COUNTY’S MIDYEAR FINANCES BETTER THAN PROJECTED

Higher tax receipts and greater investment earnings cited as factors

Riverside County government’s financial position going into the second half of the current fiscal year is better than predicted, with discretionary revenue now on track to beat initial estimates by almost $100 million, though agencies are already seeking more money to sustain operations, officials said Feb. 28.

“There are more than $350 million in new funding requests,” county Chief Executive Officer Jeff Van Wagenen told the Board of Supervisors. “We’re going through the process of working with departments to bring forward recommendations on how to pay for their needs.”

Van Wagenen said that the main objective now is to “determine what departments need not to shrink.” He said the goal is to keep agencies “flat” by focusing on “strategic priorities” and not indulging biases toward expansion.

His comments were delivered during a brief presentation on the 2022-23 midyear budget report, which indicated that discretionary revenue will likely exceed initial projections by $89 million by the end of the fiscal year, topping out at $1.102 billion, rather than the $1.013 billion originally projected.

The gains are mostly the result of higher tax receipts, as residents shelled out more for goods and services, as well as greater earnings from the county’s investment pool.

Property tax receipts are expected to expand by $21.5 million more than what officials estimated before, while the county will likely take in $6.2 million in additional sales and use taxes, and separately, the county’s share of statewide Proposition 172 Public Safety Sales Tax revenue is projected to be $13.4 million greater than first estimated, according to the Executive Office.

Interest earnings within the Treasurer-Tax Collector’s investment pool, containing a range of fixed instrument products, are expected to be $35 million to $45 million more than earlier estimated, officials said. The returns stem directly from the Federal Reserve Bank’s ongoing hikes to the benchmark short-term lending rate — pushing interest rates higher on the county’s investments — a process that began last May as part of a liquidity pullback strategy to attack 40-year high inflation.

Board Chairman Kevin Jeffries stressed to Van Wagenen that he will oppose “mission creep” by agencies “wishing to expand and take on other responsibilities” that saddle the county with unnecessary higher costs.

At midyear, multiple county agencies were contending with higher cost pressures, requiring bigger outlays to deal with them, the Executive Office stated. Most of the budgetary challenges were driven by revised or renewed collective bargaining agreements guaranteeing cost-of-living and merit pay hikes, as well as more county obligations to pay health insurance. However, some of the costs were tied to building maintenance and expansions, officials said.