Marin County fiscal outlook for 2025 is relatively upbeat, according to the budget director.
“We’re looking at a strong economy based on most economic indicators that we can see, really positive signs impacting our bottom line,” Josh Swedberg told the Board of Supervisors at its most recent meeting.
Swedberg said the nation is experiencing strong growth in its gross national product, reduced inflation, relatively low unemployment and strong stock market growth.
Money from the state accounts for a third of the county’s general fund revenue, or funds that are not mandated to be spent in a certain way by either the state or federal government.
“Whereas last year we were talking about a $70 billion state deficit, recent reports from the Legislative Analyst’s Office indicate a comparatively positive forecast at the state level for next year,” Swedberg told supervisors. “We wouldn’t expect significant cuts to our programs.”
The county will have a better idea of what to expect from the state by Friday, when Gov. Gavin Newsom is scheduled to release his preliminary budget proposal for 2025-26.
Newsom provided a preview of the proposal on Monday, saying he expects a “modest surplus” thanks to healthy stock market gains. He nevertheless plans to pull $7.1 billion from the state’s rainy day fund to support policy priorities.
“The state’s budget is heavily dependent upon stock market growth, so the LAO’s report continues to see long-term deficits,” Swedberg said.
In its report, the Legislative Analyst’s Office wrote that ongoing program expansions are contributing factors to the forecast deficits growing from about $20 billion in 2026-27 to $30 billion in 2028-29.
“This includes, for example, the expansion of services, eligibility, and rates in Medi‑Cal; an expansion of child care, including an increase in slots; and several other expansions to human services programs,” the report said.
Swedberg said, “We may be impacted by future efforts at the state level to restructure their budget, given those significant deficits expected in the years to come.”
Local property tax accounts for an even larger share of the county’s general fund revenue: 40%.
“We’re starting to see some positive real estate signs as federal interest rates have started to come down,” Swedberg said. “Not as much as we would hope, but positive signs for the years to come.”
Over the last 20 years, the assessed value of property in the county has increased by an average of 5% per year.
“While there have been some signs of improvement, we’re still well below our prior trends,” Swedberg said. “The current growth rate is 4.3%.”
Regardless, the county’s budgetary plans assume the annual increase in assessed valuations will return to 5% over the next three years.
The county’s pensions are 93% funded, and its retiree health care liabilities are 58% funded. Swedberg said he expects the healthy stock market returns this year will increase both of those percentages.
In 2003, the county issued $112 million in bonds to refinance pension debt. Swedberg said that by the end of fiscal year 2026-27, the county will have finished making payments on the bonds. Some $13.5 million in general fund revenue each year is being allocated to the bond payments.
“That is something we’ll have to start planning for,” he said.
During public comment time, Rollie Katz, executive director of the Marin Association of Public Employees, said that in 2022 the county allocated $45 million toward paying off the bonds. Swedberg later clarified that the figure included contributions from other county funds besides the general fund.
The county will begin contract negotiations with the association and its other unions early this year. Katz has repeatedly brought up the issue of the cost savings realized by the county each year from unfilled positions. He has suggested that some of that savings be used to increase union workers’ wages.
Supervisor Eric Lucan suggested that county managers make an attempt to better predict the real level of vacancies for the coming year.
“Whatever we can do to dig in on it a little better, I think it would be beneficial,” Lucan said.
County Executive Derek Johnson said the schedule for creating the county’s fiscal 2025-26 budget is being accelerated.
“We are moving forward with our preliminary budget hearings in February to give us ample time to do some strategic planning with your board,” Johnson said. “We want to bring the full picture to the board of areas such as our capital program that have been underfunded over the years.”
