The 2018-19 fiscal year will start with less red ink than originally projected in Riverside County government, though a series of measures must remain to prevent cost overruns, according to the proposed budget that the Board of Supervisors will consider Monday.
The 700-page blueprint reflects healthy revenue increases and success on the part of most agencies in in containing expenses as 2017-18 comes to a close. However, county CEO George Johnson noted that financial headwinds and a change in economic conditions are a possibility, requiring “fiscal vigilance.”
“Revenue is not growing fast enough to meet our growing population’s need for services, and pension costs are rising,” Johnson said in an introduction to the budget report. “In response, we must contain costs wherever possible, maintain high-quality services and invest wisely in projects and programs that serve residents long into the future.”
“Based on recent economic forecasts, our outlook remains cautiously optimistic, enabling us to modestly improve our long-range assumptions about general fund discretionary revenue,” he said. “We continue to focus on erasing deficit spending over the next few years and moving toward projected structural balance by 2020-21.”
The budget report highlighted an “all-time low” 3.8 percent countywide unemployment rate as one example of the area’s economic strength, boding well for revenue growth.
The Executive Office is proposing an overall $5.6 billion budget, roughly 2 percent higher than the current fiscal year’s appropriations. Just over two-thirds of the spending stems from so-called “pass-through” funds supplied by the state and federal governments for a range of county-managed programs.
The budget projects that discretionary revenue — a combination of property taxes, motor vehicle revenue-in-lieu-of-property-taxes and fees — will top out at $781 million, representing a 4 percent jump from the current fiscal year. Officials emphasized that despite the boost, roughly $20 million in contingency funds will be needed to cover some expenditures controlled by the board.
Executive Office staff said that salaries and benefits, which comprise 40 percent of the entire general fund budget, are creeping up, forcing agencies to make adjustments to keep a lid on costs.
The county has about 20,000 employees — 4,000 below the authorized number, according to the report. Johnson implemented a “targeted hiring freeze” in the middle of the current fiscal year to ensure that positions weren’t added unless supported by existing revenue.
The Executive Office touted the state’s nearly $10 billion in unanticipated tax collections this fiscal year as a win for counties that might otherwise have been saddled with greater mandated services costs, particularly In-Home Supportive Services.
Big ticket items that continue to drain county resources include the Benoit Detention Center in Indio, the first half of which is slated to become operational next month, the federal consent decree requiring expanded medical care for inmates in the county’s five correctional facilities, expansion of the Riverside University Medical Center in Moreno Valley, and pension obligations, according to county officials.
The Executive Office said the county’s reserve pool should settle at $200 million at the end of the current fiscal year, but that level will erode as officials reach into the pot to offset a structural imbalance, drawing the pool down to $157 million in 2020-21.
According to the report, public safety commitments continue to pull down the highest appropriations, and both the Riverside County District Attorney’s Office and the Sheriff’s Department are ending 2017-18 in the red.
The sheriff’s $15.7 million deficit will be reduced to $8.1 million, thanks to a board-authorized backfill, while the D.A.’s $9.3 million gap will be narrowed to $5.8 million, also due to a funds transfer. Labor costs and inter-service charges are major weights on the agencies’ ledgers. However, a slew of changes in state law have added immensely to cost burdens, according to officials.
For the D.A., voter-approved Proposition 47, which permitted individuals convicted of felony drug offenses to petition courts to have their convictions reduced to misdemeanors, has burdened staff and diverted resources, officials said. District Attorney Mike Hestrin is seeking a $123.3 million budget, compared to $118 million in 2017-18.
Sheriff Stan Sniff is planning for $716.3 million in appropriations. The budgeted amount for 2017-18 is $687.9 million.
The Office of the Public Defender had been projecting a deficit in excess of $1 million, but final figures posted to the budget report showed the agency in balance.
The Department of Probation, likewise, will begin 2018-19 in the black, thanks to $20 million in a special fund account that county officials stressed was being whittled down.
The Fire Department’s funding for 2018-19 also appeared secure and deficit-free.
Executive Office staff and several board members remain confident that an ongoing overhaul of general government and public safety operations by Netherlands-based KPMG will net growing savings in the years ahead. The firm’s $40 million contract has been a subject of controversy, with the sheriff and several candidates for board seats characterizing it as a waste of money with no obvious advantages.
In addition to this budget hearing, another one is tentatively planned Tuesday, with adoption of the new budget slated for later this month.
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