By Bonnie Eslinger, Daily News Staff Writer -
On the same day a grand jury released a report accusing San Mateo County officials of hoarding a stash of extra property tax revenue while crying about budget woes, County Manager John Maltbie lashed out Monday by contending the panel isn't credible.
"We don't know how the grand jury came to the conclusion that we've been sitting on money that nobody knew about," Maltbie told The Daily News.
Maltbie said, in an opinion column he submitted to local newspapers, that he has harbored long-standing concerns about the structure of the state's grand jury system, and about how the group of volunteers on the grand jury reaches its conclusions.
He decided to write about it after learning of the San Mateo County Civil Grand Jury's investigation into the county's budget deficit, Maltbie said.
The grand jury's 16-page report focuses on the so-called Educational Revenue Augmentation Fund (ERAF) -- excess property tax dollars that the county keeps after distributing state-required minimum amounts to public schools.
The report is titled: "An Inconvenient Truth about the County's So-Called Structural Deficit."
During the 2012-2013 fiscal year, the county received more than $98 million in excess tax dollars, according to the grand jury. Yet less than three months before the Board of Supervisors approved that year's budget, Maltbie said the county faced $28 million more in expenses than it had in revenues. So the budget eventually approved
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was balanced after the county dipped $40 million out of its excess ERAF account.
Later, when voters were asked in the June 5, 2012, election to approve new taxes on commercial parking facilities and car rental businesses in the unincorporated areas of the county, Supervisors Adrienne Tissier and Carole Groom stated in ballot arguments: "Next year, San Mateo County will face another $28 million budget deficit."
Grand Jury Foreman Timothy Johnson said while the county's message is a "constant drumbeat of 'we have a structural deficit'... in fact, the county has a surplus." Of the state's 58 counties, only San Mateo, Marin and Napa have property taxes left after funding local schools, according to the grand jury.
"I think Mr. Maltbie feels that the best defense is a good offense," Johnson said.
San Mateo County has received excess ERAF money every year for almost a decade. It began in the 2003-2004 fiscal year with an extra $24.8 million and, with a couple of exceptions, the amounts have risen each year since. Over the last four years, the county has received $79 million or more each year in excess ERAF money.
Maltbie said the excess ERAF money has to be calculated separately from the budget because there's no guarantee the county will receive it. As a result, the board treats the money as "separate funds for special purposes," he said.
Although the board voted to include $40 million from the ERAF account into last year's fiscal budget, state budget changes threaten to siphon off $20 million to $30 million from what the county might expect this year, he said.
Johnson said that although the county might claim the money is only used for one-time purposes, for the last five years those purposes have been to plug budget deficits.
The grand jury recommended that the Board of Supervisors report in its budget all of the excess ERAF that it anticipates receiving in a given fiscal year and give the public the "most current assessment" of whether it has a deficit or surplus when it puts revenue measures on the ballot.
In response to Maltbie's published criticism of the grand jury, Johnson said that the county manager should have spent more time addressing the concerns of the 19-member grand jury than attacking it.
In his opinion column, Maltbie says the grand jury's interpretation of excess ERAF "demonstrates an abysmal lack of understanding of the principles and practices of budgeting and financial management." He states that grand jurors should be required to fill out financial disclosure forms and conflict of interest statements.
"How else is the public going to know if conclusions reached by the Grand Jury are a result of biases or even the financial interests of certain jurors?" Maltbie wrote. The grand jury should also release a transcript of its proceedings after a report is released, the county manager opined.
When the subjects of investigations are chosen, the civil grand jury asks its members to disclose any potential conflicts of interests, Johnson said, adding that those with conflicts are assigned to other reports.
San Mateo County's civil grand juries operate under the same state law that governs all counties, he added.
"If he (Maltbie) has a quarrel, he can take it up with the state," Johnson said.
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