As the current fiscal year comes to a close, unanticipated revenue shortfalls in Riverside County government require roughly $60 million in reserves to be allocated to keep the budget balanced, according to a report that the Board of Supervisors will review Tuesday.
“The county continues to face a variety of structural and operational fiscal pressures,” county CEO Jeff Van Wagenen said in the third-quarter budget report due for consideration during the board’s policy agenda Tuesday.
“Rising labor costs, uncertainty surrounding state and federal funding, increasing demand for core services and ongoing infrastructure investment needs are placing additional strain on available resources,” Van Wagenen added. “As fiscal pressures continue to emerge, maintaining fiscal discipline will be critical to sustaining core services and aligning available resources with priorities.”
The 94-page third-quarter report indicated a range of expenses would need to be met before the end of the fiscal year on June 30, or multiple agencies would be in the red. The Executive Office recommended the board approve drawing down the reserve pool by about $60 million to cover the overruns.
Those include higher costs tied to indigent defense contracts, overhanging expenses from last November’s special election, which left the Office of the Registrar of Voters in a deficit, higher-than-expected labor costs in the District Attorney’s Office and Department of Animal Services and under-funded projects handled by the Department of Facilities Management.
The Executive Office requested the board “clean up” the imbalances before the start of hearings on the proposed 2026-27 budget, which were slated to get underway Monday.
The third-quarter report indicated revenue streams had expanded in a few places, principally property taxes, which have increased $19.8 million above the amount projected at the outset of the fiscal year. That will translate to a 3% rise in discretionary income — $1.36 billion instead of $1.31 billion — by the end of 2025-26, figures showed.
The county’s composite reserves should reach $650 million at the end of the current fiscal year. They had been calculated to crest at nearly $700 million, but to plug continuing budget holes, that number no longer appeared likely. The reserve pool total had been projected last June to top out at $655 million in 2025-26, so the latest estimate is more or less on target.
The board formally approved the budget, totaling $9.98 billion, on June 24, 2025. The supervisors further approved a tentative hiring freeze for most agencies to put the brakes on deficit spending.
Payrolls continue to consume half of outlays. The county employs nearly 26,000 people in more than 40 agencies on a regular or rotating temporary basis.
More than two-thirds of the county budget is composed of programmed spending, including federal and state earmarks for specific uses, along with grants and related external source revenue. The board has little control over those dollars.