Trouble may be ahead for future budgets
The current Riverside County budget is expected to end the year (June 30) with a $22 million deficit. County Executive George Johnson shared the news with the Board of Supervisors at the meeting Tuesday, May 7.
He also noted that the deficit will grow next year, FY 2019-20, without significant and hard decisions.
The county has reserves of nearly $234 million, which will drop to $212 million after covering the projected deficit. This is slightly greater than the board’s policy to maintain a reserve level of at least 25 percent of the operating budget.
But Johnson and Chief Financial Officer Don Kent stressed that the board could not accept this solution complacently. “The projected shortfall will continue unless we take serious corrective action,” Kent warned the board.
The county’s economic consultant Robert Kleinhenz, executive director for research at the University of California, Riverside’s Business Center for Economic Forecasting and Development, said he expects revenue growth to continue, “subdued, but sustained growth.”
“Our expenditures are outpacing that modest growth in revenue,” Johnson alerted the board. County departments and agencies have submitted budget requests that are $46 million in excess of the projected income.
Then Kent added that this was before any of the current labor negotiations have been completed.
The areas creating the budget problems are general assistance, pensions, health clinics and prospective labor negations.
This FY, the state transferred responsibility for general assistance to counties. Riverside County has underestimated its costs. At the beginning of the FY, the county planned on $2.2 million. By June 30, the county will have used $14.4 million when in January, the estimated total was $10.4 million. Next year’s costs will continue to grow.
Local pension costs have been growing and growing for several years. Riverside County expects its payments to CalPers to be $20 million more in FY 2019-20.
The University Health Clinics are operating at a loss. This year they totaled $16 million. The university assures county officials that it is taking steps to increase revenues.
Finally, the county has contract negotiations with several labor groups to complete this FY. The recent contract with Laborers International Union of North America, Local 777 will cost another $3.6 million next FY.
Other programs that will place demands on the next budget are the county’s capital improvements, staffing of the new John Benoit Detention Center and new equipment for the Registrar of Voters.
The board unanimously accepted the executive’s Third Quarter budget report. But in preparation for the 2019-20 budget, Chair Kevin Jeffries (1st District) said, “The board will make the determinations on which departments receive the cuts. Not all departments are created equal. Some have a higher priority for public service than others do.”
He also noted that the budget hearing on June 10 would be in the evening to afford people who work an opportunity to speak to the FY 2019-20 budget issues and concerns.