RIVERSIDE – Cost-cutting that includes downsizing the workforce by 1 percent will be almost inevitable in Riverside County government over the next fiscal year to save money amid economic uncertainty, county officials told the Board of Supervisors Tuesday.
“We cannot put off unpleasant decisions,” Riverside County CEO Bill Luna told the board during a discussion of the 2008-2009 midyear budget report. “Anything we don’t do now, we will have to revisit in future years. All departments need to conduct a careful evaluation of how we spend and what we spend on.”
In its budget report, the Executive Office indicated 50 workers will be laid off from various county departments by June, and another 150-200 positions likely will be eliminated in the 2009-2010 fiscal year, which starts July 1, to prevent budget overruns.
The county’s chief financial officer, Paul McDonald, described the county’s current and impending budget challenges as “a little bit scary.”
Departments already showing deficits in the current fiscal year include the Public Defender’s Office and the fire and sheriff’s departments, according to the mid-year report.
In some cases, state and federal funds the agencies were expecting to cover expenses did not come through. In the case of the sheriff’s department, revenue shortfalls have occurred due to cutbacks by cities that contract for law enforcement services, as well as overtime expenses and less sales tax revenue that would have otherwise gone to public safety.
McDonald said the county is drawing on its $108 million economic reserve fund to fill some gaps. He said the county also has the ability to borrow internally from its $5 billion investment pool. But much of that money is tied up in trust.
McDonald said the county is “drawing (cash) reserves down rapidly,” and if non-budgeted expenditures are not reined in, “we could find ourselves very close to a zero cash position by April.”
He said the county could sell bonds to raise revenue, but that would risk a reduction in the county’s credit rating.
The local budget situation is seriously complicated by the state’s financial crisis, officials told the board.
The California State Controller’s Office has signaled it will defer releasing more than $40 million to Riverside County to cover the cost of state-mandated programs administered by the county this fiscal year — in addition to $120 million that will be withheld in the 2009-2010 fiscal year, according to McDonald.
Child welfare services, public assistance and Medi-Cal programs will likely be impacted, unless the county makes up the difference, the Executive Office reported.
“There has to come a time when we draw a line in the sand and say, `We can’t do it anymore. It’s not going to be business as usual. We don’t receive the money, we don’t provide the services,”‘ said board Chairman Jeff Stone.
Supervisor Roy Wilson worried about potentially laying off social service workers when “the public needs these services more profoundly than they ever have.”
Supervisor Marion Ashley said compensating for a loss of state funding could be too great a burden for the county to carry.
“We could be flat broke,” he said. “It’s a matter of survival.”
Luna said budget cuts totaling 20 percent will be necessary through 2012, with the largest cut — 10 percent — occurring in the next fiscal year.
To make up for an estimated $90 million shortfall in 2009-2010, the county will trim payrolls and dip into its reserve fund.
Departments where layoffs are expected include Animal Services, Child Support Services, Planning and Public Health. The latter is slated to slash the highest number of positions — 50.
The Executive Office said, like all other county departments, the District Attorney’s Office and the sheriff’s department will each need to reduce spending 10 percent.
Supervisor John Tavaglione said even though the board recognizes public safety as the county’s number one priority, “everyone is going to have to share the pain on this.”
“I don’t want to see impacts on the streets, and I don’t want to see criminals let loose,” Tavaglione said. “But there are other areas I’m convinced can be cut. We need to insist on that as a unanimous board.”
The supervisor reminded listeners that the D.A.’s prosecutorial staff has expanded 83 percent in five years, and the number of sheriff’s deputies has increased 39 percent during the same period.
“I’d challenge anyone to say this board has not been supportive of public safety,” Tavaglione said.
Roughly 20,000 people work in county government.
The mid-year report projects that property tax assessments will decline nearly 6 percent in the next fiscal year, slicing $27 million from the county’s largest general fund revenue stream, according to the Executive Office.
Median home values are at a six-year low, and are down 96 percent from their peak in 2006. With roughly 1 in every 71 households in default on mortgages, Riverside County has the fourth-highest foreclosure rate in the state, according to Irvine-based RealtyTrac.
Sales tax revenue is expected to trail off, dropping to $30 million in the next fiscal year, compared to a projected $36 million this year, Executive Office data shows.
Overall, the county is expected to have $657 million in discretionary income next year, compared to an estimated $712 million in the current fiscal year.
The 2008-2009 fiscal year county budget is $4.84 billion, but a large part of that is comprised of state and federal “pass-through” funds, according to county officials.
The federal stimulus bill being debated in Congress could help ameliorate the county’s financial condition, officials said.