Board Contends with Deficit as Fiscal Year Draws to a Close

RIVERSIDE (CNS) - As the current fiscal year comes to a close,
unanticipated revenue shortfalls in Riverside County government require roughly
$60 million in reserves to be allocated to keep the budget balanced, according
to a report that the Board of Supervisors will review today.
  

``The county continues to face a variety of structural and operational
fiscal pressures,'' county CEO Jeff Van Wagenen said in the third-quarter
budget report due for consideration during the board's policy agenda Tuesday.
  

``Rising labor costs, uncertainty surrounding state and federal
funding, increasing demand for core services and ongoing infrastructure
investment needs are placing additional strain on available resources,'' Van
Wagenen added. ``As fiscal pressures continue to emerge, maintaining fiscal
discipline will be critical to sustaining core services and aligning available
resources with priorities.''
  

The 94-page third-quarter report indicated a range of expenses would
need to be met before the end of the fiscal year on June 30, or multiple
agencies would be in the red. The Executive Office recommended the board
approve drawing down the reserve pool by about $60 million to cover the
overruns.
  

Those include higher costs tied to indigent defense contracts,
overhanging expenses from last November's special election, which left the
Office of the Registrar of Voters in a deficit, higher-than-expected labor
costs in the District Attorney's Office and Department of Animal Services and
under-funded projects handled by the Department of Facilities Management.
  

The Executive Office requested the board ``clean up'' the imbalances
before the start of hearings on the proposed 2026-27 budget, which were slated
to get underway Monday.
  

The third-quarter report indicated revenue streams had expanded in a
few places, principally property taxes, which have increased $19.8 million
above the amount projected at the outset of the fiscal year. That will
translate to a 3% rise in discretionary income -- $1.36 billion instead of
$1.31 billion -- by the end of 2025-26, figures showed.
  

The county's composite reserves should reach $650 million at the end
of the current fiscal year. They had been calculated to crest at nearly $700
million, but to plug continuing budget holes, that number no longer appeared
likely. The reserve pool total had been projected last June to top out at $655
million in 2025-26, so the latest estimate is more or less on target.
  

The board formally approved the budget, totaling $9.98 billion, on
June 24, 2025. The supervisors further approved a tentative hiring freeze for
most agencies to put the brakes on deficit spending.
  

Payrolls continue to consume half of outlays. The county employs
nearly 26,000 people in more than 40 agencies on a regular or rotating
temporary basis.
  

More than two-thirds of the county budget is composed of programmed
spending, including federal and state earmarks for specific uses, along with
grants and related external source revenue. The board has little control over
those dollars.

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