant issues coming up in the budget year. So if I could summarize the whole agenda from the County Administrative's point of view, the basic summary is that in this year, 17-18, we have a balanced budget, and that's good news. With that, that basically assumes that we don't any have any major new initiatives. For next fiscal year, 2018-19, we have a balanced budget with significant belt tightening. And then the following year, in going out five years, we have potential budget deficits. So that's the summary of the overall presentation. I thought it'd give you a preview of that. So if you look at our budget for this year, you can see our general fund is almost half a billion dollars at this point. And our total budget, all funds, is almost three-quarters of a billion dollars. So we're getting to be a very big budget, and you can see that the general fund is a significant portion of that overall budget. If you look at the general fund, you'll see that basically half of it is intergovernmental revenues. So as a county, which is typical of counties, we're very dependent on federal and state revenues. So that's one thing that we have to keep in mind. And then the other thing we keep in mind is that of the half that is not intergovernmental revenues, almost half of that portion is taxes, and most of that is property tax. So 26% of the entire budget is taxes. But if you look at just the part, just that half that is not intergovernmental, you can see it's very significant. It's almost half is our taxes, and that mostly is property tax. Every year we have fund balance in good years, and this is how we begin the year is with the prior year fund balance, and it is composed of three main things. One is that we have been having general purpose revenues above our projections. So we don't project our revenues conservatively. We don't project them optimistically. We make a middle-of-the-road projection in our revenues. But they have been coming in ahead of that, better than that, better than moderate projections. And so we've been having fund balance partly due to our revenues, mainly property tax, but also hotel tax, sales tax, outperforming our projections. So that's one piece. And then the other piece is we have cost savings. Our two pieces make up cost savings. One of them is salary savings, which we project every year as part of the budget, and then the other, and that's due to people, staff turnover, right? And the time it takes to hire a new person. And then also just operating expenses that are not spent, called reversions, general operating reversions. So between operating budgets that are not spent and then salary savings, that makes up about 24% of our fund balance. And then we also have contingencies that luckily we have not had to spend that makes up part of it. So in 2016-17, our fund balance was actually $12.4 million, which was high. It was actually, this is about as good as it gets for us. Our normal fund balance that we would expect is in the range of about $6 million. So we almost doubled that. And you can see that when you look at the sources of that, 7 million of that was general purpose revenues above what we projected. So this is more than we, this is growth beyond our projections. And then cost savings, both reversions and both salary savings of about $3 million and then our contingencies, which we did not have to spend and therefore rolled over. So this is the money that was available to roll over into 17-18. And we took, or the board took half of that, $12.4 million, $6.1 million, put it into reserves. And that's how we were able to get our reserves up to, I had a schedule to meet our 10% and then we also put that, the remainder, 6.3 to roll over into the next fiscal year. So in 17-18, we started basically with that fund balance of $6.3 million. These are our general purpose revenues and you can see that the great majority of these are taxes and that the great majority of that is property tax. This is our expenditures in the general fund and you can see that about half of them are salaries and benefits. You'll also note that there's, our services and supplies, there's only 26% of the budget and so that's, so it just shows you how, when you have a budget problem out, it's hard to cut because a lot of it is salaries and benefits or services and supplies or contracts that are hard for us to reduce. So this is our general fund operating history going back almost 10 years. And basically you can see that we had a gap in the Great Recession 2008, 2009. We actually had a completely balanced budget in 10,000 FY 10, 11, that was when we had furloughs in place and then we had a gap that's been cruising around somewhere around six to $10 million. It's currently about $6 million and we've been covering and that's not a significant amount. It's only about one or 2% of our budget so it's not a huge amount and we've been covering that gap in the past. We've called that our structural deficit. It's our gap between recurring revenues, recurring expenditures. Right now it's about $6 million approximately and we've been covering that as you can see last year we had $12 million of fund balance, right? And we were able to roll over half of that. So that's how we've been covering that gap. This is the net county cost. So this is a very important chart because this is basically in the general fund those expenditures that are not covered by fees and that are covered by general purpose revenues and you could see it's grown up to $141 million and you can see that the majority of that is public safety of the net county cost and then you can see that we also have health and human services which is about 18%. Those are very difficult to cut as you know and also the health and human services money that contribution is used to leverage a lot of state and federal funds so it's very difficult to cut. So you can see when we have a budget deficit the difficulty we face is that this is really all the discretion you have over. If you cut the rest of the general fund is either subvented from state and federal money, right? About half of it and then the rest is covered by fees. So if you cut that you don't get any savings, right? If you cut something that is fee based you don't save any because you lose the revenue. If you cut something that's subvented through federal and state funds you don't make any money because you lose the federal state funds. So really all you have is the net county cost and you can see the majority of this again is public safety or it's in health and human services which is leveraging other funds. So this is our current year budget estimate and you can see that we're on track to still generate a fund balance. We're doing a little bit better than we projected. So the left column 2017-18 budget you can see that we had prior year fund balance of $6.3 million. Revenues are performing a little bit better than when we originally projected. We have basically a million dollars more in revenues that we're projecting at year end, a little bit less than we've been having in the past but it's still in the positive range and then we are also projecting some savings in our expenditures of about $4 million. So about $1 million in new revenue, about $4 million in savings both from budget reversions and salary savings and so we're projecting having a fund balance carryover of about $5.2 million which is what we've been in general about $6 million has been what we've been averaging in terms of fund balance carryover. The hard thing about this is that in a recession revenues start they stop outperforming your estimates and start underperforming so you get a negative there and then your reversions and your salary savings also go down because people stop leaving. Right now people, there's churn in the workforce because people are getting job offers in other counties and other cities and so there's turnover, right? In a recession people have salary free hiring freezes and so you don't get those budget reversions, salary savings, your revenues don't come down and suddenly this fund balance is not generated. Now looking to 2018-19 we are projecting that we can have a balanced budget but it's gonna take some belt tightening and basically we're projecting that our revenues will continue to grow as they have been a little bit slower than they have been in the past about 4% that we would increase any fees to cover costs that we would have the fund balance to bring over as we are estimate about $5 million. We have some cannabis growth that we're projecting, we'll go over that a little bit later. There's also some loss of grant funding which will hurt us a little bit. Our expenditures are growing. We have salary and benefit costs for existing staff and we have some risks that we are gonna talk about a little bit later from per rate increases and also state and other emerging issues which are department of health services and human services we'll talk about. So PERS is a growing issue not only for us but for pretty much every jurisdiction across the state that contracts with PERS because their rates are going up significantly over the next six years. So that is one of the realities that we're gonna have to deal with and that's really gonna define the next six years. You can see that basically PERS rates and these are the blue line is miscellaneous and then the green line is safety and then the sort of the teal line is the sheriff safety. And so miscellaneous is projected to grow, it's right now about 19.5% of the employer rate. It's expected to grow to almost 30% in six years. Safety is growing from 27% to 43% and you can see the sheriff safety is growing from 39% to almost 59%. So very significant cost increases. If these cost increases turn out as projected as a total county we would have to absorb almost $30 million in new PERS costs over the six year period. 25 million of that would be in the general fund. And so what is driving those rate increases? Basically there's three main factors. One is the earnings rate that PERS is having in their investments. They call this the discount rate. A few years ago it was 7.75 that they were using to project how much they were gonna earn in their investments. So when we give them money, we pay a bill, they take that money and they invest it. They were projecting 7.75, they reduced that to 7.5% a couple of years ago and they're now going to reduce it to 7%. So that reduction from 7.5% to 7% in their earnings projections that PERS is using in their formulas is one very big factor. Another is the amortization of the losses from the Great Recession. In the Great Recession in 2009, PERS lost billions of dollars and they amortized those losses over 30 years. They've changed that amortization from 30 years to 20 years and so the shortening of that period is also causing the rates to increase. And then the third factor is demographic changes. Basically we're living longer than projected. What the PERS demographers are saying that we are living basically every decade we're adding another two years in longevity at this point. And what that means is that the baby boom Russian retirement is gonna have a big impact on the demographics of PERS. Right now there's six current employees for every retiree as we stay today, as we stand today. In 30 years, PERS projects that there will be one retiree for one current employee. It'll be one to one instead of six to one. So that's another factor. And that's just to increasing longevity as we get older, right? We're living longer than projected. So all of those factors, those three factors have combined to make the rate increases. So every jurisdiction is having to deal with this and that is really what's driving our cost increases or a big part of our cost increases. So if you look at the 2018-19 preliminary budget projections, we're projecting prior year fund balance again of about $5 million revenue growth of about 3%. Our expenditures are growing by almost 10 to $13 million. And so we have a budget gap of somewhere in the range of $2 to $4 million. We think we will be able to close that gap by tightening, belt tightening without any major reductions. But it is gonna be a year when we next fiscal year again where it's gonna be tighter than it's been in the past five years. If you look five years now, you can see that we're projecting basically this is just revenues over expenditures. And you can see there's just a gap. The gap is somewhere around $9 to $10 million. This is above our, that's assuming we still have fund balance, right? So assuming that our normal structural deficit around $5 to $6 million, this is on top of that. And so it's just a steady gap that we have challenging us. That's assuming we didn't do any budget cuts or any adjustments. So just showing you that status quo. This is also assuming no recession. This is assuming steady revenue growth of about 3% and steady expenditure growth, which mainly is driven by salary and benefit increases and some contractual increases. So this is the budget gap. If we, you can see that in this scenario, what we did is we projected that we in fact, how much we would have to cut out of each year to balance the budget. And so what it shows is that in 18, 19, we would have to cut around $4 million or come up with that amount of money to balance the budget. The bottom line is the salary savings, the fund balance, and then the top line is the expenditures, the gap that we're having to close. And so you can see that it gets very big in 1920. Goes as high as $10 million gap there that we would have to close. And then that's assuming that every year we made those reductions that we had to make. And then eventually it gets, we close the gap by six years from now. So the challenge is really gonna be 1920, as you can see. That's the big challenge in here. Assuming, again, that we have normal revenue growth and that the PERS projections, and again, those are projections. PERS has not given us firm data yet going out beyond two years. These are all projections. It just shows that we would have to do some significant cuts potentially in 1920 and 2021. And then after that, after we made those cuts, we would be pretty much back in balance. But they're significant. They're in the $10 million a year range that we'd be having to face. We have other initiatives that we're doing. We're continuing to work on the budget format. We took input from the board, the public, and from staff to continue to improve it and revise it. So we will be including more narrative this year in explaining changes from the budget year to the prior year. We're continuing to do the CIP program improvement of the format. And you saw that the format that was handed out hopefully was a better format that we had recently in this last board meeting. And we will have continued improvement in the end of your CIP program. We will are continuing our major initiatives, our training programs, our strategic plan. And the big news is that next year, not this year, but next year, we'll be embarking on a two-year operational plan, which will also align with the two-year budget. And you can see that one of the big things we're gonna have to deal with is potentially is a budget gap in the 1920, 2021 year, assuming that our projections that we just showed you are accurate. Countywide issues. One issue I wanna talk to you about was cannabis growth. This is one of the big unknowns. We just don't know what to expect here, but this shows you what's the budget in 17, 18. We basically had $3.7 million of revenue projected. That's in this current fiscal year. In 18, 19, we think we're gonna be estimating growth of about $1.5 million to $5.2 million. That amount is very unknown. We just don't know what's gonna happen with the cultivators, especially the dispensaries have been fairly steady, but the cultivator is the tax there is a big unknown. It could be a lot more. We don't think it's gonna be a lot less, but it could be a lot more. So I think most of the risk is on the upside on this. So that's the good news. I don't think there's, I think we're being conservative here, but there's a lot of unknowns in this area. One of the issues that we continue to face is our deferred maintenance. And again, this is not just us. It's a lot of jurisdictions. We have a big need in our park facilities and our county facilities if we're just doing maintenance on aging and obsolete equipment and buildings. And then we have some upcoming issues, including in particular, there's gonna be voting systems, which are gonna be a big thing next year. And we know that there's some other issues that departments will be bringing in the budget. We are also losing some grants. This next fiscal year, the Sheriff Recovery Center is losing a grant. Probation, the MIOCR grant is ending. That includes two deputy probation officers. Juvenile Reinvestment Initiative grant is also ending. So we know that a number of these grants are ending this fiscal year. We're gonna have to deal with them in the next fiscal year. And of course, we wanna try and continue these programs. And so we're gonna try to absorb these, but that's gonna be another, that is another issue in terms of having to come up with a new funding. So that concludes my presentation. And I don't know if you wanted to have questions for me now or wait till we have the presentations from the departments. Why don't we hear all the presentations first and then we'll ask questions if that makes sense. Okay, thank you. Good afternoon, Chair Leopold, members of the board. I'm Ellen Timberlake, Director of the Human Services Department. And I wanna thank you for the opportunity today to address several emerging federal and state budget issues that may significantly impact our department in 17, 18 and beyond. So let me start at the federal level. 2017 has been a year of continuing uncertainty. As you know, Congress has made numerous attempts to repeal and replace the Affordable Care Act. Each of these has failed to secure the necessary votes in the Senate. And all of them put forth to date sharing common devastating impacts on low income individuals and families who have healthcare coverage, either through Covered California or the Medi-Cal. With these failed attempts to repeal and replace Obamacare, it was not surprising to see the elimination of the Affordable Care Act's individual mandate included in tax bills passed in the House and Senate. Bills that are estimated to cost $1.5 trillion over the next 10 years. Eliminating the individual mandate means that 13 million individuals currently abiding by the requirement to have health coverage may in fact opt out, which in turn over time destabilizes the financial structure of the insurance market. As insurance rolls decline, it is expected that premiums will rise on average an additional 10% per year. Another impact of the pending tax bill is a legal provision known as PAYGO. The Statutory Pay As You Go Act was adopted in 2010 and requires that any legislation that adds to the federal deficit be paid for with spending cuts or revenue offsets. In the case of this $1.5 trillion tax bill, if Congress takes no other action up to $150 billion per year in program eliminations and or drastic cuts will begin immediately and extend over a 10-year period. The list of programs impacted is over 16 pages long, but some that would impact human services directly includes the elimination of the Social Services Block Grant, which is used to help fund foster care, Meals on Wheels, and other programs as well as the elimination of our promoting safe and stable families funding which supports critical child welfare services. In total, the provisions of the proposed tax bills will result in disproportionately negative impacts on low-income families and individuals. Unfortunately, the forecast does not improve for other critical entitlement programs that health and human services rely on to serve our community. As you know, congressional leaders and the president have indicated a desire to shift their attention to entitlement reform after the final adoption of the tax bill. Three of the largest entitlement programs that they will likely look at is the Medicare program, which the federal government spends $590 billion per year on, Medicaid, which is $375 billion per year, and our supplemental nutrition assistance program known as CalFresh in California, which is a $70 billion per year expenditure. Should entitlement reform commence, it is anticipated that we'll also see calls for cuts to other programs, like community development block grants, Head Start, community health centers, affordable housing, just to name a few. With this subring news, let me move on to an update at the state level. Today, I'd like to focus exclusively on an item that Carlos mentioned on the status of the in-home services program. As you know, in January 2017, the governor's budget indicated that specific provisions in the legislation pertaining to the in-home support services maintenance of effort, or MOE, had been triggered and that those provisions would ultimately sunset the legislation on June 30th of 2017, effectively ending our IHSS MOE, which had been in place since 2012. By ending the IHSS MOE, substantial costs were slated to shift back to counties. Due to the enormity of the cost shifts, several work groups were formed to mitigate upcoming impacts. As a result of the advocacy efforts of CSEX and others, SB90 and subsequently AB130 was drafted in an active, effective July 1, 2017. The replacement bill creates a framework to mitigate the impending cost shifts of IHSS services and administration, establishes new funding mechanisms to offset the recalibrated MOE base and adds new negotiating tools to assist counties in responding to labor requests for provider and wage benefit increases. SB90 does not, however, address the structural funding and adequacies of the in-home support services program. While several short-term solutions have been acted, the fundamental financing structure beyond 1819 has yet to be fully addressed. This next slide summarizes the local impact of our new IHSS MOE on our expenditures. The repeal of the IHSS MOE resulted statewide in a $600 million cost shift of IHSX expenditures to the counties. Santa Cruz County's share of this cost shift is approximately $3 million. The new MOE methodology is quite complex. It has four distinct components, services, county administration, the public authority administration cost, and our payrolling system cost. 95% of the $600 million cost shift to counties is a result of five years of increasing IHSS service cost. The primary driver of rising cost has been an increase in the number of customers enrolled in the program. In resetting the IHSS MOE for counties, two factors were used and weighed equally. The first was each county's percent to total of all 16, 17 expenditures, plus an inflation factor, and the second was each county's share of all the five years worth of case load growth. For Santa Cruz County, this new adjusted IHSS MOE for 1718 is $9.2 million. Next year, the MOE will be adjusted by a 5% inflation factor with a 7% inflation factor for 1920. Due to the significant increase in cost shifted to the counties, negotiations between CSAC, the California Welfare Directors Association, the Department of Social Services, and the Department of Finance, created a funding strategy to mitigate the size of these sizable increases. The primary agents of the funding strategy were revenue offsets by the State General Fund, the redirection of vehicle license fee and sales tax growth from health and mental health to the in-home support services program, and the acceleration of case load growth payments to counties. This chart shows the projected annual county IHSS expenditures and the effect of the State General Fund offsets, the redirected health and mental health VLF and sales tax growth, as well as the negotiated annual inflator. Let me walk you through local impacts just by using 1718 as an example. In 1718, the 9.2 million represents our county's new adjusted MOE. Think of it as our gross MOE cost. As you can see, it's $3 million more than the $6.2 million IHSM MOE that we had in 1617. The blue shaded area represents State General Funds that are being redirected to help counties pay for this new MOE. As depicted in the graph, these State General Fund offsets decline over time, but it is important to note that they will remain as a permanent contribution to our MOE. The yellow or gold shaded area represents funds that are being redirected and advanced to counties to help mitigate the increased IHSS cost. In 1718, approximately $303,000 of the $1.1 million you see on the graph is redirected health and mental health funding generated from the VLF fees and sales tax growth. These funds will also be permanently added to our base. However, the redirection of the VLF funds are gradually phased out and slated to end in 2020-21. Of course, it goes without saying that this redirection strategy helps offset increased county cost, but the expense of our health partners who are seeing these funds cut. The remaining 700,000 of the $1.1 million in the gold shaded area really just represents a change in the way the State distributes 1991 realignment funding. Prior to this change, we've received growth funding in arrears, meaning for example that money earned in 1516 would not be paid to us until 1718. Under the new agreement, assuming that the economy generates enough revenue and that's an important assumption, the State will advance the county, our IHSS realignment growth at a much faster pace. They'll be advancing to us as we earn it. This leaves the brown shaded area, which represents the net county IHSS MOE obligation. In the case of 1718, $6.2 million. It should be noted however that this figure does not include the cost of the negotiated IHSS provider agreement approved by your board this morning. Moving forward, the net county IHSS obligation is increased by an annual inflation factor beginning with 5% in 1819, which adjusts our MOE to $9.7 million, followed by 7% in 1920, which moves the MOE to $10.3 million. It is important to note that all of these cost shift mitigation strategies and accompanying funding mechanisms assumes that the sales tax revenue will be sufficient to deliver on the estimates provided by the Department of Finance. As mentioned earlier, SB 90 calls for a re-opener in 2019 to really examine long-term financing solutions. This final slide reinforces that the new IHSS MOE has no impact whatsoever on the eligibility for IHSS services and how we assess the level of need. For IHSS providers, SB 90 introduces new tools for collective bargaining that help counties across the state advance wages and benefit levels by maximizing state and federal financing. We're very fortunate that the timing of these tools has allowed us to advance the wage and benefit levels of our IHSS providers as evidenced by the new three-year agreement adopted by your board this morning. Finally, we're tracking closely discussions at the state level regarding the unexpected 12% cut to our IHSS administration allocation effective this year. The good news is that a committee has formed to discuss how to incorporate IHSS costs associated with mandated workload increases. And we hope that that issue may be settled in the next six or seven months. And this concludes my presentation and I'll turn it over to Director Nguyen. Well, I hope we're here much more happy news from Director Nguyen. Oh, sorry, Jane. I was worried that I should probably leave now, so. Yeah, yeah. Happy holidays to you, Director Timberlake. I just, just one second technical issues. We're just trying to advance to her slide. It's advancing. Oh, I got to do one more. This was a hyperlink. Sorry, I'm famous for them. Okay. Got it. Good afternoon, Jane Nguyen from the Health Services Agency. I wish I had better news, but unfortunately we have some potential and actual impacts to our budget from the health side of it. We don't hold you personally responsible. Thank you, sir. So I will not go into details and repeat the information that Director Timberlake just presented to you, but the five items that I'd like to represent to you as potential and actual impact to the Health Services Agency budget for next year has to do with mostly federal and state actions. So the first one, of course, we all heard about the threat to repeal the Affordable Care Act. And of course the impact would be about 35,000 individuals in Santa Cruz County not having coverage that are currently having and that we would go back to the old days prior to the ACA with providing episodic care, less or no preventative care. Of course, health care costs would increase because of those non-preventable health services. We would lose significant reimbursement funding from the feds and the state. Care coordination would be impacted. And of course, it's not a good thing for Santa Cruz County here and statewide and nationwide. As we know, one of the tax reform proposals we heard has to do with the repeal of the individual mandates. And that would be very devastating for our community because right now we already experienced 67% in reduction of uninsured individuals in our community. So we need to keep up with that reduction. Very good news. So as you know, nothing in our budget at this time, too many unknowns to mitigate the potential impact of the ACA repeal. If that were to happen, we would have to go back to the table to renegotiate with the state because it did take 3.8 million dollars from the County Health Department each year due to the ACA implementation. We have to work really hard with our community to look at our Medicare cruise program again to redesign. And we have to work on some with the Central California Alliance for Health to look at the impact on the MediCal side as well for our clients. You heard about drug MediCal expansion this morning. You're very aware of the potential impact financially speaking. So I will not go into details on this slide because you heard about that this morning. Next item is the item that I also presented to you aboard last year. Last year I was not very serious, didn't have serious concern about this, but this year I am very concerned about this. This has to do with the primary care funding cliff reductions. So the historical information on this was that prior to the Affordable Care Act, it was decided by federal government that a dedicated source of funding which is called the Community Health Center Fund would need to be established to implement the Affordable Care Act because we realized that local community would be impacted with people going to primary care setting, receiving more primary care services. So federal established this Community Health Center Funds currently contributing about $3.6 billion per year to all local communities, all health centers nationwide. So in 2015, the Community Health Center Funds was extended for a period of two years up until September 30th this year, 2017. And it has sunset it and the federal government has not decided to renew it or make a decision on it. So we are in limbo, this is about 70% reduction to all local community health funds nationwide that would impact services to clients. Nationwide there are about 2,800 health centers that provide health services to low income or no income individuals and more than 50,000 providers and staff nationwide would be displaced if we do not have this funding renew or extended or increase. And 9 million patients nationwide would be impacted by this act but non-action from Congress and from the federal government. So locally for our county clinics we are looking at about $1.7 million cut that support our clinics operation. It would impact the Santa Cruz County Community Health Santa Cruz Community Health Centers and also Salute Aparela Hente clinics as well. This would be very devastating for the communities. So last week to avoid a federal government shutdown the president signed a two week stop gap funding measures to extend current federal government funding through December 22nd. So we are waiting to see what would happen. After December 22nd whether Congress and the president would approve for an extension of another cycle of community health funding. And also part of this was something that Supervisor Leopold mentioned this morning the CHIP funding, the Children's Insurance Health Plan and it's also expired September 30th and it's also in limbo right now. The sad part about the house version of the proposal to continue funding the CHIP program was also to take money from the public health prevention and public health funding as a majority funding sources to fund CHIP. So as Rob Peter the PayPal, either way the health department and the community here will be impacted a great deal. So that is something that I'd like to inform your board about. Next thing is a cannabis business impact and we've talked a lot about this. Your board has taken so much time and effort to review but from the health side we are concerned. Environmental health staff are very concerned about hazardous material handling, consumer protection, water and land use concerns. We really think that statewide health education is important from the public health perspective to discourage inappropriate cannabis use especially in the youth population. And we really want to make sure that we have, we build a public health data system for decision making to constantly monitor the impact to the public health of the community and we want to make sure that we have adequate data and information to report to the board on a periodic basis. Last but not least you heard from director Timberlake about the impact on AHSS shortfall. As a result of the redirection as you heard the public health and mental health realignment growth in the 2011 realignment funding would be impacted and it's for fiscal year 2018-19 we projected about $203,000 loss in our realignment growth funds that would normally support cost of livings and negotiate salary increases for employees and also for our contractor providers. So there are a lot more information about potential impacts but these are the major ones that we would like to inform your board and hopefully some of the potential one would not turn to out to be reality and we can just continue to move forward. So thank you at this time we'll close our presentation for your board questions and consideration. All right, well all sunshine and roses presentation. I'll just, I just want to say a couple of things and then I'll let others make comments but just as a process wise I really appreciate Mr. Palacios that we're having this discussion in December. I think this is the appropriate time to have it and I appreciate your leadership in wanting to bring this information to us early to have us talk about these issues so we're all on the same page as you give direction. So I just want to acknowledge you and the staff for putting this together to have us address it now rather than waiting till later. I'll turn to my colleagues, Supervisor Coonerty. Sure, well I agree and thank you for bringing it and it's certainly sobering to see the challenges. And then actually one thing that wasn't mentioned here that I was just wondering about was the Prop 63 shift from mental health to affordable housing that was discussed in the legislature. I wanted to check and see if that's gonna have a budgetary impact. Yes, thank you. That is the project that the state called No Place Like Home and the projection was about $20 million hit to our county in the duration of about 10 years plus. And I think last year we already lost about $2 million on the realignment of 2011 negotiation with other counties statewide and we're anticipating a million dollars hit next year related to No Place Like Home. Yes, thank you. I forgot about that. We did present that last year, but yes. And then the question I had for Mr. Palacios was yeah, when we were out visiting other counties, one of the things we saw was Marin had prepared a plan in the event of a downturn in advance so that you wouldn't do sort of across the board cuts when you didn't, when you actually may need to be increasing funding for some areas and making cuts in others sort of when we're looking at this potential impact, is it worth starting to think about how we can be strategic in our decisions before we're in a crisis? Yeah, I agree with that. And I think that is one of the benefits of doing our strategic planning process as well is to sort of start setting those priorities for the board and the community so that we're not just doing necessarily across the board cuts, but you're looking more strategically about perhaps cutting back in certain areas and increasing or maintaining other areas. The other thing is that I think it gives us time to also look at how to increase revenues and how to increase our use of our assets as well, such as the property we own in the county, for example, such as our work practices. And so I think we know that the good thing about this is that we know that this year we're balanced. Next year we know we'll be a little bit of a challenge, but we're balanced. So we have two years basically to prepare for this. And so that gives us time to really start preparing and start thinking about those kind of issues. So we will definitely do that. And that's one of the things we wanted to do with our two-year budget is to, that's when it'll exactly fall into when we adopting that two-year budget is to look at how do we look at the budget strategically and try and avoid some of those cuts to which areas which are priorities of the board. Supervisor Friend. Thank you, Chair. Let me echo a couple of things and add a little bit of additional information. This is exactly why we wanted this information to come this early and I appreciate your work, Mr. Plosios on this. And also from the community's perspective, the community understanding, this is actually, what's interesting about this is how little of these impacts are actually caused by the county. And I think that the board in the last four or five years has worked really hard to provide economic development, to increase housing opportunities, which also spurs economic development, to improve the way that we do community programs and to actually have a sense of direction in how we invest and the strategic plan's gonna be a key component of that. All of that would be derailed by some of, by really actually any one of these actions actually coming to full fruition. So I think it's also gonna be important for us as a board and the county administrative office to continue to communicate with the community about how we actually get our funds and where those responsibilities lie and some of the things that are coming down the pike. I would actually be, I'm supportive of the two-year budget as you know, but I would even be interested in this year's June budget actually having scenario-based budgets in advance, something that starts to give it a sense of expectation for the community of what's possible. Should any of these come to fruition? And maybe even gets the board thinking in advance of how we would make a decision, including even in this budget, of increasing reserves in anticipation of something happening. Now, whether the PERS information isn't as bad as it's portrayed, it's still gonna be bad. Whether the federal government actually funds one of these 10 things that they're gonna cut, not as bad, but still bad. So I don't see anything on the horizon that isn't gonna mean, even with increasing revenues associated with cannabis or economic development, that isn't gonna mean we're not gonna have some sort of shortfall. So it would be good, I think, if you proposed, normally you just propose, this is what a 10% scenario looks like, but something a little bit more specific than that. If we experienced these couple things in your department, Mr. Amber, like this is something that we may need to adopt and we can start to create that expectation coming that time. So again, the strategic plan, this is actually for future meetings that are gonna be held on the strategic plan, I think that we should also be discussing this direct nexus as to, this is why we are creating a plan that talks about priorities because you may not have very much funding to deal with those priorities and make sure that the community recognizes that as part of the investment. Thank you for the presentation. Thank you, Supervisor McPherson. I'd repeat what was said. This is terrific to have it. What a great Christmas present. Right, but it's good to know. We need to know. And I think the in-home support services and the retirement costs are the biggest weights that we have to deal with in the near future. I don't know what form, I don't think anybody knows what this tax, federal tax reform is going to really have included in it and indeed it happens. But I'd like to, as soon as it is established, say they do pass it, it would really be good to have something as soon as possible. And I don't know what's realistic to think about that first of March or something like that, because they're gonna do it probably by the next couple of weeks, 10 days. When would be a good, a reasonable time to get an update on if federal tax reform takes place? I think we're planning to bring a mid-year budget, our normal mid-year budget update in February and the second meeting of February and that will be the, but by then we'll have the mid-year results from the first half of the year, so our projections will be actual solid numbers. And at that time we could bring a summary of the federal tax reform and the potential impacts on our budget. So that would be. Yeah, one specific and the general fund five-year forecast, it seemed the expenses seemed to flatten at 2018-19. Is there a reason for that or? Yeah, that's assuming that we make the big cuts that we have to balance the budget or we get increased revenues in 1920 and 2021. So there's two really bad years there that are significant budget cuts. You're talking $10 million each year. And so assuming that you balance the budget either you make those cuts or you increase revenues, then the good news is that the revenues and expenditures start coming back in line because the per's costs flatten out then. The per's increases are actually in the next three years, the biggest jumps. And so if we get past those years and we deal with it in a way that balances the budget, then the good news is that by year five and year six, you're back to pretty close to a balanced budget. Okay, thank you. Supervisor Caput. Thank you. You know, I know I don't like surprises. I don't think, you know, any of us do, but I want to thank you for bringing it up now. So, you know, we have time to think about it, maybe even do something. We've hired people to fill positions, which is good. What are the odds that some of those people are going to get laid off if we can't balance this budget? Well, it's hard to predict what would happen in the future. What we would do first is start doing some kind of hiring freeze, typically, is what we would start with. And we'd have to do that strategically. The last thing we want to do is lay out people. So we want to be very careful about that. So we know that in this year and next year, we have a balanced budget and we don't anticipate any layoffs. In the future, it's going to be, you know, there's significant budget deficits, but it's still two years in the future and we don't know, there's a lot of uncertainty still. So I think it's early to be talking about any staffing reductions at this point. Okay. Can you name anything that we did significantly that we passed in the budget last year or maybe the year before, that has actually put us in a better position than we were maybe three or four years ago? Well, the big thing that this board has done is establish those reserves, which have got up to 10%. And that may play a role in helping us to deal with these next difficult years. The reserves would be good for how long. If we're talking about spending them, that's what they are for in an emergency. But how much time are we buying with that? It depends on how many positions we have to freeze maybe for hiring, but how significant is that amount of money we have in the reserves? Is it good for one month? Is it good for a year? Good for two years? Helping us out. The reserves could be used in a limited way to have a soft landing, to help you have a soft landing. It's not gonna solve our problem in and of itself, but the reserves could help us. And that's your right. That's why we established them. Part of the reason why we established them is to help us have a soft landing in the event of a budget shortfall. I have done that in the past, where I've used reserves strategically over a five-year period, and you draw down a few million every year to help reduce some of the cuts. But you can only do that if you see on the other end that you're gonna get increased revenues or that reductions are gonna be taking place to balance your budget. So they definitely will be part of the solution. And that's why we established them, and we definitely want to use them strategically, but you have to be very careful also, because they're one-time money, right? That the reserves are, by definition, one-time money. And so you still have to structurally get your budget back in balance. Okay, and then looking at future obligations for retirement, if we have people living longer, we actually could have, what, three people getting paid for the same job. We'd have one that retired, and then another one that retired, and then currently paying somebody to fill the position. I mean, we haven't seen that before, but what I'm getting at is we are trying to look at it like a life insurance salesman. They have everything projected, right? So, I mean, how are we gonna work around that? What can we do now to help us out in the future? Are we gonna have to have different contracts for new employees? Are we gonna try to change contracts that people currently have? Are we gonna, you know, these are all ifs. Well, the good news is that you have done something already in the past when you did adopt a second tier, and that saved the county billions of dollars literally over the time, and so that second tier is very important, and then the governor and the legislature and adopted the Public Employee Pension Reform Act of 2013, which means that new employees, employees coming into the system are at a different rate that's much less expensive, and so those two acts over time are going to balance the system. The problem is getting from today until, you know, six years from now when those new employees become the majority of the employees. So we have some, there are already solutions in place, but it's gonna be, the problem is getting from here when you have current employees who are in the old retirement systems until you get to the point where the majority of people are on the new retirement systems. And that's where we get at 2%, 2% at 55, for a while there was 50, right? Well, okay, so the miscellaneous formulas was 2% at 55, so 2% of salary at 55 years of age, and then it went, you adopted a second tier, which was two at 60, so 2% at the age of 60. That's what this board adopted, and then the State Pension Reform Act is two at 67, so 2% at 67, and for public safety, it was at 3% at 50, and the Public Revention Act, it's 2.7 at 57. Yeah, yeah, I know, and every little bit helps. I know it's rougher on the people, you know, that are getting higher now and all that. What about the current employees, like all of us? How are we gonna be affected? We were under an old contract. Any changes to our contract, maybe going forward? There is a court case before the Supreme Court that was brought forward by some cities, I believe it was San Diego, San Jose, that basically those cities tried to change retirement formulas of current employees going forward, so not what you've earned in the past, what you're gonna earn going forward. Currently the new pension formulas only apply to new employees brand new to the system. What San Jose and San Diego tried to do is change formulas for current employees going forward from a date, certain. That's in the court system right now, I think that'll probably be decided within the next year, and then I think that could have ramifications across the state in terms of changing those formulas for current employees, but right now it's still in the courts and there's still a lot of uncertainty about that, so it's still a big unknown. Yeah, I just wanna lastly say thank you again for the information, and I think it helps us get ready for the future budgets that we have to work on. And I know with the health services, your funding is more federal state, right? And so I don't know, in your opinion, do you think that's more critical than our local funding source? And I have one last thing after that, that would be property tax. Yes, for the health services agency, about 8% of our annual budget is net county costs, county general funds. The rest is federal and state, like you said. And most of what we get from federal and state are actual services that are provided either by our own county employees or by contact providers, and so it's reimbursement basis. So as long as we provide services, we claim we receive funding accordingly. So some of the federal action that we are talking about today are our potential impact related to grants from the federal for certain areas such as the county clinics. And those are categorical grant, they're not actual reimbursement of services, so they're two different sources of federal funding. One is actual services provided and we get reimbursement for those services. And the other one is categorical grant funding. So the potential impact that we talked about today with federal has to do with the grant funding, categorical grant funding for community centers. And then property taxes, I know with the deduction, maybe not being able to use more than $10,000 as a deduction on your IRS reporting. They say that that's gonna make what the price of homes come down a little bit. People won't be able to afford staying in homes they're buying. So that all affects us also. I don't know if that's a $10,000 deduction per house that maybe somebody owns two houses. Is that 10,000 each or is it 10,000 on one only or a combination of all of them, I don't know. I don't think any of us know at this point, thank you. If I may, there's one other item. If the federal government decided to change the structure and the funding structure of Medicaid program that would greatly impact state and local ability to receive federal reimbursement for actual services as well. So that's still in the talk at the federal level and we're not sure what they're gonna decide. So it would become a block grant type of situation versus fee for service or actual capitative model. And federally you're facing a very unclear picture right now. Thank you. You know, over by term on the board, I've been here during really bad times and in slightly better times. And the board has taken lots of actions to sort of write the ship in a lot of ways here. I mean, it was discussed about the funding of the programs we have, whether that be economic development. Talked about the pension changes that we made that we did in collaboration with our employees that, and we built up a reserve to be able to weather storms, not make them go away, but as you remarked, a softer landing. And we got the good news recently that our credit rating was raised because of those measures. But the storm that is the federal government and what's happening in Washington is extraordinary. Programs that have historically had bipartisan support, the Children's Health Insurance Program, the Community Health Clinics Funding, those were bipartisan and supported legislation and we're supposed to care about the next generation and we hear members of Congress talking about what we're gonna leave for our kids all the time. The CHIP funding ran out in September 30th. I don't hear anything that that's gonna be included before the end of the year. The best I heard is that they might try to provide some stopgap funding for those states that are gonna run out of money. Before the end of the year. But if the past is any prologue to the future, don't count on it. It's really pretty scary. And when we think watching the surreal nature of a healthcare discussion that was about taking away healthcare from people, under the guise that they said they would make it better, was surreal enough. But a tax cut discussion where all the denzians of the fiscal conservatives were admitting that no matter what they did, whatever their details are, that it was gonna blow a $1.5 trillion hole into our budget is surreal. And when you look at what choices members of Congress are making, it's even more extraordinary because it was to give corporations whose effective tax rate is way lower than the listed tax rate and wealthy people. And on top of it, inherited wealth got the best deal out of the whole effort. And most of us are gonna see our taxes go up in a couple of years. And now, they haven't even waited for that tax cut bill to pass. They're already talking about cutting the programs that they claimed that they were never gonna cut. And the biggest issue I take with your presentation is when you call it entitlement reform, you're buying in to the language that is not accurate. It is not entitlement reform. It is slashing the safety net. That is what this is about. That has been a lifelong goal of many of these Republicans. Paul Ryan in college bragged about his Rand-like fidelity to that kind of craziness. We should not buy in to their language and call it what it is, which is slashing the safety net. And whether it be through Pego or just their maniacal drive to try to do everything they can because hopefully there's gonna be a reckoning in 2018. In November 2018, we can expect the next year to be worse, not better than this. And so there are a couple of questions that I had. One is one of the elements of this tax cut bill was the salt deductions, right? The state and local tax deductions, which disproportionately affect states like ours. And when we think about future revenue pieces, Mr. Palacios, what do you think the effect of these salt deducting changes would have on our ability to even raise funds? Well, the loss of the salt deductions hits states like California disproportionately because we have an income tax, relatively high income tax and property tax. And so what that means is that either it'll be severely limited or cut back, which means that many Californians will see their taxes go up and there will be a reaction, I believe, in that you will no longer be able to deduct your property tax or your income tax from your state income tax from your federal income tax. So what I think that does is that when you go for a revenue measure, for example, to the local school district goes for a revenue measure to put a bond on the property tax, people are gonna be less likely to support it, I believe, because their tax bill will have gone up and their federal tax bill because they will no longer be deductible. And so I think there's gonna be pressure to not increase property taxes in any way and there may be even pressure to reduce them. So it's a very significant thing to a state like New York or California where there's gonna be significant pressure placed on us because of folks having struggling to have to pay their new federal tax bills. Another question I have is, I've been supportive of the two-year budget idea and what my colleague mentioned about scenarios may be a good way to start thinking about this year. Given what we see on the horizon, does a two-year budget limit our flexibility to be able to respond? And I wanted you to be able to address that because I think that's an important part as we look at these rocky waters over the next couple of years, will a two-year budget cycle help or hurt us? Yeah, I think it will help you in terms of your long-term planning and I do not think it limits your flexibility. By law, you cannot adopt legally a second year of the budget. You're really adopting that first year. Legally, you can only adopt one year at a time. So the second year of a budget, of a two-year budget, is really just a very detailed planning document. And what you do is you come back that second year and you amend that first year budget and then you have to legally adopt it. Most years, hopefully that second year is a much, it's just fine-tuning, right? You've already have a detailed plan in place. You don't have to have as extensive budget hearings. You can just basically fine-tune the budget and adopt that second year. However, if there are major changes, you can always have a more extensive budget process should the circumstances require it. Let's just talk about revenue for a moment. You mentioned, you pointed out that there was a $10 million need in our park system and $35 million for our county facilities. There's gonna be a stake parks bond on the ballot. Do we think that that will provide resources that would help address some of that $10 million parks deficit? We do. Our parks director has commented though that he believes the details of how that money would be given out have not come out but typically the state requires a match and often a significant match, 50% match. And so the issue for us is to be eligible for those state funds is more than likely we're gonna have to come up with a local match. So that's gonna be the challenge that we're gonna be faced with. I appreciate that. The other area you talked about was the cannabis and it's a great unknown in terms of what that will mean. Have we gotten any estimates about what we might be able to generate? I know you've gave some numbers and I recognize that they're estimates because we're in a new world there but do we have a range that any of our experts have talked about? In the slide we showed you, we were projecting in the current year to have about 3.7 million and next fiscal year, 2018, 19, about $5 million of revenue. When we talked to HDL, when we were working on the scenarios for the tax rates, they did some sort of very rough modeling and they thought that it's theoretically possible that we could have as much as $10 million of revenue once the industry gets built out, right? And so we're projecting $5 million, 18, 19, so they're projecting that could be almost double, 10 million once the industry gets established and built out but a lot of uncertainty there but certainly within the realm of possibility. What is a potential ray of hope because I don't know where we get five or $10 million easily and if HDL has, if they're accurate or if they're even close to accurate, that could be a real life preserver for the county budget. So it's something to think about in the future. I'll open it up to members of the public if anybody wants to address us. Good afternoon. Good afternoon, well, my head's spinning. My name's Becky Steinbruner and thank you for this report. I remember, I think it was year before last, bad news like this did come at a surprise and that's when I remember first hearing that the county was operating a $12.8 million deficit and so I'm a little confused at budget time. Last June, I heard it was reduced to 7.2 or 4 or something but there was still that lag. So I'm a little confused when I hear that it's a balanced budget. I'd like some clarification on that. I wonder about the issue of, I hear the board and staff hiring outside consultants a lot for public works projects. I mean, we've hired on $15 to $25 million worth of engineering outside of county facilitators to help with various development projects. Selecting you, Mr. Palacio was $35,000 outside. I hear this a lot, not only in the county but also in the water districts and that's gotta be expensive and I wonder if part of the belt tightening could not be that more work is done in house. And I wonder if those, I would like to know if those consultants are part of the 49% pie of salary that is the county's expense. My daughter works as a paramedic in the adjacent county and she's telling me she's already seeing the effects of the ACA and how people call 9-1-1 to get a ride to the ambulance to the hospital because they cannot be refused care if they go in that way. And I expect we're gonna see a lot of that and we'll put a huge strain also on our emergency response. The PERS issue is huge and you are not alone in that, Abtas the Selva fires also looking at balloon things as is SoCal Creek water. So this is like a tidal wave coming our way and I'm worried and I really wanna thank you, Mr. Palacio and also staff here for sounding the warning of the approaching tidal wave so that our supervisors can take good leadership and do what they can. I urge you in all future meetings to take a look at really the necessity of some of the expenses that are being brought to you with the idea that we do need to tighten our belts now. Thank you. Good afternoon. Good afternoon. Jim Coffes from Venloman and I wanna speak briefly on behalf of the Green Trade Santa Cruz, the Coalition of Cannabis Businesses and suggest that or thank you for opening the door so that many of our businesses can approach the state for a temporary license beginning as soon as possible. That's something that we asked you about in May and this past week, the word went out to cultivators and manufacturers to come in and submit their applications to see if they were eligible. So I think as you get more of those businesses through the system and into the regulated market, the faster you will see an increase in revenues. I think you get two and a half million dollars on retail alone right now. You should be looking at multiples of that and from cultivation and manufacturing assuming those businesses are able to operate. So I would hope that you continue to help them, maybe even so far as to encourage them to get involved and make it more welcoming for them to participate in the regulated industry so they can contribute. One other thing, there is going to be a windfall at the state level for taxation. There is no doubt whatsoever by any expert that the state tax revenue is going to see a significant increase. A lot of that money that the state will be taking in ought to be coming back to local jurisdictions that have participated with the state in this regulated economy. So it will be very important for us to be speaking to our legislators and to our lobbyists in Sacramento to make sure that Santa Cruz gets the share that they deserve of the tax windfall that the state is going to get. So look into that. I do believe that the cannabis revenue can be a sustainable tax revenue for the county for a long time if we foster and encourage its growth. Thank you very much. Thank you. Good afternoon. Good afternoon. Chief Chastain up from Coralitas. And we all look forward to more revenues from the green rush that we're having. But I've spoke once on this about getting a proper survey registered with the county because a lot of these young kids are buying the property and they're encroaching on their neighbors. And I've just checked with Robin. There's no regulations written into it into the regulations for the cannabis about having proper surveys of where your property line stands. And up in the rural areas up in the upper Coralitas it's a problem of encroachment. It's a problem of encroachment on the parks and the private property owners. So I'd really like that spoke to Mr. Friend and John Leopold on this issue. And I'd like to see it addressed. I've talked to the county about they don't have proper monuments. It's never been properly surveyed. And so they say, well, it's on you to prove it. I've lived up there 25 years and this is now becoming a problem. And so I'd like to see that in the regulations for the cannabis growing is to have proper certified surveys, registered surveys on each growing, maybe just in the rural areas. Maybe that might help. But it's beginning to be a problem and it's gonna get bigger. So I'd like to see that addressed. I appreciate it. Thank you. Thank you. Seeing no one else. We do have a limited set of actions here. Does anybody want to make a motion or any additional comments? Move the recommended action. Motion by Friend. I mean, motion by Coonerty seconded by Friend. All in favor signify by saying aye. Any opposed? Motion carries unanimously. That ends today's, oh right. We do have one more item 64.1, which was item 11. Thank you for the presentation. Item 11 was accept and file progress report on development of a drop in day center for the homeless as recommended by the county administrative officer. Ms. Steinbruner, you pulled this item. Thank you, Becky Steinbruner. I pulled it because when I was reading through the documentation, what caught my eye is that staff is considering declaring a local state of emergency or shelter crisis to expedite siting of the day homeless day drop in center that would allow for amendment to zoning building and other building codes, regulatory codes, reduce land use barriers, which I interpret as public input, CEQA process and expedite contracting processes. It also has the intent to raise public awareness and to expedite staff ability to take quicker action. There are four places currently that I guess staff has identified for this center. They're all over in the Harvey West area. And so staff is looking at vacant commercial industrial sites to lease. So I have questions and I did write you, but I didn't get an answer. So that's part of why I needed to pull it off today. But I also think this could be a very serious thing for a community to declare a local state of emergency. How, so my questions are these. What is the process for declaring a local state of emergency or shelter crisis? What are the impacts of doing this on the public process, the public's involvement in the process and the commercial surrounding commercial interests involvement in the process? How would doing this take, this action affect the local economy? We are a tourist economy. While declaring a state of housing emergency may raise awareness for the locals, I think we're all very aware. But what will it do to the image of Santa Cruz County for those who come here to vacation? And how will it affect the environment if there are building codes, environmental barriers, things like that that would be waived? How will that affect the environment? And I want that to know that the county is thoroughly, especially given what we've just heard, thoroughly considering using county-owned facilities and not leasing. And I'm also curious why it's all being centered in one place in Harvey West. How was that place selected? Why is there nothing in Watsonville or the South County area? And I just have a lot of concerns about this, not only the process, but the long-term implications. And I think we do want to address the homeless, but I think we have to do this carefully and be responsible to those who are working very hard. Supervisor Coonerty. Can I recommend that Becky speak with staff? A lot of those questions were answered or would be answered when and if any jurisdiction took up these questions. Those are all the questions that would be brought up. So answering them now seems premature. There is definitely information in the board letter about the South County Day Center. So the idea that we're only doing it in one area is not accurate. Why don't you briefly just say the consideration of an emergency. What would you do if you wanted to have us consider that? Good afternoon and thank you, board. As the letter says, we're actually exploring what the implications would be and what the process would be. We're investigating what have other communities done? Why did they do it? What were the results of that? And what were the advantages or disadvantages to doing that? So many of the questions Ms. Steinbruner has raised would be, of course, considered. We are not making any decisions or recommendations at this time. We just wanted you to be aware that we are looking at it as a possibility. There are numerous communities, particularly on the West Coast that have explored doing this and many that have done it. And I cited some of the reasons why they do it, not that we're necessarily seeking to do it for that, for all of those same reasons. And yes, we are definitely pursuing a day center and emergency shelter in Watsonville. And that's actually much further along than our plans here in North County. Okay, and do you want to identify yourself? Oh, I'm sorry. Rainie Maher, County's Homeless Services Coordinator. And for Ms. Steinbruner, she's an excellent person to talk to if you have questions about that. I'll see if the board has any other questions or willing to take action. I will move the recommended action. Motion by community, seconded by friend. All in favor, signify by saying aye. Any opposed, motion carries unanimously. And with that, we end the last meeting of 2017. We will be having a closed session. Is there anything reportable out of that closed session? No, there is not. So to those watching at home, thank you for watching today's meeting. Thank you to Community TV. Our next board meeting will be January 9th, here in the board chambers starting at nine o'clock. I look forward to seeing you then.