Riverside County’s Financial Outlook ‘Stable, But Tightening,’ CEO Says

The Riverside County Board of Supervisors last week received a mid-year budget update that showed the county’s financial position had improved from last summer, but uncertainties remained.

“At mid-year, the county’s financial picture is stable, but it is tightening,” County Executive Officer Jeff Van Wagenen said at the March 10 meeting.

Starting on a positive note, Van Wagenen said discretionary revenue was performing “slightly better” than expected, property tax growth remained steady and interest earnings were stronger than projected.

“As a result, our mid-year forecast shows an improvement in the operational deficit compared with what was projected at the time the budget was adopted,” he said. “However, that improvement should be viewed with caution.”

Van Wagenen said the revenue increases might be temporary, especially increased revenue coming from high interest rates. He said the possibility of future decreases in revenue coupled with the increasing cost of providing county services and uncertainty at the state and federal levels was creating pressure on the county’s resources.

“So the message today is straightforward: we remain fiscally stable, but the environment ahead is becoming more challenging,” he said. “We will need to approach the upcoming budget cycle with discipline and clear priorities.”

Last June, the county adopted a deficit budget with an expected shortfall of $73 million, the first in four years. However, Van Wagenen said because the beginning fund balance at the start of the fiscal year and revenue projections had both improved, along with concerted efforts by the county to rein in spending, the structural deficit had decreased to $38 million.

“We have been using the budget strategies that this board adopted during the budget hearings in June, that is a hiring freeze, a maximum fill rate for the identified departments and the use of just-in-time funding,” he said.

The just-in-time funding allows the county to fund additional expenditures at the appropriate level when departments need it throughout the fiscal year, instead of providing an estimated amount of money at the start of the fiscal year for departments to hold onto until they need it.

Despite the current year’s improvements, Van Wagenen warned the supervisors that the future remained unclear.

“Every day brings new news, and it’s difficult to try and see where the trends are headed,” he said. “We have increasing demand for services. We have aging buildings that need services. … Visionary capital improvement projects are coming online.”

One of those uncertainties was as a result of HR1, also known as the One Big Beautiful Bill Act, which Van Wagenen said could result in the county having to decrease its level of service across a number of departments.

“The reality is, things cost more,” he said. “We have less money to pay for those things, and there’s going to be some difficult decisions as we move ahead.”

Along with moderating local spending, Van Wagenen said the county was working to advocate for additional funding and flexibility at both the state and federal levels so the county, at a minimum, could maintain current service and staffing levels going forward.

Supervisor V. Manuel Perez said he didn’t understand the reasoning behind the federal cuts, stating that it would cost the country more both in the short- and long-term.

“We’re all going to have to pay for it,” he said. 

The county has already started its budget process for the upcoming fiscal year, which begins July 1. Earlier this year, the county released its second annual budget priorities survey, which closed February 28 and received more than 26,000 responses. 

Next month, the county will hold a series of five in-person community meetings to receive additional input from the public. The public hearing for the budget has been set for June 8 and, if necessary, June 9. Adoption of the budget is slated for June 23.