Kern County approves $34 million in midyear budget adjustments, staff warns of multi‑year deficits

KERN COUNTY, Calif. — The Kern County Board of Supervisors on Feb. 10 received a midyear status report for fiscal year 2025–26 and approved recommended midyear adjustments totaling $34,000,000 to cover departmental deficits and rising costs.

Assistant County Administrative Officer Elsa Martinez told the board the adopted FY25–26 budget provides for $4,500,000,000 in total expenditures and authorizes 8,669 positions. Martinez said discretionary revenues are tracking slightly above original estimates — citing about $3,500,000 in additional property tax-related revenue and roughly $2,500,000 from one-time sales and use taxes tied to large solar projects — but several departments are projecting deficits.

"This midyear review reflects our best professional judgment at this point of the year," Martinez said, recommending midyear adjustments funded in part by $6,200,000 in additional discretionary revenue and $27,000,000 in state and federal revenue.

The largest variances, Martinez said, are in the Department of Human Services and Public Works, with other pressures in utilities, indigent defense and general services. She told supervisors that salary and benefit costs are tracking lower year-to-date only because of timing delays driven by the county’s new financial system and later postings for workers’ compensation and unemployment charges.

County budget analyst Alex Alba and CAO Nancy Anderson presented the FY26–27 budget development outlook, describing a projected $14,000,000 annual deficit driven by rising health benefits, salary step increases and mandates. Staff estimated modest discretionary revenue growth of about $8,900,000 versus substantial cost increases including a $6,900,000 rise in health benefits and other mandated costs.

Staff highlighted several structural risks: the phaseout of American Rescue Plan Act (ARPA) funding, an administrative cost‑shift tied to federal policy changes under "HR 1," and continuing pressures in mandated social services. Alba said the county projects exposure from SNAP/CalFresh cost‑sharing and error‑rate changes that could grow to tens of millions in future years and that a May revise from the state could provide additional details on the error‑rate impact.

Supervisors questioned timing on pension obligation bond payoffs, the mechanics of the SNAP error‑rate calculations and what departments can expect in negotiations with labor groups. Martinez said departments will be asked to perform a 5% step‑down stress test to identify realistic reduction scenarios, and staff will pursue grants, evaluate realignment flexibility and report back on potential efficiencies.

The board voted unanimously to receive and file the midyear report and to approve the recommended midyear adjustments. The board also approved staff’s guidance for the FY26–27 budget development process, including additional public input and return briefings as projections update.

What’s next: staff will process the midyear appropriation changes and return with follow‑up information during the budget development schedule, with key dates including a budget priority discussion after the governor’s May revise and hearings in June.