Local News

Monday, Feb 03 2014 06:05 PM

County's finances mid-year outlook: rough seas

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    By Casey Christie / The Californian

    Kern Medical Center in Bakersfield on Mt. Vernon Avenue.

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BY JAMES BURGER Californian staff writer jburger@bakersfield.com

Kern County has been forced to lower financial expectations as it faces the realities of a fiscal year costing more than expected.

Halfway through this fiscal year, county officials have dipped into reserves to pay $7.9 million in one time costs, primarily for Kern Medical Center.

The county's financial challenges will drain even more from its rainy day fund in order to make it to June 30, officials said.

County department heads are being told to think twice before hiring, buying supplies or pushing forward projects -- even if they had previous approval.

Tuesday, Kern County supervisors will go over the mid-year budget update, a report from the County Administrative Office outlining the county's fiscal health.

The report states that county departments' spending is tracking as expected, and revenues are better than predicted.

But KMC continues to bedevil the county's ability to handle its fiscal crisis.

Assistant County Administrative Officer Nancy Lawson, who is in charge of the county budget, said the county-owned hospital impacts the county in three ways.

The first is experts expect the county will owe the state around $21 million; the amount KMC was overpaid for services it performed. Fortunately, Lawson said, all that money won't be claimed by the state immediately.

The second impact, and a bigger concern, is that KMC's monthly financials are tracking even worse than county budget watchers expected in September. How much will that pull from county coffers isn't yet known, Lawson said.

And the final KMC uncertainty is tied to years of miscalculations the hospital made about how much it would be repaid to care for uninsured patients. That miscalculation blew an estimated $64 million hole in the hospital's finances.

It's believed that $30 million of that total is owed to the county general fund, part of KMC's roughly $100 million loan from the county.

Lawson said once the amount of that miscalculation is figured out, the Kern County Auditor-Controller will have to write the approximate $30 million off as bad debt, a huge budget hit.

Lawson said the reserves the county has built up -- $88.4 million currently -- will be critical to the county weathering this year's challenges.

But next fiscal year the county faces challenges in addition to KMC as the Sheriff's Department ramps up staffing for the new jail expansion and the county plans funding to support freeway construction plans.

Lawson said a report on next year's budget plan, complete with guidance for county department heads, is due out later this week.

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