MONTESANO — County officials are on track to spend about $2 million more this year than last and will have to dip into reserves for the first time in about four years. But higher sales tax figures and extra forest revenue may mean the impact is less than first thought.
With two-thirds of the year over, the county commissioners heard a review from Budget Director Brenda Sherman on this year’s budget as they look to next year. Sherman noted that sales tax revenue continued to increase for the 13th straight month and forest revenue is greater than first budgeted.
County Commission Chairman Frank Gordon said the budget has been in good shape all year and the county hasn’t been afraid to spend money to help its employees. At this point, Gordon notes, every county employee has gotten some kind of salary increase — except for himself and Commissioner Wes Cormier. Even the incoming new county commissioner, who will take over incumbent Herb Welch’s seat next year, will get a higher salary, Gordon said.
The county commissioners approved a $26.26 million operating budget in December. But, after eight months of hiring decisions and salary increases and the resulting budget amendments, the county’s budget now stands at $27.029 million.
At this point, the county is expected to bring is $26.092 million in taxes, fees and other sources of revenue, leaving a $936,999 deficit. But Sherman says if the county only ends up spending 97 percent of its actual budget, the deficit would be $264,570, relying on reserves to make up the difference.
Had the county not given raises or made an assortment of hiring decisions, the county would have had a balanced budget this year that didn’t need to rely on reserves at all. But Gordon said he didn’t feel that was a serious option.
“County employees have held the line for so long,” Gordon said in a recent interview. “They deserve raises.”
However, Gordon points out that the county’s reserves are better than they’ve ever been and will be somewhere between $5.1 million and $5.8 million by the end of the year, depending on how the expenses match up. Whatever the case, the county banked on having at least $5 million in reserves, following guidelines put in place by the state Auditor’s Office after a financial finding issued in 2012.
The county reserves are the best they’ve been since 2007, when the reserves were at $5.2 million. The county relied heavily on those reserves in the intervening years until 2010 when the reserves reached $2.3 million and major cuts and layoffs were needed. The county managed to not just balance its budget but begin to build the reserve back up to where it is today.
Should the reserves be used to balance this year’s budget, it’ll be the first time it’s been needed in about four years.
County Commissioner Wes Cormier said he’d like to put a pause on any other kind of hiring decisions or raises until after the 2015 budget discussions are done. Last month, the county commissioners approved a wide assortment of raises for administration employees in the Sheriff’s Office and instantly heard from other elected officials and department heads about getting more money for their employees. The decision came after agreeing to hire new employees in Central Services, the Sheriff’s Office and the Prosecutor’s Office.
Budgets from the various county departments are due at the end of the week and will be sorted out and looked at by the budget staff for release in early September.
“We have made progress overcoming financial difficulties resulting from the economic decline that occurred in recent years, but we still have issues to address,” the three commissioners wrote in a joint budget priorities statement. “It is our intention to maintain adequate cash reserves, to provide working capital to meet our operating needs throughout the year and lessen the impact of unforeseen revenue shortfalls or unanticipated expenditures.
“Grays Harbor County continues to struggle with one of the highest unemployment rates in this state. Economic forecasts continue to indicate a very slow economic recovery. With these factors in mind, we will forecast revenue conservatively. … The last several years we have postponed maintenance and repairs of our buildings and infrastructure in order to provide ongoing services. As public stewards, we must maintain county infrastructure so it will be of service to taxpayers in the future. It is a priority of the board to earmark a portion of current revenues for the preservation of our infrastructure.”
The board’s message also notes that the commissioners want to make it a “priority to limit spending to available county revenues and provide a level of service, which will put us on a sustainable fiscal path.” However, at the current rate of spending, the county would likely need to dip into reserves next year, as well — even more so if the county does not rely on a road levy shift, which has added half a million dollars into the general fund this year and has been tapped since 2012.
Cormier says he’ll fight against the road levy shift this year, but Gordon has said he still wants it on the table. That will leave the decision in the hands of Welch. Without the road levy shift, it leaves a half million dollar hole.
Next year, commission candidates Vickie Raines and Keith Olson have already made it clear they will side with Cormier against the levy shift. Commission candidate Al Smith is more open to the idea. Raines was the leading vote getter in the primary and could face Olson or Smith.
Votes are still being counted and a recount is possible to decide the second name on the ballot.