Riverside County government’s revenue is expanding as the final month of the current fiscal year approaches, but future growth remains uncertain, necessitating a cautious approach in establishing next year’s budget, according to a report received by the Board of Supervisors Tuesday.
The 69-page third-quarter budget compendium showed a 5% increase in discretionary revenue, mostly derived from boosts in property tax receipts, compared to what Executive Office staff earlier predicted would be available by this juncture in 2024-25.
The county’s total discretionary income is expected to total $1.32 billion. The projection at the beginning of the fiscal year was $1.26 billion. The county’s reserve pool is now projected to top out at $728 million, rather than the initial estimate of $720 million.
“The county is contending with a range of structural and operational pressures,” Chief Executive Officer Jeff Van Wagenen said. “Rising labor costs, unpredictable state and federal funding, increased demand for essential services and deferred investment in aging infrastructure are placing significant strain on available financial resources.”
The CEO further observed that while the current year’s revenue intake assures “some short-term relief” from cost pressures, “the future rate of growth is expected to flatten, (and) fiscal prudence will be essential as we work to manage these pressures.”
The largest tax revenue shortfall detected to date was in Proposition 172 Pubic Safety Sales Tax receipts, which were projected to slip by $9.3 million in 2024-25. Overall sales tax receipts were additionally anticipated to slide by $1.3 million compared to earlier estimates. The drops were attributed to slowing in the economy and ongoing inflationary pressures impacting consumer spending. Economists have not yet begun using the term “stagflation.”
The board, without comment, signed off on a bevy of spending adjustments for various agencies as part of the third-quarter report. Most of the outlays were expected to be covered via agencies’ internal budgets. However, in over a dozen instances, the county will have to drawn down its cash contingency reserve, by an aggregate $14.15 million, to cover the expenses, according to the report.
Public safety agencies were generally holding inside spending thresholds. However, the Department of Animal Services needed a $783,000 augmentation for mobile spay and neuter services and other obligations. The agency has been operating at maximum capacity at all four county shelters for at least the last two years.
The budget for 2024-25, approved by the board in June, contained $9.2 billion in appropriations, representing an 11% increase over the 2023-24 spending blueprint.
Van Wagenen confirmed at the start of the fiscal year that there were 2021 American Rescue Plan Act funds still in the county treasury. However, the county expended the last of that money in December. The county received $480 million in ARPA allocations and another $500 million in 2020 Coronavirus Aid, Relief & Economic Security Act money.
The federal infusions have been applied to “budget stabilization,” community development, infrastructure projects and related programs.
Under the current budget, $2.6 billion has gone to the Riverside University Health System, the largest set-aside in the spending plan, at 27% of total expenditures. That translated to a 5.6% increase in health care-oriented obligations.
Public safety agencies were next, with $2.2 billion in expenditures, 8.5% more than last year’s outlays and 23% of the composite budget, while the social services portfolio has received $2.1 billion in General Fund receipts, also representing an 8.5% increase compared to 2023-24 and comprising 21.4% of the budget.
Hearings on the proposed 2025-26 budget are slated for June 9-10. The new fiscal year begins on July 1.