Well, at least we have some reserves.

That seemed to be the message from the Merced County supervisors as they started off their regular meeting Tuesday with a look ahead at some tough budget planning.

The preliminary estimates from the Executive Office and County Assessor's Office were not encouraging: a reduction of $16.7 million dollars in total county resources for 2009-10 and a need for $5.2 million in public service revenue.

The projected $22 million hole to start the fiscal year was presented with the gloomy backdrop of the county's 19.9 percent unemployment rate, the fourth highest in California (and higher than the 17 percent recorded after Castle Air Force Base closed in 1995). The county itself has been holding 150-160 job vacancies for about 18 months now.

And then there are the staggering home foreclosures and declining values that “haven’t slowed down,” said County Assessor Kent Christensen. There have been more than 7,500 foreclosures over the last two years. The county’s total real estate value has dropped a few billion dollars.

The county’s plan to deal with the situation is a work in progress, CEO Demitrios Tatum warned. The cuts, problem solving and state budget changes will grow more intense in the months to come, he said.

"We've been grinding a great deal of corn trying to get to a position where we will present an operating plan knowing full well that it will change from August to September when there is a final budget," Tatum saidr.

Nevertheless, the board does have something to work with.

"With all this doom and gloom, we are fortunate to have money set aside in our reserves," said Supervisor John Pedrozo. "I don't want to go through what our predecessors went through in the 1990s."

Pedrozo was talking about $49.9 million in the county's current "Fiscal Foundation" as presented by Tatum's staff. Something previous board members didn't have when the economy turned back in the mid-1990s.

"The $50 million reserve that we have now is really a reflection of what the board faced in the 1990s," Supervisor Deidre Kelsey said. "Back then, there were no reserves and members could not afford to throw money at troubled areas to stop the bleeding."

Here's where today's reserve money is:

• $31.1 million in "total reserves" (think savings account).
• $6.4 million in "contingency" (think checkbook).
• $12.4 million in tobacco discretionary dollars (a one-time installment).

Tatum and staff also pointed out that another $30.7 million from tobacco "securitization" has been set aside and can only be used for what they call "sticks, bricks and mortar" projects.

The county is in a better position than surrounding counties, they said Tuesday, "but things can turn around real quick."

Retirement issues, labor pacts and new state propositions are on the way, planners warned.

There's also the issue of how to use those reserve funds.

Will the supervisors tap the funds for one-time uses, transitions or ongoing costs?

And will a few bright spots in the distance — like Wal-Mart plans, UC Merced growth, federal stimulus aid, and stock market stabilization — come to the rescue?

Said Tatum, "We will talk about it more in June when we present the budget."