Riverside County's deficit in the next fiscal year will be about $10 million more than estimated, while increasing labor and pension obligations, along with the cost of building a new jail, will require "creative thinking" to balance the budget in future years, the county's chief financial officer told the Board of Supervisors today.
"We need to keep up with the (spending) curve that's before us," CFO Ed Corser said during a third-quarter report on the 2011-12 fiscal year. "Instead of across-the-board spending cuts, we need to look at the priorities of the Board of Supervisors and come up with a plan (for the years ahead)."
Corser noted that the 2012-13 budget deficit estimated in March -- $13 million -- will be closer to $23 million because of an expected 2 percent drop in property tax revenue. The county's property tax receipts have declined $230 million since 2008.
Corser acknowledged predictions from economists who made presentations to the board today for low single-digit revenue growth between 2013 and 2017. But he said any strengthening of the balance sheet has to be weighed against a growing list of greater financial obligations. The budget report stated that a lower rate of return on county investments managed by the California Public Employee Retirement System will require the county to shift more general fund dollars to make up the shortfall. Recently negotiated collective bargaining agreements with several public sector unions -- including the Service Employees International Union, the Laborers' International Union of North America and the Riverside County Deputy District Attorneys' Association -- will saddle the county with increased salary and benefits costs totaling $380 million over the next four years, according to officials.
Corser pointed out that the county received a $100 million state grant in support of construction of a new jail over the next six years. The county has to come up with matching funds for the project, which is expected to be located east of Banning. Operational costs will be in the tens of millions annually.
"We need to stop using one-time money and address these things up front, instead of year after year coming in and trying to chase the problem," Corser said. "We need to get ahead of the problem."
He said the Executive Office will organize meetings with department heads beginning in November to identify ways of bolstering the county's bottom line without resorting to blanket cuts.
"We need some real creative thinking, and it has to be serious and sincere," the CFO said.
County Executive Officer Jay Orr said departments have to be "more efficient and more lean."
"We do anticipate a reduction in the workforce in the coming year," he said.
The Executive Office predicts up to 200 layoffs may be necessary to cut costs and close the county's structural budget gap. Supervisor Jeff Stone believes 500 to 1,000 positions should be chopped to make the government more proportional to the population it serves.
"If we don't turn around and do something about our deficit, no one is going to do it for us," said Supervisor Marion Ashley. "Growth is going to be sluggish, and that augurs bad for future budgets. We have to strive this year and next to structurally balance our budgets. If we take action now, it will put us in a position to grow through these economic doldrums."
According to the Executive Office, three agencies are likely to report red ink on their budgets come June 30, the end of the current fiscal year: The Department of Animal Services, the Fire Department and the Office of the Registrar of Voters. The latter's $1.8 million overage is roughly half of its budget and the result of state withholding, according to county documents.
The report indicated the board may have to address the funding gap to prevent operational deficiencies going into the Nov. 6 general election.
Animal services' $325,000 shortfall was tentative and stemmed from a personnel lawsuit, according to the report. County fire's $2.7 in red ink is a carryover from the 2010-11 fiscal year.
Fire Chief John Hawkins told the board in March that he expects the department will head into 2012-13 with a $6.5 million deficit because of spending cuts planned as part of the county's deficit reduction strategy. He said a desert station will have to be shuttered, a Jurupa Valley station will be partially deactivated and about 24 jobs may have to be slashed to reduce costs.