With the budget for the coming year on the books and a new union contract on the table, Ventura County's government is on solid ground, a county supervisor and the county's chief executive said Friday.

However, there are reasons to worry about the future — among them, the need to expand county jails and retrofit the hospitals, each of which could cost the county hundreds of millions of dollars, Supervisor Kathy Long and County Executive Officer Johnny Johnston told the Camarillo Chamber of Commerce at a "State of the County" breakfast.

"We're in pretty good shape, for the shape we're in," Johnston said of the county's fiscal outlook, crediting his mother with the phrasing.

"The shape we're in" includes big spending for a jail expansion and hospital retrofit on the horizon, and a lack of tax revenue when compared to other counties, he said. Still, the budget is "structurally balanced," meaning operating expenses are covered by regular revenues, and Ventura County hasn't racked up massive future debts to its retirees by promising lifetime healthcare coverage, as many cities and counties have.

The last year the California State Association of Counties studied per-capita revenues, Ventura County ranked 55th among the state's 58 counties. Revenue was about 20 percent below the state average.

The reason for the county's relative tax poverty is its conscious decision to keep urban and suburban-style development within city limits, Johnston said. The county only gets a share of sales tax for sales made in the unincorporated areas, so that policy leaves it poorer than counties that encourage big-box stores in rural areas.

"We are a 21st-century economy, but we're still operating on a 19th-century tax structure," Johnston said.

The county also has its hands tied on the way much of its money is spent, he said. The Board of Supervisors approved a $1.6 billion budget last month for the 2007-08 fiscal year. Only about $80 million of that is truly discretionary — the rest is either earmarked for certain purposes by the state, or guaranteed for fire and police services by county policies.

"Public safety is priority number one in this county, followed by health and welfare," Johnston said.

In the county's private sector, "the economy remains vibrant, although the real estate market is struggling," Long said, citing the work of economist Mark Schniepp.

Some of the county's biggest challenges — transportation, housing and pollution — are regional in scope, she said, and can be addressed only through cooperation with leaders in Santa Barbara and Los Angeles counties.

"We are not an island," she said. "As much as we might like to, we can't build walls. We have to build bridges and relationships."