Increasing labor costs and flat revenue require Riverside County to adhere to a conservative spending plan for the rest of the current fiscal year and into 2014-15, according to a report that the Board of Supervisors will review Tuesday.
The Executive Office's midyear analysis of county finances shows that most agencies are on track to end 2013-14 in the black, but pressure on the treasury remains an ongoing concern as the county faces an estimated $77 million in higher labor expenses over the next year.
The rising costs stem from collective bargaining agreements reached with labor unions that represent more than 90 percent of the county workforce. A sheriff's recruiting drive -- undertaken at the Board of Supervisors' direction -- to add 500 deputies to the county payrolls is also lengthening the expense column, according to the midyear report.
The Sheriff's Department and the Riverside County Regional Medical Center projected the largest deficits by yearend -- $35 million for sheriff, and $84 million for the medical center. The latter is in the early stages of a major restructuring that county officials hope will curtail cost overruns and make the facility more competitive.
The red ink serves as a reminder that the county must stick to a disciplined spending regimen, county CEO Jay Orr said.
"My office has tempered our revenue projections for the next four years," Orr said in the report. "Escalating labor costs and other financial challenges will continue to outpace ... modest revenue growth."
Orr pointed out that assessed property valuations are predicted to increase a meager half-percent this year, leaving property tax income virtually unchanged, while sales tax revenue and receipts from building permits are likely to be "flat."
The county's discretionary income at midyear was projected to be $625 million, compared to $591 million in fiscal year 2012-13. Though the modest increase was encouraging, county officials cautioned that future revenue growth remained tied to uncertain variables, such as the length and strength of the real estate market recovery.
Orr said non-public safety agencies will have to absorb labor cost increases through the end of the current fiscal year, though there would be exceptions. According to the report, the Public Safety Enterprise System had recorded $500,000 in excess expenditures because of problems getting the network up and running.
PSEC replaced the county's analog radio system with a digital spectrum that allows sheriff's deputies to broadcast from remote locations regardless of line-of-sight challenges or other coverage blind spots.
The Clerk of the Board and the Office of the Registrar of Voters were facing similar overruns. The ROV's has to do with a March 25 special election called by the governor to fill a senate seat left vacant when the incumbent unexpectedly resigned. The clerk's deficit stems from unanticipated retirement outlays, according to the report.
Figures showed the county is holding about $194 million in reserves.
According to documents, agencies projected to end the fiscal year with money to spare include the Office of the Assessor-Clerk-Recorder and the Office of the Treasurer-Tax Collector.
The first hearings on the 2014-15 fiscal year budget are tentatively set for April 2.
– City News Service.