Riverside Co. Supervisors Weigh Depleting Reserves To Sustain Funding Commitments

RIVERSIDE COUNTY, CA --- Growing expenditures and marginally increasing revenue will mire Riverside County in a structural budget deficit going into the 2016- 17 fiscal year, necessitating a "cap and hold" spending strategy and a draw- down on reserves, according to a report that the Board of Supervisors will review today.

The board is scheduled to hold its final budget hearings this week before tentatively approving an appropriations blueprint for the fiscal year that begins July 1. Formal adoption of the budget is not likely until late July.

County CEO Jay Orr and Executive Office staff produced a 570-page report detailing proposed expenditures and providing comparisons to prior years. The analysis offered a sobering picture of the county's challenges, revealing how public safety obligations and rising legal liabilities continue to strain the budget, leaving virtually no room for increasing commitments to "general government" functions.

Discretionary revenue, comprised largely of property tax receipts, is projected to grow only 2 percent -- from $678 million to $735 million -- between the current and next fiscal year.

At the same time, pressures are building to fund positions for the East County Detention Center in Indio, slated for completion in three years, cover ballooning detention health expenditures and satisfy cost-of-living adjustments, merit pay increases and other benefits guaranteed to many of the nearly 23,000 employees under collective bargaining agreements.

"The key will be to cap and hold overall discretionary spending at current levels," Orr said. "Most departments have been able to maintain service levels with flat discretionary funding, in large part because of improved business practices. We have made a substantial effort ... to achieve efficiencies and better outcomes. That effort must continue and expand to touch every department."

• Previous: Report: Riverside County Must Draw Down Reserves to Support Operations

The 2016-17 budget gap is estimated to be $61 million and will require every agency to exhaust its internal reserves -- after which the board may have no other option but to drain roughly $30 million from the general reserve pool. Executive Office staff anticipated that depleting reserves over the next three fiscal years will be unavoidable, unless other forms of cost-cutting are implemented. The report contained no mention of layoffs, though almost any belt- tightening method can be utilized by the board.

Supervisors Marion Ashley and Kevin Jeffries have expressed an aversion to chipping away at reserves after the last four years of stashing away rainy day money following the Great Recession, when the county narrowly avoided a cash crunch.

The current reserve pool is $201 million.

Staff identified other actions that will help ease the financial burden, including eliminating a number of vacant unfunded positions, which presently number 7,268, as well as keeping new hires to a minimum and "holding firm on labor negotiations" with unions.

Multiple departments put in requests earlier this year to procure funding commitments over and above their baseline spending limits. Public safety agencies sought the largest boosts, leading off with the Riverside County Sheriff's Department, which requested $51 million in increased appropriations. The board already agreed to provide half that amount.

The District Attorney's Office sought an $18.9 million infusion, but the Executive Office is recommending only $6 million be disbursed.

The Department of Public Social Services asked that its general fund commitment be upped by $11.2 million. EO staff said that the county can only afford $4.5 million.

Comparatively smaller amounts were requested by other agencies. The Department of Animal Services would receive more than it initially sought -- $4.4 million as opposed to $3.6 million -- under the Executive Office's plan.

Higher detention health expenses remain a looming concern. According to the budget report, unofficial estimates continue to put the figure at $40 million in 2016-17.

The county settled a lawsuit toward the end of 2015 that stemmed from allegations that jail medical staff were inattentive and inconsistent, and that the county's correctional system lacked a sufficient number of qualified professionals able to see to the psychological and physical health needs of inmates. As part of the federal consent decree to which the plaintiffs and defendants stipulated, the county must hire more healthcare workers and expand services.

The total proposed budget for 2016-17 is $5.43 billion, compared to $5.34 billion in the current fiscal year. Nearly half of the money in the budget will emanate from state and federal sources to fund mandated programs, while other components include fees, special district revenues, capital project revenues, sales and use taxes.

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--City News Service/Patch file photo