Riverside CFO: County will have balanced budget

Riverside County government will end the 2013-14fiscal year with a balanced budget, but fiscal challenges lay ahead for severalagencies — with the county hospital ranking highest on the list, officialssaid today.

“They’re looking at a deficit of $50 to $80 million next year,” countyChief Financial Officer Ed Corser told the Board of Supervisors during areport on county third-quarter finances. “We can use general fund money tomake the hospital whole, if that’s the desire of the board.”

More than 90 percent of the Riverside County Regional Medical Center’sincome originates from state and federal sources. County general fundappropriations amount to about 5 percent of the Moreno Valley facility’sbudget.

RCRMC Director Doug Bagley told the board last month that low Medi-Calreimbursements and rising costs in other programs were impacting the hospital’sledger.

Supervisor John Tavaglione pointed out today that county agencies,specifically the Departments of Mental Health and Detention Health, had beenpaying reduced rates or next to nothing for hospital services, leaving themedical center to effectively subsidize those agencies while losing money.

“They’re not paying their fair share,” Tavaglione said. “Issues likethis need to be addressed.”

Corser said many of the hospital’s patients are indigent and slow to paytheir bills, making revenue collection a long-term and uncertain process.

The board did not signal interest in covering the hospital’s shortfallwith general fund appropriations. However, the Executive Office vowed tocontinue looking at ways to rein in its costs.

Tavaglione worried about the facility’s ability to compete for federalfunds with the full implementation next year of the Patient Protection andAffordable Care Act, better known as “Obamacare.”

The fire department was also contending with persistent red ink.According to the budget report, county fire Chief John Hawkins had madeprogress containing costs but would not be able to close a $4.9 million gap inthe agency’s budget before July 1, the start of the next fiscal year.

At the the Executive Office’s recommendation, the board approved a $3.9million appropriation to offset the department’s expenses, some of which stemfrom the agency’s conversion to an all-digital public safety communicationsystem that the county has been working to bring into operation over the pastfive years.

Corser told the board Sheriff Stan Sniff was expected to close thefiscal year with a balanced budget for his department, after starting offnearly $10 million in the hole.

Several years ago, the board enacted a policy to bulk up a fund strictlyset aside for public safety reserves. Supervisor Marion Ashley told Corserand county CEO Jay Orr today that more work should be put into expanding thecounty’s economic uncertainty reserves, which have remained below $150 millionafter peaking at $500 million in 2007.

Other board members agreed that gradually boosting reserves to $250million would be a wise decision.

“All we need is a little blip, and we’re in trouble again,” SupervisorJeff Stone noted.

Orr said charting a course based on “conservative fiscal principles”would be in the county’s best interest going forward.

“Even with the revenue increases forecast, balancing the budget willcontinue to require taking the long view with prudence and restraint,” hesaid. “We must remain grounded and pragmatic.”

The CEO noted that cuts in services and layoffs are possible to keep thecounty budget structurally balanced.

“It will be difficult, but necessary,” he said, without citingspecific figures of potential layoffs.

According to the budget report, the regional economy is showing signs ofa gradual recovery, dovetailing with improving economic conditions throughoutthe state.

Positives include a lower unemployment rate, thanks largely to hiring inthe leisure and hospitality sector, as well as increases in sales taxes andincreases in the number of building permit applications.

According to the report, sales taxes in unincorporated communities areup 9 percent compared to a year ago. County officials attributed most of thejump to activity tied to construction of the 250-megawatt Desert Sunlight andGenesis solar power plant near Blythe.

Building permit applications surged 26 percent in the most recentquarter compared to a year ago, bringing in $3.4 million in permit fees, thereport said.

County officials expected a .15 percent drop in the county property taxassessment roll, reducing discretionary revenue by roughly $3 million in thecurrent fiscal year. Despite the decrease, discretionary revenue was likely totop out at $587 million by July 1 — around $17 million more than predictedwhen the budget was approved last July.

This story was written by Paul Young, City News Service