The city and county recently balanced their budgets for the 2011 fiscal year, and each government closed out multimillion-dollar shortfalls. While the county faced a $181 million gap and the city confronted a $43 million hole, the two bodies have different budget problems for a host of reasons, including their size and the county’s links to the state’s budget.

To better explain the differences in the budgets at the city and county, The Sacramento Press asked a handful of insiders to comment on the budget problems in local government.

Local officials point out that counties are closely connected to the state. California’s counties “exist to deliver statewide services on a local level,” said Sacramento City Treasurer Russ Fehr, who is also a former Sacramento County budget official.

For example, the state partly funds the county’s investigation and security services, said county spokeswoman Chris Andis. In the 2011 fiscal year budget, the state delivered $10 million to the Sacramento County Sheriff’s Department for investigation and security services, she said.

The state also distributes large amounts to Sacramento County’s social services programs, including $31 million to the county’s Child Protective Services for the 2011 fiscal year, according to Andis. In another example, the county’s foster care and adoptions program garnered $47 million from California, Andis said.

“Obviously they’re very reflective of the state,” said Sacramento City Councilman Ray Tretheway.

Because the county must carry out state programs, the state budget impacts counties more than cities, Sacramento County Chief Operations Officer Nav Gill said. When the state makes cuts to services, the county’s programs are subsequently cut, he added.

Another key difference between the two budgets is their size. The city’s budget is dwarfed by the county’s. City Finance Director Leyne Milstein said city officials are still analyzing figures for the city’s 2011 fiscal year total budget, but expect it to be about $890 million. The city’s general fund budget for the fiscal year is about $364 million, she said. The city’s website states that the general fund “is supported by taxes and fees and generally has no restrictions on their use.”

By contrast, the county’s total budget for the 2011 fiscal year is $3.5 billion. The county’s general fund budget makes up $1.9 billion of that total. The county explains in a fact sheet on its website that its general fund is “used to account for all financial resources, except those required to be accounted for in another fund such as rates for water and garbage service.”

County Supervisor Don Nottoli noted that the unincorporated part of the county has a population that surpasses the half-million mark. “We’re still bigger than even the largest city — still greater than the city of Sacramento.”

Fehr pointed out an oddity in Sacramento County’s budget. The county provides some services to the urban unincorporated area, which is unusual, he said. Most Californians who live in urban areas are living in cities, Fehr said, but many local residents live in unincorporated parts of Sacramento’s urban area.

Gill said Sacramento County’s budget is unique in other ways, too. The county’s administration has had five-year contracts with its labor unions that include salary increases each year for union-represented employees, Gill said.

In addition, Sacramento County balances its budget with millions of dollars that come from funding sources that can only be used once. These are one-time funds, Gill explained, noting that “they’re not going to replicate again next year.” The county applied about $20 million in one-time funding for the 2011 fiscal year, Andis said. Most of that money comes from the county’s debt service reserve fund workers comp reserve fund, she noted.

While the county didn’t want to use that nonrenewable source of funds for the 2011 fiscal year, Andis said, “reductions were too drastic, and priority services must be maintained.”

Gill and Andis said the county has worked on fixing this problem, and pointed out that the latest use of one-time funding is less than the roughly $80 million in one-time monies used in the 2010 fiscal year.

Plus, the county has received less funding from property taxes because of the poor economy, Gill said.

“These are difficult times for both the county and city, and they will remain difficult,” Milstein said.

Photos of the Sacramento City Council by Brandon Darnell. Photo of Supervisor Don Nottoli by Anthony Bento.

Kathleen Haley is a staff reporter for The Sacramento Press.

Editor's Note: Chris Andis contacted The Sacramento Press to correct a piece of information in the story about the city's one-time funds. The incorrect information has been crossed out. The correct information has been added.