Quick Take
Santa Cruz County’s budget for 2026-27 safeguards core services and avoids layoffs, despite a historic fiscal squeeze, writes County Executive Officer Nicole Coburn, who is in her first year in the job. The $1.29 billion plan relies on $43 million in one-time funds, reducing county reserves to 10.4%, but keeping critical programs running. Without structural change, she writes, Santa Cruz County faces a projected $67 million deficit as soon as next year. The county is asking for millions from the state for help to overcome the shortfalls caused by federal cuts. This budget buys time, she writes, but the county will likely need to make hard choices in the future. The board of supervisors will meet for budget hearings in the coming weeks.
Have something to say? Lookout welcomes letters to the editor, within our policies, from readers. Guidelines here.
Last week, Santa Cruz County released the 2026-27 proposed budget that makes clear the coming years will test our community.
The county, which provides municipal services for half of our residents and safety net services for all of them, is facing significant fiscal headwinds. I wanted to share the reasons for this, what our priorities are as we approach this problem and how you can help us navigate the way forward.
Despite one of the most difficult budget environments since the Great Recession, this proposed $1.29 billion budget, my first as county executive, protects core public services, avoids layoffs, preserves progress on major priorities such as affordable housing, modernization of county operations, natural resource protection, wildfire resiliency, homelessness response and more. It also protects our workforce of 2,683 people, which is the backbone of the wide range of services we deliver to the community.
This did not happen by accident. It reflects extraordinary work across every department — and real sacrifices from county staff, who shared in this belt-tightening through a countywide hiring freeze, travel restrictions and targeted reductions that impact their day-to-day work. Their professionalism and resilience helped us avoid worse outcomes, and they deserve our thanks.
But we must also be honest with the community — this budget is a bridge, and without a change in direction, far more significant challenges await.
To protect essential public services, avoid layoffs and preserve core operations, we are using $43 million in one-time funds to help close a structural budget gap and address impacts from H.R. 1 — a set of federal policy changes that shift major safety-net costs from the federal government to states and counties.
We are taking the one-time funds from our department trust funds and reserves, which are the county’s “emergency savings,” money we use to pay for critical needs like disaster response and public safety when revenue falls short. Taking the funds will drop our reserves from 12.5% to 10.4% of our general fund total, which will leave us with $87 million at the end of the next fiscal year. By using these funds now, the county has less protection against future local crises, such as fires or floods.
These one-time resources buy time, but they are not a magic wand.
Without meaningful change, Santa Cruz County’s projected deficit could exceed $67 million in FY 2027-28.
We are not alone in these challenges. With more significant impacts still to come, H.R. 1 represents a multiyear shift that imposes up to $9.5 billion annually in new costs to California counties, threatening the systems millions rely on. Nearly 1.5 million Californians could lose Medi-Cal coverage, public hospitals could face billions in lost financing, counties will shoulder major new costs to administer Medi-Cal and CalFresh, and behavioral health systems will face increased demand with fewer resources.
As a budget principle, we worked hard to balance impacts on county departments and community partners, which both play a role in county service delivery. We have eliminated 58 unfilled positions, but at the same time, we must acknowledge that the county has had to cut back on discretionary funding for community-based organizations, many of which are facing similar issues. These include cutbacks in county contributions for programs that serve immigrants, children and the economically disadvantaged, such as CalFresh outreach through Second Harvest Food Bank. These trade-offs were difficult.
For our community, those impacts threaten the broader safety net that supports seniors, working families, children, people with disabilities, residents experiencing homelessness and anyone who might one day depend on emergency rooms, food assistance, mental health care or community-based services. When the safety net frays, everyone from emergency room nurses to street outreach workers feel it — the human costs are significant.
That is why Santa Cruz County supports a coordinated request for new state funding through the California State Association of Counties, including $1.9 billion in 2026-27 and $4.5 billion in 2027-28 to stabilize California’s safety net in the wake of H.R. 1.
In 2026-27, this request has four pillars:
- $761 million to rebuild indigent care systems for people who lose health coverage.
- $500 million to stabilize public hospitals, including Watsonville Community Hospital, and the broader healthcare network.
- $373 million for county eligibility workers who help keep residents enrolled in Medi-Cal and CalFresh amid new administrative burdens.
- $224 million to expand county-level behavioral health capacity and mitigate cuts that would otherwise increase homelessness, psychiatric and substance use emergencies, and strain on jails and emergency rooms.
Santa Cruz County has long operated under sharp fiscal constraints, taking in just 13 cents of every property tax dollar on average. We are also seeing shifts in sales tax revenues as more people shop online, increasing unfunded mandates from the state and more demand for services from our community. These are all factors in our structural issues, and we need to work with the community on solutions, whether rolling back to focus only on core services or finding new revenue streams.
H.R. 1 did not create these underlying issues, but it has intensified them to an unsustainable degree.
Public engagement matters right now. I encourage every resident to review the proposed budget at www.sccbudget.us, understand what is at stake, and participate in the upcoming county budget hearings. All meetings begin at 9 a.m.
- Tuesday, May 5: North County Government CenterCommunity Room, 701 Ocean St., Santa Cruz
- Wednesday, June 10: South County Government Center, 500 Westridge St., Watsonville
- Thursday, June 11: Board of Supervisors Chambers, 701 Ocean St., Santa Cruz
- Wednesday, June 24: South County Government Center, 500 Westridge St., Watsonville
Santa Cruz County is doing its part — tightening internally, protecting core services where possible, preserving momentum on important community priorities and advocating for sustainable solutions. But even our best local efforts cannot fully shield this community from the nationwide erosion of the social safety net.
Meeting this moment will take partnership. It will take our legislators, local leaders, nonprofits, faith communities, neighbors and residents all pulling in the same direction. Protecting our values and safeguarding this community will require hard work, honest conversations and shared sacrifice.
The road ahead may not be easy, but Santa Cruz County has never been defined by easy. We are defined by resilience, by community, and by our willingness to stand together when it matters most. If we do that now, we can protect the services, stability and compassion that define who we are.
Nicole D. Coburn is the county executive officer of Santa Cruz County.