RIVERSIDE- Riverside County faces a $71 million budget shortfall and further erosion of property and sales tax revenue, leaving little choice but to continue slashing expenses, according to a report to be submitted today to the Board of Supervisors.

"The past few years of declining revenue now mandate the budget cuts we face in the coming fiscal year,\'\' county Executive Officer Bill Luna wrote in the 48-page midyear budget update. "We must address the inevitable and reorganize, funding only the programs our revenue will support.\'\'

The report revealed that county property tax assessments will likely slide another 5 percent this year -- equaling a $20 million loss -- as residential and commercial property values continue to wither. The drop follows a 10 percent decline in the last fiscal year.

Roughly three-quarters of the county\'s discretionary income comes from property taxes.

According to budget documents, sales tax receipts in Riverside County dropped 15 percent in the first quarter of the 2009-10 fiscal year, compared to the same three-month period a year earlier.

County officials projected sales tax income would total $26 million by June 30, the end of the fiscal year -- compared to $41 million three years ago.

The county\'s total discretionary income -- $609 million -- is down $174 million from 2007, according to the report. Reserve funds have fallen correspondingly, as the county depletes monies set aside for contingencies. The $147 million reserve pool is off 59 percent compared to two years ago.

Luna warned the 6 percent floor that the Board of Supervisors recently adopted, on his recommendation, for the county\'s economic uncertainty fund left "little flexibility for unforeseen circumstances or emergencies.\'\'

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Shriners Hospital for Children Fiscal prudence demands that the board not whittle away contingency funds to address the county\'s $71 million structural budget deficit, Luna said, stressing the practice had already prompted credit rating agencies Fitch, Moody\'s and Standard & Poor\'s to slash the county\'s creditworthiness to medium-grade, from "high-quality\'\' less than three years ago.

The budget report indicated that over the next two years, county public safety agencies, including the Sheriff\'s and Fire departments and the District Attorney\'s Office, should have 3 to 10 percent shaved from their budgets. Other departments should expect 10 to 25 percent cuts, according to county officials.

Some $70 million in reserves would still have to be siphoned away to balance the budget in fiscal year 2010-11, according to the report.

Uncertainty remains over whether the county\'s half-dozen public employee unions would agree to some of the planned cost reduction measures, including the continuation of weekly furloughs. "Without labor concessions, more severe direct cuts will be required,\'\' the report stated.

The midyear report showed the Department of Animal Services and the Public Defender\'s Office were not likely to meet their budget targets in the current fiscal year.

The Executive Office recommended that the board not allocate the additional $150,000 Animal Services is expected to need. But staff advised increasing appropriations by $2 million for the Public Defender, covering the costs associated with four new attorneys and six new investigators.

The Executive Office referred to the positions as "critical,\'\' emphasizing that a shortage of deputy public defenders and support staff means caseloads pile up and the county has to contract with private attorneys to defend indigent clients -- a more expensive alternative.