In a unanimous vote, the Board of Supervisors approved the first installment of a $7 million plan to cover 16,000 uninsured kids, while cutting $530,000 from a 12-person residence for the mentally-ill called Casa del Mural.

The 450-page proposal also blocked $650,000 for a crisis center for the mentally-ill in the North County, as well as $1 million in salary adjustments and funding for doctors and nurses, and the county’s Human Services Commission.

While officials succeeded in keeping county finances in the black, they could face a tough policy decision if health and social service costs for the poor continue to rise. As County Executive Mike Brown said earlier in the week, supervisors may have to reduce services or find new ways to cover operations.

Failing to do so could lead to deficits as high as $18 million by 2010.

 “We’re excellent spenders, but we’re not revenue generators,” said Supervisor Joni Gray, citing failed proposals for new oil drilling, affordable housing and residential “village” development as recent attempts to generate income.

Every year, county staff and external agencies dance for dollars in last-minute “expansion requests.” This year, supervisors agreed to defer most of them to October, when they can revisit the county’s finances.

But as officials winded up proceedings, Supervisor Janet Wolf asked colleagues to find money for a new social worker, higher pay for medical staff and support for the Santa Barbara Visitors Bureau and Film Commission. She also questioned plans to transfer $71,000 between departments and a $278,000 expenditure on the county’s public information officer.

“I’m very disappointed,” she said in her closing remarks.

Members of the public also split over spending.

Budget hawks like Coalition of Labor, Agriculture and Business chief Andy Caldwell called for more savings, predicting that home values, and therefore, the region’s tax base, would soon level-off with the cooling real estate market. County Taxpayers Association Executive Director Joe Armendariz urged supervisors to vote “no.”

“It’s simply irresponsible for you to pursue this level of government expansion,” Armendariz said.

Residents and supporters of Casa del Mural asked supervisors to preserve funding for the Goleta Valley residence that will have a new management system under the proposed budget.

And George Green, a field representative for SEIU Local 620, urged supervisors to pay attention to increasing workloads in departments like Alcohol, Drug and Mental Health Services, and adjust resources accordingly.

“All we're doing is crisis management.”