Sacramento County Slashes Jobs

The Sacramento County Board of Supervisors approved 100 layoffs and the elimination of 70 empty positions Tuesday to cut spending by $14 million.

The move follows a series of recent credit rating downgrades that cited the county’s failure to balance its budgets over the past three years. Fitch Ratings, Standard & Poor’s and Moody’s Investors Service all downgraded California’s eighth-most populous county earlier this month.

The county, which laid off more than 700 workers earlier in the fiscal year, faced another $10 million deficit this year before the latest round of cuts. It faces a $118 million budget gap for fiscal 2011 even after the cuts.

The county has been spending reserves to keep its spending higher than revenues in recent years. It posted an operating deficit of $129 million in fiscal 2009, pulling its unreserved fund balance into the red. The unreserved general fund balance declined to negative 2.1% at the end of 2009 from 11.2% in fiscal 2006.

On February 17, Standard & Poor’s cut the county’s issuer credit rating to A from A-plus, and Moody’s cut its issuer rating to A3 from A1. Fitch cut the county’s pension obligation bond rating to A-minus the next day. All three agencies maintained negative outlooks on the county.

It was the second round of downgrades the county has faced in less than a year.

Sacramento County had about $1.1 billion of pension obligation bonds and $328 million of COPs outstanding at the end of fiscal 2009.

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