Times are good, but potential trouble looms.

An economic downturn locally, state budget cuts and the damage from inevitable natural disasters such as fires are all potential threats to Santa Barbara County’s economy.

“The county is doing very well, but there are challenges ahead,” said Mona Miyasato, CEO of Santa Barbara County. “And now we have a forecast of what those challenges would be.”

Hundreds of people packed The Ritz-Carlton Bacara in Santa Barbara on Friday afternoon for the fourth annual State of the County. The event, hosted by the Santa Barbara South Coast Chamber of Commerce, brings elected officials and business and government leaders together to talk about the local economy and forecast what’s ahead.

Miyasato was among those who addressed the crowd. She said that even though the budget is balanced, the county’s goal for the next fiscal year is “prudence and progress.”

The county is anticipating a possible economic downturn that could affect tax revenue, which, Miyasato said, is already leveling off.

Concerns exist about California budget shortfalls and the possibility of cuts to social services. New legislation and proposals from the legislature also could squeeze the county, she said.

In addition, natural disasters are always a threat.

Since 2014, there have been 40 proclaimed disasters or emergency center activations.

The Lake Fire in July caused $76 million in damage to agriculture. The storms of 2023 and 2024 caused nearly $100 million in infrastructure damage.

The county is looking to increase its transient occupancy tax from 12% to 14%. Voters will decide that measure in the Nov. 5 election.

Miyasato highlighted some positives, including a new regional fire communication center set to open later this year. The new center will centralize calls for medical and fire services.

The county also opened a new permanent supportive housing project in Goleta. The project will feature 60 units for residents and provide access to services.

Peter Rupert, director of the UC Santa Barbara Economic Forecast Project, also spoke and talked about how changing demographics will affect the county.

Middle-age residents are leaving the area and taking their children with them, Rupert said. That is causing the general population to be older, which he says may have an effect on the county in the long term.

“How do we think about schools? How do different businesses think about the changing age distribution?” Rupert asked the audience.

He said the county also will likely see changes to its racial demographic.

White, non-Hispanics are expected to make up 34% of the county’s population by 2034. White, Hispanics are expected to make up 47% of the population.

“So, these changes are big, and it’s something everyone should kind of realize [it],” Rupert said.