Santa Cruz County Budget Hearings to Address $11.1 Million Shortfall

SANTA CRUZ, Calif. — Santa Cruz County‘s budget hearings for the 2025-2026 fiscal year will begin next week, focusing on funding for its various agencies and departments. The Board of Supervisors will first tackle a controversial proposal concerning the Health Services Agency on Tuesday at 9 a.m. at 701 Ocean St.

The proposed budget comes amidst a projected $11.1 million reduction in agency revenue, forcing the county to recommend cuts that would reduce the Health Services Agency’s staff to roughly 659 full-time positions, a loss of 74 positions, including almost 12 currently occupied roles.

County Executive Officer Carlos Palacios, along with Budget Manager Marcus Pimentel and outgoing Health Services Agency Director Mónica Morales, first presented the financial challenges to the board in April. They cited federal actions that led to cuts in public health grants and delays in reimbursements from the Federal Emergency Management Agency, which have put local safety net programs like Medi-Cal and CalFresh at risk.

Palacios expressed concern over the “uncertainty and chaos at the federal level,” saying he had never witnessed such a tumultuous environment in his nearly four decades of local government experience. Despite these explanations, the plan has generated significant public backlash.

Members of SEIU Local 521, the largest union in the county, have rallied to defend the positions slated for elimination. Many community members also voiced support for funding local behavioral health providers that rely on county support, including the Mental Health Client Action Network of Santa Cruz and New Life Community Services‘ Gemma program.

In response to the public outcry, the Board of Supervisors has requested staff to present possible funding options for these programs at the upcoming budget hearing. Alongside the Health Services Agency budget, the board will review allocations for several other departments within the proposed $1.2 billion budget, including the Human Services Department and various capital projects.

Regular agenda items also include budgets for the Assessor-Recorder’s Office, County Executive Office, Clerk/Elections, and County Counsel. The budget discussions are scheduled to continue on Wednesday, with a final hearing set for June 10.