Humboldt’s Weak Economy Leads to Budget Deficit

Humboldt County Supervisor Steve Madrone 

Humboldt County is in the midst of an ongoing sales tax revenue slump and once again is balancing its budget by forwarding savings from previous years.

A draft budget with a $12 million deficit was reviewed at the June 9 Board of Supervisors meeting. The county expects to spend about $12 million more than it takes in during the coming fiscal year, but plans to cover the difference with accumulated reserves, which county officials described as maintaining a balanced budget.

At $658 million, the budget has increased by 4.4 percent but increases in some pools of revenue, including property taxes and interest, have offset the additional General Fund spending.

But there’s an overall $12 million gap between expenses and revenue – the same deficit amount as the fiscal year that’s ending – and sales tax revenue has been declining over the last several years.

A written staff report says as of the last quarter of 2025, sales tax revenue for the unincorporated county area was down 3.2 percent compared to the previous year and it’s expected to drop by 2.1 percent in the coming fiscal year.

“The downward trend is likely to hold as consumers are impacted by the increase in fuel prices and the rising costs of household items,” the report says.

The deficit can be covered by forwarding savings built up in previous years but the written report says in the 2027-28 fiscal year, there will only be $2 million left of savings to forward.

The budget’s General Fund spending is increasing by 5 percent, reflecting salary and benefit increases that had been deferred for several years.

Assistant County Administrative Officer Jessica Maciel mentioned the deficit in passing, saying being at the same amount is “a pretty great position to be in given that we did get the 5 percent increases in General Fund allocations.”

But Supervisor Steve Madrone wasn’t as upbeat. “This is never easy, cutting costs for services,” he said. “It’s a horrible place to be in for all of us.”

He warned there’s a limit to how long the county can spend more than it takes in.

“We’re considering passing a budget that spends money we don’t have, which I have a serious problem with, frankly, just from a philosophical and an economic perspective,” Madrone said. “I realize that it ultimately ends up somewhat balanced because of the fact that we don’t spend all the money – just to put it real simply, I think that’s kind of what we’re doing.”

“The budget is in fact balanced, you’re essentially using your savings account to fill that gap,” said County Administrative Officer Elishia Hayes. “So I just want to be clear that it is a balanced budget and you are spending at this point within your means.”

She added, “But as we whittle that savings account down times will certainly get tougher.”

That’s the point Madrone was making and he said it’s a “scary” situation. “The trend ever since I’ve been in this position is that it’s gone down and gone down and gone down and it only can go so far,” he said.

Supervisor Rex Bohn acknowledged the budget’s spending increase. “I’ve sat through fourteen of these and I think my original budget was $278 million and I ran on a platform of holding our costs in check and lowering them,” he said. “So I’ve almost tripled it. So how am I doing so far?”

He said Humboldt is “in the same boat as almost every other county in the state” and at a recent convention of the California State Association of Counties, “Everybody was screaming the blues.”

Several departmental funds have negative balances, a persistent issue described as “a threat to the General Fund.”

And Maciel said federal cuts will lead to “increased pressure on behavioral health” and “higher demand for housing, homelessness and social service programs.”

A public comment period had no takers. With the potential for future service reductions, Supervisor Natalie Arroyo supported doing more public outreach to tap community opinions on priorities.

“Unless things magically change quite substantially, this is the last year where we’re working with this amount of reserves that we can apply to the budget,” she said. “We’ll have some in subsequent years but not not this much and I think it would be really interesting to have folks bring back some ideas on how we could get some additional methods of input to see what’s most important to our community.”

Supervisors approved some adjustments to the draft budget, including inter-fund loans and continuing a hiring freeze.

The budget is set for approval on June 18.

Madrone said he won’t vote to approve it due to a single item that’s small in dollars but has big implications – the $21,000 a year it costs for the Sheriff’s Office to maintain the controversial license plate cameras it uses.

“I wish that the sheriff would recognize the public opinion on that,” said Madrone.