County's Revenue Slightly Higher, But Budget Picture Still Gloomy

RIVERSIDE - Revenue flowing into Riverside County coffers was higher than expected in the last fiscal year, but even with the extra dollars, not all departments are operating in the black and more budget cuts are coming, according to a report to be reviewed tomorrow by the Board of Supervisors.

The county ended the 2010-11 fiscal year with $605.7 million in discretionary income -- roughly $12 million more than what had been projected, according to the Executive Office, which will be asking the board to give final approval to the county's 2011-12 budget blueprint.

A working budget was approved by the board in June, two weeks before the start of the new fiscal year. Executive Officer Bill Luna, however, wanted to defer formal ratification of the budget until now so that county officials would have a better understanding of the fallout from the state's actions to close its multibillion-dollar deficit.

''While the county's budget reflects the impact of state budget cuts and includes adjustments for anticipated realignment involving state corrections reform, the source of ongoing funding for these changes is still unclear,'' Luna wrote in an introduction to the final draft of the budget.

''The state has not released firm plans for other realignment elements, including public social services,'' he wrote. ''Whether the state will fully fund realignment costs is unconfirmed, so we must limit our expenses to available funding.''

Luna predicted that the county would not achieve structural balance in 2012, as had been hoped, and emphasized the need for department heads to continue to enforce fiscal discipline.

The county CEO pointed to research by Cal State Fullerton economists showing the Inland Empire's economic slump will persist, with marginal job growth and flat or declining property tax receipts -- the county's main source of discretionary income -- over the next two years.

''What is certain is the significant and persistent gap between spending and the revenue available to support it,'' Luna said.

He proposed a hiring freeze similar to the one implemented in 2009, along with borrowing and payroll reductions, as possible methods of paring down a ''distressing'' anticipated $80 million shortfall next year.

Public safety agencies eat the largest share of general fund revenue, and all started the current fiscal year in the red until the board allocated reserve funds and ''one-time'' money to shore up their budgets.

Partly because Proposition 172 safety sales tax revenue to the county was less than expected and partly because personnel costs have risen, the fire and sheriff's departments' budgets are still short.

The fire department has an overage of $4.8 million, while the sheriff's gap stands at $40 million.

The new city of Jurupa Valley is contracting with the sheriff's department for law enforcement services, which should close most of the agency's gap. But county officials noted that the city, which has already received a $2 million loan from the county, may struggle to meet its financial obligations.

Fire Chief John Hawkins has vowed to squeeze savings wherever he can.

Luna cautioned against further draw-downs on the county's reserve for economic uncertainty, which has declined to $125 million -- less than half of what it was in 2007.

The aggregate 2011-12 budget is around $4.78 billion, compared to $4.73 billion in 2010-11.