CORRECTION (Published 6/12/2014)

A story incorrectly reported that Alameda County's proposed budget has a deficit. The budget closes a $67 million funding gap. There is no $86.6 million deficit. Also, a word in a quote by Alameda County Administrator Susan Muranishi was incorrect. The word should have been "adequate" in the following quote. "The funding is never adequate," Muranishi said. "The amount of money allocated last year is already less than this year."

As the economy slowly improves, Alameda County is recovering, too.

The proposed $2.8 billion budget presented to the board of supervisors on Tuesday closes a $67 million funding gap. Still a declining unemployment rate and rising home values aren't enough to stop the belt-tightening.

About half of the county's funding comes from the state and federal government, and cuts and shifts in services are leaving the county to pick up the tab. .

Because of the Affordable Care Act, the county lost $11 million in funding already this fiscal year. It expects to lose $44 million in fiscal year 2014-15 through Gov. Jerry Brown's proposal redirecting $725 million statewide.

"The theory is with the Affordable Care Act that people we were previously serving will get insurance," said Alameda County Administrator Susan Muranishi. "But we still expect that a lot of people will still need services."


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She told the board that the revenue loss will result in challenges for the public hospital system that serves vulnerable populations. The county is planning to still provide services for about 100,000 indigent patients who are expected to remain uninsured.

With the passing of Measure AA, the half-percent sales tax continues funding health care services for the indigent, uninsured and low-income people.

Three-hundred full-time jobs were all added without county cost, funded by the state and federal government through the Affordable Care Act.

In addition, AB 109 for inmate realignment is straining county funds. Inmates convicted of nonserious crimes are transferred to county jails that were not designed for longer sentences.

"The funding is never adequate," Muranishi said. "The amount of money allocated last year is already less than this year."

She told the board that the state should restore its own cuts to programs but not on the backs of local governments.

Board President Keith Carson said, "We're still in Sacramento negotiating the realignment, and it's a very challenging negotiation."

Alameda County's debt totals almost $3 billion and pension costs make up almost half of that. About $600 million stems from the construction of the Acute Care Tower Replacement project for the Alameda Health System, and more than $450 million is due to bond debt.

The proposed budget puts more than $50 million toward annual debt service payments.

But not all areas would see cuts. Muranishi said that focusing on capital projects, such as maintenance and construction, would be fiscally responsible.

"We have not funded them at an adequate level," she said, adding that as projects deteriorate they become more expensive to fix. The proposed budget allocates $356 million, 6.3 percent more than last year.

Children's services would see a 3.6 percent increase.

Overall, public protection makes up 22 percent of the budget; public assistance, 27 percent; and health care services, 22 percent.

Supervisors have two weeks to review the proposed budget before voting whether to adopt it June 27. Public hearings are scheduled for June 23 and 24.