REPORT TO SHASTA COUNTY BOARD OF SUPERVISORS

BOARD MEETING DATE:  April  18, 2017
CATEGORY:  Consent - Other Departments-10.

SUBJECT:

Budget Amendment & Capital Asset Purchase

Supervisorial District No. :  All

DEPARTMENT CONTACT:  Paul Kjos, Agricultural Commissioner/Sealer (530)224-4949

STAFF REPORT APPROVED BY:  Paul Kjos, Agricultural Commissioner/Sealer

RECOMMENDATION

Take the following actions:  (1)  Approve a budget amendment recognizing additional unanticipated revenue in the amount of $19,584 in Unclaimed Gas Tax offset by increasing appropriations in Agricultural Expense by $3,600 and adding a capital asset all-terrain vehicle with sprayer (ATV) in the amount of $8,900 for use in the Noxious Weed Eradication program; and (2) authorize purchase of the new capital asset ATV.

SUMMARY

The department has received unanticipated Unclaimed Gas Tax revenue this fiscal year and is proposing to use a portion of these funds to purchase an ATV and electric sprayer as well as purchase additional herbicide for use in the Noxious Weed Eradication program.  The use of these funds for this purpose will also assist the department in meeting its Maintenance of Effort (MOE) as required by Food and Agricultural Code Section 224.5.

DISCUSSION

The department’s largest source of revenue, outside of the County’s General Fund, is Unclaimed Gas Tax.  Gas taxes are collected by the State of California and those taxes that are attributable to the off road use of gas-powered engines for agricultural purposes are eligible for refund.  Many fuel purchasers do not choose to claim the refund and millions of dollars go unclaimed annually.  A portion of these unclaimed funds are then transferred from the California Department of Transportation (CalTrans) to the California Department of Food & Agriculture (CDFA) and the Department of Pesticide Regulations (DPR) and, in turn, most of this money is distributed to counties for the purpose of partially reimbursing counties for expenditures on specified agricultural programs of mutual state and county responsibility.  These programs are defined in Food and Agricultural Code Section 2282.   Utilizing these funds minimizes the negative impacts of a reduced county cost for agricultural programs in next year’s budget and will provide the resources needed by the department. 

Each year funds from this source are allocated to individual counties based on the total dollars available for distribution and each county’s previous year’s net cost for agricultural programs.  Based on this distribution methodology, counties having a high net county cost for these programs compared to all other counties receive the highest unclaimed gas tax reimbursement.  The CDFA is unable to determine the specific distribution for each county until late spring of each fiscal year, after the financial reports submitted by counties have been analyzed. 

Because of the timing of these disbursements it is very difficult to accurately estimate this revenue source in the budget preparation process.  This year it was determined that Shasta County’s portion of UGT is $304,584 or $19,584 more than the anticipated $285,000 that was included in this fiscal year’s budget.  Only a portion of this revenue is being requested to be recognized and utilized in the purchase of the ATV, spray unit and herbicide.  This revenue is unpredictable; it can go up as well as down, and the department, with the County Executive Officer’s support, has always taken a conservative approach to estimating the revenue. 

While increased revenue and decreased expenditures are beneficial to the County’s General Fund, this situation can negatively impact the revenue expected from unclaimed gas taxes in the following fiscal year, since the department’s net county cost would decline.  To prudently minimize the impact of the department’s net county cost decline, the Board is being asked to approve the recognition of a portion of the increase of the UGT revenue and authorize the Agriculture Department to purchase an ATV and associated spray unit for the department in the amount of $8,900 and authorize the purchase of herbicide in the amount of $3,600.  The ATV will be utilized by field staff to complete noxious weed treatments in an efficient manner.  Several other counties are currently using similar ATVs for this program work.

This action will also assist the department in meeting the statutory Maintenance of Effort requirement now required to be eligible to receive UGT.  Counties are now statutorily required to maintain general fund support for agricultural programs that is at least equal to the average amount expended for the five preceding fiscal years, unless the county is facing an unusual financial hardship (FAC 224.5).  

ALTERNATIVES

The Board may choose to approve the requests, modify, or reject the requests. 

OTHER AGENCY INVOLVEMENT

The Auditor will process the budget amendment upon Board approval. The Ag Commissioner will work with County Purchasing for the capital asset purchase.  The County Administrative Office has reviewed this recommendation.

FINANCING

The department has received unanticipated revenue this fiscal year from UGT.  This will result in a reduction in the department’s net county cost by the end of the fiscal year. While this benefits the County’s General Fund, this situation could lead to a decline in UGT anticipated for next fiscal year since next year’s UGT revenue is based on the net county cost for agricultural programs this fiscal year. 

The department is asking to use $12,500 of unanticipated revenue on agricultural program expenditures this fiscal year.  If the Board approves these requests the department should still be able to reduce net county costs by approximately $7,084 this year as a result of additional unanticipated revenue and decreased expenditures.