Democratic supervisors want to change how the county determines its rainy-day fund, freeing more than $350M

Last month, Supervisor Terra Lawson-Remer announced a proposal to free up more than $100 million in county reserves, money at the ready for emergency use.

In an interview this week, she said that plan, co-authored with Supervisor Monica Montgomery Steppe, could free up far more — roughly $355 million.

It’s one-time money, she emphasized, but hopefully enough to address possible federal cuts to vital county programs.

The county’s public health department recently was told it was losing roughly $40 million in federal grants, including $3 million promised for a new public health lab.

“When Washington walks away, we need to be able to act — to protect public health, public safety, and essential services,” she said in her State of the County address earlier this month.

The two Democratic supervisors want to change how the county calculates its minimum reserve amount and expand the definition of what counts as reserves.

Lawson-Remer said in an interview Monday that what she and Montgomery Steppe are recommending follows standards set by the Government Finance Officers Association (GFOA), a national organization that provides guidance to state and local governments.

“We don’t want to spend it all in one place, because it’s one-time money,” Lawson-Remer said in an interview Monday. “So what we want to do with the reserve windfall is use it to safeguard against the shocks of federal government cuts, the state government cuts, a potential recession.”

The county’s $3 billion general fund currently includes just over $691 million in reserves. It also includes $1.6 billion that’s earmarked for specific programs or projects. The remaining $635 million is categorized as “assigned,” meaning the county intends to use it for a specific purpose.

For years the county policy has been to set aside enough money in reserve to cover at least two months of expenses. This year, that amounts to around $973.5 million — roughly $282 million more than the $692 million currently on hand.

Lawson-Remer and Montgomery Steppe want to change the county’s approach to calculating what it should keep in reserves — specifically by shifting away from including all expenses to instead including only operating expenses. They also want to count the assigned fund balance as money available for emergency use.

If such a scenario had been in place when the current budget took effect on July 1, 2024, the county would have had $1.3 billion in reserves but need only $945 million — resulting in an excess of $355 million available to spend.

This amount could change depending on next year’s budget; a draft of it was being introduced Thursday.

Lawson-Remer said her plan would be to spend the money incrementally over several years and have guardrails in place stating that it may be used only to offset state or federal cuts.

The two supervisors plan to bring the new reserves policy to the board this month. But it’s unlikely to then.

The usually five-person board is currently short one member, leaving it divided between the two Democrats and two Republicans, Jim Desmond and Joel Anderson.

After an April 8 special election, Chula Vista Mayor John McCann and Imperial Beach Mayor Paloma Aguirre will compete in a July runoff. Aguirre is a Democrat, McCann a Republican.

Aguirre told the Union-Tribune last month that she believes the county should be spending more of its reserves. McCann disagreed, telling the Union-Tribune that it was irresponsible to dip into emergency funds.

Anderson and Desmond also oppose tapping into reserves.

“While I always getting the highest and best use of the tax money that our constituents have entrusted us with, we can’t follow the state government’s lead of raiding every for pet special interest projects,” Andersons said in a statement this week.

“Over the past few years, the county workforce has grown by 2,500 new positions, and several new departments have been created — departments we simply cannot afford,” Desmond told the Union-Tribune last month. “Just like any family tightening their belt during tough times, the government must rein in spending and stop funding programs that don’t directly serve our residents, not spend more money.”

Montgomery Steppe said she wants the reserves policy updated so that the county — which operates the region’s safety-net programs — is prepared to face likely funding cuts.

“Right now, we face the threat of people struggling with their critical needs going unmet,” she said. “There is no better time than this to use our resources to help those suffering the most.”