Falling Oil Prices Could Deliver $61 Million Hit To Kern County Budget
Falling oil prices could deliver a big hit to the Kern County general fund. The Board of Supervisors will consider a staff proposal to declare a fiscal emergency at its meeting next week. County property tax dollars are heavily dependent on the price of oil.
The Kern County Assessors office says this year it will the value oil that remains in the ground at $55 a barrel. Last year it was valued at $99 a barrel. That means general fund revenues could be off by as much as $44 million, and fire fund revenues by $17 million.
Unfortunately for the county, oil isn’t the only budget problem. Increasing pension costs, including looming debt payments for a pension obligation bond also mean costs are rising. On top of that, a new jail that’s scheduled to come online by 2018 will only add to the county’s expenses.
That’s led County Administrative Officer John Nilon to recommend a mid-year budget cut of 1 percent across the board, as well as cuts on hiring and travel. Still, under some scenarios county departments might have to absorb as much as a 7 percent budget cut, spread out over five years.
The proposed fiscal emergency declaration would allow the county access to the current general fund reserve and give management more flexibility when it comes to reducing staffing levels. The Board of Supervisors will debate the budget issues at their Tuesday meeting.