San Mateo County's economic picture is a mixed bag of a lower unemployment rates and increased home prices and personal income but also spiking commercial property vacancy rates and uncertainty over school funding, according to the controller's evaluation of the last fiscal year.
Controller Bob Adler released a summary of his annual financial report which sums up how the county is making ends meet and where it may need to improve. The 10-page report looked at statistics through the end of June 30, 2012.
On the good side, the county is in better shape than the state in regards to pensions and other benefit liabilities. The county's funded ratio of 73.3 percent is higher than the state's ration of 59.4 percent and works out to a per capita liability of $1,285 compared to the state's $4,349.
The newly passed state pension reform act will primarily affect workers hired after Jan. 1, 2013 which, Adler notes in the report, means the number of employees in more expensive retirement plans will diminish over time.
However, the county — despite having frozen its workforce and salaries — will still face higher annual employer contribution rates for benefit obligations in the "foreseeable future.”
That future also holds several unknowns.
For instance, in the last fiscal year, the county was not paid $203,960 of the $125 million owed in vehicle license fees because of insufficient funds. The county's share of the shortfall was $120,666. If more school districts become basic aid when property taxes are higher than state per-pupil funding, the shortfall could grow significantly because there won't be sufficient money from Education Revenue Augmentation Funds and non-basic aid school districts to pay the VLF due the county and cities. In turn, the county and cities will have less revenue available and feel "a profound, detrimental impact,” Adler wrote in the report.
Looking forward, the county will also be required to make major changes in health care delivery under the Affordable Care Act. An estimated 47,000 more uninsured residents will qualify although a smaller number is expected to actually participate. When all is said and done, the county estimates 16,000 adults and 4,500 children will continue to be uninsured and therefore remain the county' responsibility; in comparison, 28,000 adults and 5,000 kids are currently enrolled in county programs.
The county actually expects an overall neutral financial effect from the law's implementation but there is much "financial uncertainty,” Adler wrote.
What is known is data from the last fiscal year, including a 7.1 percent unemployment rate which is below the prior year's average of 8.4 percent. The county is the second lowest among California's 58 counties.
August 2012 was the strongest month for Bay Area home sales in six years and the number of homes sold increased 14 percent over the previous year. Adler wrote that the county's median prices continue to rise — the single-family home median rose 8.9 percent to $826,250 — and the improving real estate market in the county should continue to increase assessed property values and, in turn, future property tax revenue.
The property tax assessment roll is also up 3.33 percent, or $4.75 billion, which means an increase in property tax revenue of about $47.5 million for schools, cities, special districts and the county. However, the future doesn't include refunds, which are unpredictable. For example, in fiscal year 2011-12, the county processed $26.3 million in refunds.
The report also noted that the commercial property vacancy rate was up 14.1 percent and the per capita personal income increased to $67,964 which is an ongoing increase.
Air traffic at San Francisco International Airport continues as a major economic impact on the region, providing tens of thousands of jobs and seeing total passenger volume up 7.7 percent to 43.1 million people.
The full report is available online at www.co.sanmateo.ca.us/controller/2012pafr.
Michelle Durand can be reached by email: firstname.lastname@example.org or by phone: (650) 344-5200 ext. 102.