Budget report shows county’s reserve pool swelling

Reserve funds on hand for contingency or emergency expenditures by Riverside County government are expected to swell to an amount nearly $150 million greater than anticipated at the start of the current fiscal year, according to a report the Board of Supervisors will review Tuesday.

The Executive Office’s 22-page First-Quarter Budget Report for 2022-23 will be considered as part of the board’s policy agenda Tuesday morning.

The compendium’s highlight is the fact the county is now slated to end the current fiscal year with an estimated reserve pool of $511 million, compared to an earlier estimate of $368 million. The county ended the previous fiscal year with just under $300 million in reserves.

EO staff attributed the larger sum to higher-than-expected interest rate earnings on county investments, elevated sales tax receipts and property tax revenue.

Aggregate discretionary revenue is projected to grow to $1.076 billion, compared to $1.013 billion estimated at the beginning of 2022-23, a $63 million increase, officials said.

Discretionary income is derived from property taxes, sales and use taxes, fees charged for documents, penalties and licenses, as well as earnings from the treasury’s securities, mainly fixed-instrument investments.

Inflation has driven interest rates higher.

“While the projected outlook for the fiscal year is improving, we have challenges looming that will need to be addressed,” according to the introduction to the report. “We must continue to work toward growing healthy reserves as the economic future is uncertain.”

The budget report includes several recommendations by the Executive Office, including that the board approve $16 million in additional General Fund revenue to cover expenses stemming from capital improvement projects required by the Sheriff’s Department, and $1.9 million to amortize expenses incurred by the District Attorney’s Office for outlays the spilled over from the prior fiscal year.

In June, the board approved a $7.45 billion budget for 2022-23, roughly 8% larger than the 2021-22 budget of $6.88 billion. The bulk of that money is comprised of non-discretionary, or programmed, budget requirements and includes “pass-through” revenue streams from the state and federal governments.

The county received almost $500 million in 2020 Coronavirus Aid, Relief & Economic Security Act allocations and another $480 million in 2021 American Rescue Plan Act money, and county CEO Jeff Van Wagenen acknowledged that just under 10% of the federal infusions would be applied for “budget stabilization” in 2022-23.

The funds have been used for homeless and rental assistance programs, along with other social welfare efforts, but they’ve also been appropriated for multiple infrastructure, or capital improvement, projects.

The midyear budget report is scheduled to be released in February.

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