“As of the FY 2023/24 First Quarter Adjustments Report, the county continues to maintain a strong fiscal standing,” was the Executive Office’s summary of Riverside County’s current budget as of Sept. 30, the end of the first quarter of fiscal year (FY) 2023-24, which ends June 30, 2024.

Not only are revenues expected to grow this year, but FY 2022-23 ended with a larger surplus than was expected. The revenue forecast is $1.175 billion and the net county costs are planned for $1.25 billion, yielding a $50 million surplus at the end of the fiscal year.

The first quarter review was presented to the board of supervisors at its Nov. 28 meeting. The surplus from previous years will be $624 million, an unexpected increase of $69 million, 12%. County Executive Jeff Van Wagenen explained that there were two unexpected causes for the larger than forecast reserves balances — larger savings and more revenue.

Overall, county costs were lower than expected because of “salary savings achieved countywide, stemming from ongoing challenges with staff retention and recruitment.” This difference was nearly $42 million.

Secondly, FY 2022-23 revenues were about $125 million greater than originally estimated. The largest increase was $48 million in interest. The final property tax collections were $37 million greater than projected, and sales and use taxes were $12 million more. The actual revenues were $37 million greater than the estimate during the FY 2023-24 budget preparation.

While the final review of FY 2022-23 resulted in a surprising increase in reserve balances to $624 million, the initial review of FY 2023-24 projects revenues to continue to increase. In the 1st quarter review, Van Wagenen’s staff projects revenue from property taxes, interest, Motor Vehicle in Lieu and Residual Assets to be nearly $32 million greater than the June projections.

The current reserves balance of $624 million is greater than the county’s two benchmarks for emergencies. Board policy is 25% of total discretionary revenue which would be $285 million of the current budget. The other benchmark from the Government Finance Officers Association is two months of operation costs or $612 million.

The county does project a slight increase in the unemployment rate, from 4% in 2022 and 5% in 2023 to about 5.6% next year. County population is expected to continue to grow, attracted by increases in the affordable housing market.

Besides the overall assessment of the county’s economic situation, Van Wagenen did recommend several budget adjustments. Most of these were approved at board meetings earlier this fiscal year. For example, at the Oct. 31 meeting, the bboard approved $1.4 million for five more positions for the registrar of voters and printing costs. At the Nov. 7 meeting, the supervisors approved interpreters for board meetings and that will cost $96,000.

However, Van Wagenen did recommend two specific changes in the report. The first was $18,412 to maintain the county’s required one-third of the operating costs for the Local Area Formation Committee. This year, the county obligation is $368,144 and only $349,732 was included in the June budget.

The second increase was $550,000 to Facilities Management for litigation settlement fees.

After these recommended adjustments, the General Fund Appropriations for Contingency will have a remaining balance of $17.3 million.

The 2nd Quarterly fiscal review is expected at the end of February 2024.