County Facing Massive Layoffs And Spending Cuts

Double-digit spending cuts and hundreds of layoffs are possible to close an estimated $80 million gap in Riverside County's budget next year, officials told the Board of Supervisors today.

"There will be cuts across the board,'' assistant county Executive Officer Jay Orr told the board during a first-quarter budget report on the 2011- 12 fiscal year. "Our (tentative) plan is prudent and cautious.''

Orr, along with Chief Financial Officer Ed Corser, emphasized that revenue challenges will demand more fiscal belt-tightening as 2012-13 approaches.

Officials highlighted how ongoing sluggishness in the housing market, hesitant consumer spending, lower investment returns and unpredictable state funding will all bear on the county's financial health going forward.

Interim county Executive Officer Larry Parrish said there were "tepid'' signs of an economic recovery, but the recession's "massive lingering effects'' would be difficult to overcome.

"We need to pull expenses down to revenue levels, as there is no sign revenue will grow significantly in the near-term,'' the CEO said.

According to Corser, moving the county toward a balanced budget in 2012- 13 will require a nearly one-third chop in spending for non-public safety departments, while public safety agencies will need to implement cuts amounting to 3 percent.

Supervisor John Tavaglione asked about the approximate number of layoffs necessary to effect the deficit-reduction plan, and Orr replied that the number could be as high as 650.

The county has issued about 300 pink slips since 2007, and roughly 1,200 positions have been phased out through attrition, according to Corser.

According to the budget report, assessed valuations of residential properties in the county were expected to decline for the third straight year. However, the aggregate drop in 2011-12 would be a relatively small 1.5 percent.

Property tax revenue was expected to come in around $264 million -- $2 million less than previously estimated.

Retail sales tax revenue during the April-to-June quarter -- the most recent available -- rose countywide by 9.1 percent compared to the same period a year earlier. But the Executive Office cautioned that most of the uptick was the result of a jump in fuel prices, and a trend toward higher receipts was doubtful.

One of the Executive Office's biggest concerns was whether there would be adequate appropriations from the state to cover the cost of "realignment.'' Under Gov. Jerry Brown's plan, which the Democrat-controlled Legislature approved through a series of bills sent to the governor between April and June, programs previously managed by the state were reassigned to counties.

Changes included making counties responsible for juvenile detention, adult parole, child welfare, foster care and dependent adult care services.

According to the Executive Office, the state guaranteed realignment funding for the current fiscal year, but what happens after that remains to be seen. California Controller John Chiang recently announced the state's anticipated revenue for 2011-12 was already $700 million below target.

Supervisor Jeff Stone warned that one component of realignment, AB 109, was underfunded by as much as 70 percent. AB 109 shifted responsibility for so- called "non-violent, non-serious'' felons to counties.

Offenders sentenced to less than three years are to be incarcerated in county detention facilities. However, because of penal code technicalities, some convicts are receiving upwards of 14 years in a county jail, taking up limited space and resources, according to Sheriff Stan Sniff.

"I don't see any way we're going to have a soft landing,'' Stone said. "All variables point to a crash landing ... We need to take into account the AB 109 impacts. They will be significant and devastating ... We could end up $122 million in the hole.''

The Executive Office estimated the county's current-year discretionary revenue would top out at $580 million, about $4 million less than originally predicted and $25 million below the 2010-11 receipts.

The CEO submitted a tentative multi-year fiscal blueprint that combined anticipated savings from new labor contracts, marginally higher revenue and "one-time'' money to eliminate the county's structural budget deficit.

Corser proposed restructuring several departments, as well as borrowing internally and replacing county-operated materials suppliers with outside vendors to reduce expenses.

He did not recommend tapping reserves. According to the Executive Office, the county has roughly $157 million in its reserve pool, about $30 million of which is restricted. The county's reserves are less than half what they were in 2007.

According to the report, the sheriff's and fire departments, registrar of voters, Department of Environmental Health and the Medically Indigent Services Program are projecting shortfalls adding up to $12 million in the current fiscal year. But Corser believed the overages could be pared down without difficulty.

"I hope we can get through this year and the next without crippling functions and (initiating) layoffs,'' said board Chairman Bob Buster. "We cannot dilly-dally any longer.''

The Executive Office will be presenting the board with a comprehensive action plan in January, according to Corser. --Paul Young, City News Service