Our view: Ventura County’s focus on fiscal stability pays
There are two numbers you need to know about the state of Ventura County’s $2.3 billion budget — 87.8 percent and $150 million.
The 87.8 percent is the funded level for the county’s pension obligations, a number that is within the range of full funding and well ahead of CalPERS current level of 70 percent.
The $150 million figure is the county’s rainy day fund, which is at its highest level in years and close to the county’s goal.
When we caught up with county CEO Mike Powers a few days after he presented the two numbers as part of his annual “State of the County” talk to the Ventura County Taxpayers Association, he added that the rainy day fund is in addition to around $70 million in reserves in accounts dedicated to IT improvements and infrastructure projects.
Ventura County is investing heavily in advanced technology to reduce the cost of government services and was recognized as one of the top five “Digital Counties” in the nation by the Center for Digital Government. It is using IOT sensor technology to improve water management and artificial intelligence for crime analysis.
As the Business Times reported earlier, the county is fostering partnerships to develop the startup culture, particularly in the Camarillo-Oxnard-Ventura area, putting together Naval Base Ventura County, Matter Labs and the Port of Hueneme in a combined effort.
All of this is to say that at a time when the nation’s finances are a fiscal mess, Ventura County has its eye focused on economic vitality and fiscal stability.
There are some weak points.
It is still expensive and time consuming to develop housing, particularly in larger cities and unincorporated areas where rebuilding from fires has been slow. Manufacturing and better paying jobs — except for health care — are not growing as fast as tourism and retail employment.
Transportation projects don’t enjoy the funding base that comes from a dedicated sales tax as in other large counties.
But 10 years after the recession, Ventura County’s finances are in very good shape, as recognized by bond rating agency Moody’s, which rates the county’s debt AAA with a positive trend.
RATE CUTS HURT PENSION FUNDS
Speaking of public pensions, it is worth noting that CalPERS once again fell short of its 7 percent benchmark in the most recent fiscal year.
Stock market volatility played a part but so did ultra-low interest rates, which affect the returns on cash, notes, bonds, mortgages and other debt-like instruments. Pension funds count on the safety of bonds and reliable income that historically has been 3 percent or more depending on inflation and risk.
If large pensions can’t earn a reasonable return on their bond portfolios, they will have to reduce expected returns, cut benefits, increase contributions, take more risks or some combination of the above.
Federal Reserve rate cuts can keep the economy growing in the short term but punishing savers and pension funds has long-term consequences.