RIVERSIDE, Calif. -

Financial red flags are appearing on the horizon even though the current fiscal year is less than half over, but Riverside County officials were optimistic that problems could be contained and will provide the Board of Supervisors with a summary of options today.

The Executive Office's first-quarter budget report offers a mix of positive and negative news, with the latter mostly attributable to a widening deficit at the county hospital.

County CEO Jay Orr said the Riverside County Regional Medical Center's cash shortage as of last month was $86 million, and the gap was not going to improve with time without an overhaul in operations.

Unpaid medical bills, unreimbursed expenses tied to care for inmates and mental health patients, along with increasing labor expenses, were all weighing on the hospital's ledger, county officials said.

The board will consider a $26 million contract with Chicago-based Huron Consulting Inc. to implement a turnaround plan to keep the medical center afloat.

Another concern was an estimated $39 million budget deficit in the sheriff's budget by June. According to county officials, union-negotiated labor cost increases were the main source of the sheriff's unfunded liabilities.

However, higher costs associated with court security -- for which the county had to assume responsibility under the governor's 2011 public safety realignment -- and the recruitment and hiring of 500 additional deputies to staff jails and patrol unincorporated communities are also chewing up the sheriff's appropriations, the budget report stated.

Orr said the sheriff's deficit will be addressed in greater detail during midyear budget hearings in February.

The county's nascent Public Safety Enterprise Communication System, an all-digital network that will replace the decades-old analog system, was expected to come on-line in January -- a year late, according to the budget report. The system is expected to be more expensive to maintain than originally thought and will require larger general fund allocations, despite concessions by the contractor, Motorola, county officials said.

Executive Office staff said that liabilities to the California Public Employees' Retirement System were going to be an ever-enlarging draw on the general fund, and any discretionary revenue needed to cover pension costs would have to come at the expense of non-public safety agencies.

On the bright side, the budget report indicated that discretionary revenue would top out at $594 million in 2013-14 -- about $4 million more than first projected.

Property tax receipts are on track to increase 4.5 percent in 2013-14, thanks to a rise in real estate values that propelled the median price of a single-family home in the county 25 percent higher between August 2012 and August 2013, according to the report.

Trends in countywide sales tax receipts are also pointing higher. 

According to the budget report, sales and use tax receipts jumped 5.7 percent in the last quarter compared to the same time a year ago.

The county has roughly $175 million in reserves.

Orr cautioned that although the financial picture has improved, the county is still contending with a double-digit unemployment rate -- just under 11 percent as of August -- and uncertainties remain about what might happen at the federal level that could impact the county.

The budget resolution that ended the partial government shutdown in October only provided funding for federal operations through Jan. 15.