RIVERSIDE – Riverside County could end the 2012-13 fiscal year $30 million in the red with costs exceeding revenue available to three county agencies, prompting one supervisor today to vow to do ”whatever it takes” to keep the county’s budget balanced.
During a first-quarter update on county finances presented to the Board of Supervisors, Chief Financial Officer Ed Corser warned of another budgetary cycle where some county agencies might be asked to wrestle with cutbacks in order to keep others whole.
”Our revenue next year is forecast to be essentially flat,” Corser told the board. ”Costs have to be absorbed somewhere.”
According to the budget report, the sheriff has estimated a $9.2 million overage in his budget, due in part to the recruitment of 50 additional deputies and costs associated with the Public Safety Enterprise Communication System, a new voice and data wireless network that will enable enhanced digital transmissions.
Fire Chief John Hawkins is expecting a $5.7 million deficit because of changes in fire services contracts with area cities, as well as the increased expense of operating the PSEC, according to the report.
The document noted that the Riverside County Regional Medical Center in Moreno Valley was estimating at least a $14 million shortfall by the end of 2012-13. Negotiated benefit increases for hospital personnel and unpaid bills from emergency room visits and uninsured medical care were cited as reasons for the red ink.
”We have a structurally balanced budget, and we want to keep it that way,” Corser said. ”We need to deal with these issues early. Otherwise, they fester and become a bigger problem.”
The CFO said that, to avoid delving into the county’s $155 million in reserves, more ”one-time” money will be needed to cover whatever lingering departmental deficits there are come May.
”We continue to be in this situation because revenue has not increased,” Corser said, adding that while there are signs of a private sector comeback from the Great Recession, the public sector’s outlook remains ”iffy.”
”Government goes into the tank last and comes out of the tank last. We’ve dropped to the bottom,” Corser said. ”We can use any revenue growth we have to hold fast.”
Assessor-Clerk-Recorder Larry Ward predicted a marginal half-percent increase in the value of the property tax roll in 2013. Property taxes accounts for more than 80 percent of the county’s discretionary income.
A team of Cal State Fullerton economists, who provide the county with national, state and local economic forecasts annually, project property tax receipts will expand grudgingly, rising 2 percent in 2014 and 4.3 percent in 2015.
In the budget report, county planners expressed concern over the growth in general labor costs, which will begin steadily rising in the next fiscal year and continue until they total $188.3 million by 2015-16. About 20 percent of that amount must be covered with general fund revenue. The increases stem from collective bargaining agreements approved by the board over the last 18 months.
The report also pointed out that county contributions to the California Public Employee Retirement System will be rising — 2 percent for each general employee, and 3 percent for each public safety employee. The increases are to make up for CalPERS’ investment losses over the last several years.
Both Corser and county CEO Jay Orr said uncertainties remain about what impact the federal Patient Protection and Affordable Care Act — known as ”ObamaCare” — will have. According to Orr, a committee will be formed to draw up a plan for how the county will meet all new law’s regulatory requirements, which go into effect on Jan. 1, 2014.
According to the report, expenses tied to the Indio Jail expansion continue to swell, with around $25 million in additional funding needed to complete the project by 2015, and $50 million in annual operating revenue needed thereafter.
Supervisor Marion Ashley agreed with the Executive Office that drawing down reserves to cover any gaps was unacceptable.
”We need to strive to maintain a structurally balanced budget,” he said. ”We should do whatever it takes, make cutbacks and reductions this year and the year after that.”
The budget report identified a few positives, including a 9 percent bump in sales tax receipts countywide, refinancing opportunities on county debt, thanks to lower interest rates, and the passage of Proposition 30, which guarantees long-term funding from the state to counties for assuming more public safety responsibilities under the governor’s 2011 realignment plan.