CEO: Riverside County Facing Financial Hurdles

RIVERSIDE COUNTY, CA - Budgetary challenges loom on the horizon in Riverside County, making a "corporate" mentality necessary to ensure that agencies pull together to weather the tough times ahead, county Chief Executive Officer Jay Orr told the Board of Supervisors Tuesday.

"We have to rethink how we do business," Orr said in presenting the board with a midyear report on the 2016-17 fiscal year. "We have a corporate structural problem and need to look for corporate solutions."

The Executive Office's 50-page analysis of county finances offered few notes of optimism, but Orr stressed that it was "not a time to panic" because agencies have an opportunity to prepare for worst-case scenarios and plan accordingly.

"We need a plan that's well-reasoned and can be supported by revenue," the CEO said. "The threats we see are threats to sustainability. Everyone needs to row together, in sync. We need to maintain corporate unity of purpose and transparency. That's how we get problems solved."

According to the Executive Office, a projected decline in property and sales tax revenue could result in an $8.2 million loss to the general fund. The drop in receipts was due to changes in economic conditions, officials said.

Just as concerning was a proposal in Gov. Jerry Brown's 2017-18 budget blueprint to change counties' contributions to the In-Home Supportive Services program.

Under current law, counties cover 17 percent of IHSS costs, with the state and federal governments kicking in the lion's share. Brown is seeking to have the current 3 percent cap on program growth eliminated, as demand for IHSS services -- benefiting indigent seniors, the sick and disabled -- continues to soar.

According to the midyear report, removal of constraints on the growth rate could impose tens of millions in additional annual obligations from the county.

Officials said a new statewide collective bargaining agreement with Cal Fire personnel, who form the backbone of the Riverside County Fire Department, could translate to an additional $2.5 million in costs to the county in the current fiscal year -- and $11 million in 2017-18.

The compact is awaiting the governor's signature.

County Chief Financial Officer Paul McDonnell told the board options for holding down the county's general fund appropriations to the fire department may have to include "selective staffing reductions and (station) closures." More will be known toward the close of the fiscal year in June, he said.

The Trump administration's "repeal and replace" strategy for Obamacare raised questions about Medicare and Medi-Cal reimbursements for the county hospital, but officials said it was too early to ascertain the impact.

The midyear report indicated the county is still struggling with a $22 million chop in Proposition 172 public safety sales tax revenue from the state. Prop 172 funds are distributed to county safety agencies to cover a variety of expenses.

Shortfalls are plaguing most of those agencies, the largest being in the Riverside County Sheriff's Department, which is in a $19.4 million deficit.

Although Sheriff Stan Sniff has managed to close the hole modestly since July, it's likely to grow again heading into 2017-18 as labor costs rise and preparations are made for the opening of the East County Detention Center in Indio. The sheriff is also contending with a federal consent decree mandating improved services in existing jails for mentally and physically impaired inmates, requiring more correctional personnel.

The District Attorney's Office is $4.4 million in the red, a reduction from July thanks to austerity measures implemented by D.A. Mike Hestrin and his team.

According to the report, the Office of the Public Defender's gap actually widened from July to January, growing from $1.7 million to $2.1 million, mostly due to unexpected inter-agency charges, employee payouts and a reduction in state revenue to offset the cost of mandated programs.

The Department of Animal Services was predicting a year-end revenue loss of $1 million, apparently due to a decline in impounds and the fees associated with them. The agency also informed the Executive Office that two- thirds of its fleet had exceeded the "standard vehicle life cycle" of 100,000 miles, and many vehicles are in need of repair.

Executive Office staff remained confident that a sweeping review and reformation program inaugurated in March using the international professional services firm KPMG would net the county sizable savings from operational efficiencies. Public safety officials have expressed skepticism about the firm's objectives and whether they can be achieved.

Supervisor Kevin Jeffries worried that deferring budget planning and failing to immediately apply remedies to problems on the radar would be placing the board at risk of making major budgetary decisions under duress.

"Expenditures are getting worse and revenue is shrinking," Jeffries said. "We need to pull the trigger and start fixing things for the future, instead of waiting for the future to arrive. Let's start examining opportunities when they come up, and let's start booking them."

Supervisor Chuck Washington agreed, expressing the most concern about sheriff's department staffing.

"I don't see a solution to the problem," he said. "As far as KPMG -- we need those efficiencies now. We need to partner with labor and work out a way to provide the services we need them to provide while holding down costs."

McDonnell said KPMG was overseeing a "pilot project" to streamline and improve patrol operations. Jeffries and Washington both voiced the need to spare unincorporated communities further cuts in patrol staffing.

The board insisted at the outset of the current fiscal year that the county's reserve pool not fall below $150 million.

Orr said fiscal discipline will have to be maintained to keep from depleting reserves.

- By Paul Young | City News Service / Image via Shutterstock