Roads are squeezed as Santa Cruz County passes a ‘survival budget’

In a budget season marred with bleak projections and a regular refrain of “dire” and “crisis,” the fate of Santa Cruz County’s nearly 600-mile road network was the source of much of the attention and drama. 

More than the justice system, first responders and sanitation, road maintenance was held up by residents and supervisors as the preeminent county service upon which everything and everyone relies. 

Yet, roads are the infrastructure most under pressure from the continued onslaught of climate disasters. Since 2017, the county has spent nearly $350 million on roads, including a dizzying 282 disaster-repair projects. This year, the county will borrow around $90 million, its largest debt issuance to date, to finance already completed and still active disaster repairs (largely, roads) from the 2017 and 2023 storms.

This unprecedented disaster debt has hamstrung the county’s finances. There is no money and no plan for another 88 storm repair projects (mostly roads and culverts). Under the approach of summer fire season, followed by the rainy winter season, the specter of expensive climate disasters looms large. 

When County Supervisors Manu Koenig and Felipe Hernandez challenged chief county executive Carlos Palacios’ decision to not put more money into road repairs, it sparked the most intense debate of the budget season. Now, roads, and how the county funds them, are the focus of a scathing report from the Santa Cruz County Civil Grand Jury published last week. 

“Roads in the unincorporated areas of Santa Cruz County are in deplorable condition,” the report begins. “Currently more than 63% of the local roads are in poor [or] failed condition. … Chronic underfunding of roads and culverts has led to a [road-maintenance] deficit approaching $1 billion.” 

The report, published Wednesday, is the first in a forthcoming series from the 2023-24 civil grand jury. The grand jury, a volunteer group of 19 jurors and 11 alternates, forms anew with fresh members each year to investigate a menu of city and county issues, sometimes rising from citizen complaints, sometimes from their own curiosity. During the 2022-23 season, the civil grand jury published eight investigations that touched on issues from housing and behavioral health, to surveillance and the county jail. Each investigation produces specific findings and recommendations, and requires a response from the government entities and agencies involved. 

The roads report, titled “Santa Cruz County Local Roads: A smooth path to paradise or a hell of a highway?”, criticizes the county for trapping itself into prioritizing roads that are already in reasonably good condition since those fixes are often cheaper. 

“For decades the county’s strategy has been to forgo spending money on the roads that are in the worst condition and concentrate on pavement preservation on roads that are already in good to fair condition,” the report reads. “Many unincorporated roads haven’t been resurfaced in decades. … Many residents are not aware of this unstated strategy.” 

In a 2024-25 budget District 2 Supervisor Zach Friend described as a “survival budget,” roads will get more than $83 million, but it’s a fraction of what the civil grand jury says is needed. According to the investigation, the backlog of deferred road maintenance amounts to $401 million; the backlog for culvert maintenance, which redirects storm flows to protect road infrastructure, amounts to $400 million, bringing “the deferred maintenance total to approximately $801 million.” It’s a number the jury said would only grow.  

How quickly the county can address its road maintenance backlog amounts to a money question, and county officials have said countless times during the budget process, a lot of money is tied up. The Federal Emergency Management Agency, which is set up to cover 75% of a local jurisdiction’s expenses in responding to federally declared disasters, still owes the county more than $120 million from disasters stretching back to 2017, including the pandemic and the CZU fires. The county expects those federal reimbursements are still years away. 

“The federal system hasn’t caught up to climate change yet, which is impacting some communities more than others financially,” county budget manager Marcus Pimentel told Lookout. 

State funds through 2017’s Road Repair and Accountability Act, a legislative package that sends $5.4 billion per year into state and local road projects, could be more of a windfall for road maintenance; however, Santa Cruz County’s allocation has been tied up financing repairs from the 2017 and 2023 winter storms, the grand jury wrote. Earlier this year, residents across the county passed Measure K’s half-cent sales tax increase, which was to dedicate at least $1 million annually to road maintenance, but that money is held up in a lawsuit. The state’s excise tax on gasoline, aimed at financing road infrastructure, has become less dependable as cars become more fuel-efficient and drivers transition to electric vehicles. 

Among the eight recommendations the civil grand jury makes to chip away at the roads issue, it points to three special service districts the county created in 1983 to fund hyperlocal road repairs, known as Special District 9D 1, 2 and 3. Those districts, which divide the entire unincorporated county into a north, mid and south region triptych, charge a special tax to the residents within their boundaries to fund hyperlocal road repairs. 

The districts raise a combined $2.7 million per year and are, according to the grand jury, “the only reliable source” for road funding. However, the tax rate hasn’t been increased since the districts were created. Had the service tax increased with inflation, as some special districts are wont to do, the county could be earning nearly four times as much revenue for roads repairs. The grand jury formally recommended the county look at implementing an inflation-based increase. 

For the upcoming fiscal year, the county will put $83 million into county roads, but much of that money comes through dedicated revenue streams. The county will use $11.1 million to tackle 32 projects from the 2023 storms, $10.5 million for 31 projects from the 2017 storms. Those projects include about $2 million for two sections of Little Basin Road in Boulder Creek, and roughly million-dollar projects fixing Valencia Road in Aptos and Eureka Canyon Road in Corralitos. Still, Koenig argued that despite a lot of money going into roads, there is still a “big shortfall” of the need, and urged the county to put more property tax funding into the road network. 

“I recognize historically we have not allowed discretionary general fund revenue toward road maintenance, but it’s the No. 1 county service our rural residents rely on,” Koenig said. 

Two particular rural road failures have drawn intensely emotional appeals from dozens of families at the northern and southern ends of Santa Cruz County. To the north, a landslide on Mountain Charlie Road has cut off dozens of families from their typical routes to school, work and daily life. Paulsen Road, just outside of Watsonville, has disrupted the flow of families trying to get to and from Watsonville Charter School of the Arts and Alianza Charter School. The county has no money and no concrete plan to fix either. 

“We need to think about the long term, we’re going to continue to have atmospheric rivers, we’re going to continue to have storms, we need to think about this in a more sustainable manner, in a manner that prioritizes our safety,” a woman named Emily, who said she lives off Mountain Charlie Road, told supervisors last week. “I’m all for bike lanes, but the level of anxiety and the level of risk that we’re at up here [on Mountain Charlie Road] is absolutely unacceptable.”

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