SANTA CRUZ — The Santa Cruz County Board of Supervisors gave the final go-ahead Tuesday for an austere 2025-2026 budget while also making a last-minute pivot away from some of its most controversial proposed cuts.
A few hours before approving the $1.24 billion yearlong financial blueprint, the board endorsed plans drawn up by its staff that continue to support a couple of key behavioral health programs and preserve a few extra staff positions and health care services amid deep cuts to the Health Services Agency.
After initially zeroing out the budget for the Mental Health Client Action Network of Santa Cruz to protect mandated county services, budget staff shifted a few line items around to allocate $477,939 to the peer-run mental health program, also known as MHCAN. This investment was complemented by $100,000 from the city of Santa Cruz that made the program financially viable.
County funding was also ended for the Gemma program, which supports women involved in the justice system, but budget staff shared that Janus of Santa Cruz is slated to take over operations so its services can continue.
Plans to assure continuance of the programs came after weeks of advocacy from members of the public that had a clear influence on the supervisors, who requested options to keep them running throughout the budget hearing process.
“One of the most important programs for me to save was MHCAN,” said Supervisor Justin Cummings. “For many, this is the only day-service we have for people who have mental health issues and it’s not just for people who are unhoused. It’s for people who are housed as well and it provides a great service to a lot of folks in Santa Cruz.”
Temporary relief
The specter of cuts to mental health programs weren’t the only proposals prompting an outcry throughout the deliberative budget process. The Health Services Agency, projecting a reduction of $4.5 million to its budget, originally recommended cutting the equivalent of 74.4 full-time staff positions, 11.6 of which were currently filled.
The public backlash preceded a reshuffling of funds by staff that resulted in an option Tuesday, also accepted by the board, to preserve one full-time senior mental health client specialist and a contracted psychiatrist at the county’s Freedom Campus Health Center. There remained no long-term options for continuing laboratory and radiology services offered by the county, that many medical providers and viewers from the public said were essential, but the board did give the OK for extending the services for 90 days in hopes of creating a smoother transition.
County spokesperson Jason Hoppin told the Sentinel Wednesday that the three-month extension of radiology and lab services will ensure continued temporary employment for 7.6 full-time workers originally designated for elimination. Of the four current employees whose roles will still get cut, two are considering retirement, Hoppin said, but the county is planning to place three in other county jobs and is continuing to try to find solutions for the workers still due for termination after the 90-day extension.
Max Olkowski-Laetz, Santa Cruz chapter president for SEIU 521, the county’s largest union, said that while the union had hoped all reductions would be rescinded, he was grateful for the board’s support, particularly from Cummings and Chair Felipe Hernandez.
“I do really appreciate the board for asking tough questions and supporting this three-month extension for radiology while repeatedly directing county leadership to engage with us and frontline staff before making any final decisions,” said Olkowski-Laetz. “SEIU 521 is always willing to work with personnel to come up with solutions.”
With more budget upheaval potentially happening this fall based on decision-making in Washington, Olkowski-Laetz said it is the union’s hope that its leadership is included in future decisions impacting staff levels.
“We’re committed to working constructively with the full Board of Supervisors to try to find common sense, community-centered solutions,” said Olkowski-Laetz. “Things that actually serve the people of Santa Cruz County.”
Shuffling things around
Supervisor Monica Martinez said she was “reluctantly approving these reductions” because now is the time to prepare for potentially devastating federal cuts that are currently moving through Congress.
“In my view, it’s an attempt to preserve the clinic and the safety net for our most vulnerable for the next couple of years,” she said. “It’s our responsibility to make tough choices to preserve what we have and that’s the position I feel like I’m in today.”
Given the zero-sum nature of the budgetary process, the county unlocked the restorative funding through various sources, explained Assistant County Executive Officer Nicole Coburn.
The board approved reallocating $500,000 from a culvert restoration project along Capitola Road in county Zone 5 and grabbed almost $400,000 from Measure K housing-related uses for the last-minute changes. Additionally, almost $500,000 of Medi-Cal reimbursement revenue will go to the restoration efforts, which came at a total cost of about $1.4 million.
Supervisor Manu Koenig, who represents the area along Capitola Road where the culvert project is in development, expressed concerns about more deferred maintenance eventually crippling the county’s road network. But those concerns appeared to be somewhat alleviated after he was told by county Community Development and Infrastructure Director Matt Machado that the culvert project likely wouldn’t break ground until next fiscal year.
Casa Pacific saved
The county and its partner behavioral health provider, Encompass Community Services, both said they reached an agreement to avoid an unexpected and potentially disastrous closure of Casa Pacific, a residential mental health treatment facility in Live Oak operated by Encompass that serves about 50 clients per year.
The closure, which would have come in addition to a similar Encompass site in Watsonville called Telos, was called off after the county said it was able to reallocate some additional funds but would maintain its new room and board service reimbursement rate of $75 per person per day. The rate cut was cited by Encompass as a major obstacle to remaining open.
County Behavioral Health Director Marni Sandoval told the Sentinel the county reduced Encompass’ lease agreement at the facility to $1 down from $51,000, in addition to providing a one-time grant of $350,000 that was previously earmarked for Telos.
Despite all the tough decision-making, county officials said they remained proud of many of the investments the county planned to make this year. Almost $3.5 million was dedicated to funding new road and infrastructure improvements, a new 32-bed children’s crisis behavioral health center is set to be finished soon, a 24/7 mobile crisis response team will be bolstered, and Santa Cruz County Juvenile Hall will receive major renovations and program investments.
“This budget balances investment and responsibility,” County Executive Officer Carlos Palacios said in a county media release. “We are advancing core priorities and protecting essential services, even as we navigate significant funding risks from the state and federal levels.”
The budget that was approved this week does not factor in any of the major cuts included within President Donald Trump’s One Big Beautiful Bill Act, that leaders from across the county have said will devastate the social safety net. Once that legislation is finalized and inevitably impacts California’s budget, several adjustments may be warranted this fall.
“The message we’ve been receiving from the (federal government) is pretty clear: that they’re going to jam these awful budget proposals through,” said Cummings. “If they make it through, then the fall is going to be a much bleaker position.”