After the first quarter of fiscal year 2013-14, the Riverside County financial condition continues to improve very slowly. However, several very dangerous issues are on the horizon before the fiscal year ends June 30, 2014.
The most egregious is the deteriorating finances of the County’s Regional Medical Center in Moreno Valley.
Its current cash storage is already $86.1 million, according to County Executive Jay Orr. The center’s projected operating deficit is more than $50 million.
Just last week, the Board of Supervisors approved an agreement with Huron Consulting Services to advise the hospital management on potential savings and efficiencies.
In a report submitted last month, Huron said it has identified several changes that would save millions.
For example, pharmaceutical discounts, which have not been implemented, could save $8 million to $10 million annually.
The county also has hired an interim hospital CEO to oversee needed changes to ensure the institution’s survival and the assistance it provides the community.
The Sheriff Department’s budget may also substantially degrade the county finances. At this point, the sheriff’s budget projects a $39 million deficit. The preponderance of this shortfall is attributable to the sheriff’s need to expand staffing. Earlier this year, the Board of Supervisors directed the sheriff to increase patrol staff in the unincorporated areas such as the Hill.
The board wants the sheriff’s office staffing to return to one deputy per 1,000 residents. Just a year ago, because of budget reductions, the ratio had dropped to nearly three-quarters of a deputy per 1,000 residents.
The slowly expanding jail situation also mandates more deputies and this staff also is growing. Between the two initiatives, the sheriff’s budget may need another $35.7 million, more than 90 percent of the possible underfunding.
The executive office has not increased the sheriff’s budget allocation yet, since these estimates may ultimately be less. For example, last year, at mid-year, the staff projected a $10 million deficit in this budget. By the end of the fiscal year, a $3.7 million savings was achieved because the rate of new staffing did not meet projections.
“We have an agreement with the sheriff that as they need money to pursue and to implement policy changes you made, we will provide the money,” County Chief Finance Officer Ed Corser told the board last week. “Otherwise, we might have to unnecessarily cut other departments.”
Also contributing to this shortfall is the county’s agreement with labor unions. In return for changes in pension, particularly for new employees, salaries have increased.
While Orr plans to have a mid-year budget review available in February, he is already planning for the 2014-15 budget.
“Achieving structural balance within cautious revenue assumptions is essential to laying a sound foundation for the county’s future,” Orr said in his report to the board. “Consequently, non-public safety departments are expected to absorb current and future labor-cost increases.”
State’s revenues are ahead of forecasts
California’s economic recovery continued to bolster revenues in October for the fiscal year July 1, 2013 through June 30, 2014.
For the four months since July 1, tax receipts have run ahead of projections while disbursements have been generally in line with estimates.
“State revenues are more than $600 million ahead of projections following a second straight month of strong collections,” said State Controller John Chiang in a press release Nov. 8.
“Importantly, because higher-than-expected payroll withholdings and estimated payments are driving the good news, it signals that Californians are beginning to earn more, work more, and the Great Recession is becoming a faint image in the rear view mirror …”
October revenues exceeded the June budget estimates by $510 million or 10.7 percent. Personal income taxes were $439 million or 11.8 percent, also greater than initial projections.
Income taxes are about two-thirds of the state’s total revenue.
Higher total income, driven by job growth, has supported the tax base, while capital gains resulting from this year’s sharp rise in stock prices have provided a special boost.
Technology companies, which favor California, have been in the forefront.
October saw both the effects of last year’s income gains and this year’s expected increases.
Payments linked to the filing of final returns for 2012 exceeded estimates, while refunds were lower. Reflecting higher anticipations for 2013 earnings and tax obligations, both estimated taxes and tax withholding were ahead of October’s forecasts.
More jobs, higher stock prices, and rising home values drove consumer spending. Consequently, sales tax receipts were $53.2 million, or 7.4 percent ahead of budget estimates.
Of the three major revenue sources, only corporate taxes missed estimates during the month, with a shortfall in tax receipts of $16 million, or 8.9 percent.
Through Oct. 31, total General Fund receipts have surpassed budget forecasts by $632 million, or 2.5 percent.
Personal income tax receipts have led that outperformance.
On the disbursement side, outlays were less than expected in October, including $625 million linked to state-mandated educational reform (Common Core), along with other education bills.
These funds will be paid in November instead of October.