Yolo County staff predicts another sobering budget deficit that’s expected to intensify

The Abridged version:

• The Yolo County Board of Supervisors kicked off discussion of the 2026-2027 county budget on Tuesday.
• County staff forecast another deficit, with increasing shortfalls in the coming years.
• To address the structural deficit, supervisors will have to leverage some combination of cuts and revenue enhancements.

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The Yolo County Board of Supervisors was presented with a sobering budget reality on Tuesday.

Months after county staff leaned on one-time funds to balance last year’s budget, the 2026-2027 process kicked off with another dire fiscal outlook. As the county contends with a years-long structural general fund deficit, staff warned supervisors at the Jan. 13 meeting that major changes will be needed to remedy the persistent shortfall.

In a presentation to the board, staff predicted a nearly $27 million deficit this coming year and a roughly $47 million gap by 2031. Last year, the county managed to close a $40 million deficit with the help of reserves.

The county is legally required to balance its budget each fiscal year. It’s unsustainable to continue one-time, short-term fixes, staff said.

“The structural deficit can only be solved by some combination of increased revenues and decreased expenditures,” Tom Haynes, chief financial officer for the county, said. “It will likely take several years to correct.”

Cuts likely in Yolo County

This isn’t a new problem, but inaction this year would put the county in an increasingly worse fiscal position. If the county continues to rely on dwindling reserve funds to balance the budget, they would all be spent by the 2028-2029 fiscal year, Haynes said.

Should that happen, options become much more limited, and the board would likely have to implement cuts worth tens of millions of dollars.

Because staff salaries are one of the largest costs to the county, that could include layoffs.

Haynes said that a $18 million reduction is the equivalent of 100 full-time employees, or a 14% cut countywide.

Supervisors worried that layoffs could impact county operations.

“Reductions in staff FTE are reduction in service,” Supervisor Mary Vixie-Sandy said.

Though that scenario isn’t a given, staff predicted that some reductions — staff or otherwise — would need to be made starting in this budget year. The board will need to decide how to make these cuts.

Possible solutions include tax hikes

Haynes said the forecast means the county will have to find a way to make up for $47 million in the next five years, an amount that won’t be addressed by cuts alone.

As such, supervisors continued exploring avenues to raise revenue, some of which were originally presented at the Nov. 18 board meeting.

On Tuesday, staff again highlighted options like increasing county sales tax, fixing the county’s property tax allocation through the Educational Revenue Augmentation Fund, enhancing cost recovery and looking into options for economic development.

The increased sales tax has the potential to raise the most revenue, but it would need to be approved by voters and likely wouldn’t come to the ballot until 2028.

When it reconvenes on Jan. 27, the board will provide county staff with direction for how to approach the coming budget year. As it stands, cuts are likely, whether it’s sooner or later.

Daniel Hennessy joins Abridged from the California Local News Fellowship. He’s a reporter covering Yolo County.