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County commissioners need to deal with $1 million hole in budget

MONTESANO — The Grays Harbor County commissioners are staring at a potential $1 million unplanned deficit next year that will have to be tackled by either raising revenue or doing more cutbacks.

County Commissioner Frank Gordon says he thinks the best way to go would be to keep an unpopular road levy shift in place, which has drawn the ire of city councils and mayors from across the Harbor for the past couple of years. Through an accounting gimmick, the county takes money from its road fund and places it in its general operating fund and, as a result of the shift, it raises the property tax of those who live within cities.

“Unless we’re going to go down to the casino and roll some dice, I hate to say it, but I don’t see anyway to avoid shifting from the road fund,” Gordon said. “I really, seriously, can’t. I will say whatever happens among us on voting on adjustments and changes we have, I don’t have a problem taking the dog-gone bullet if we have to do this.”

County Commissioner Wes Cormier says he just can’t bring himself to vote for the increase and says he’s working on potential cuts that the county could bring forward. He says he’ll release a more detailed plan later and wasn’t prepared to talk about specifics. At a recent budget meeting, Cormier asked how much money could be saved by doing temporary layoffs of employees once a week. He was disappointed to discover the savings to the county would only be about $130,000.

“I want to find another way to balance the budget,” Cormier said.

Commissioner Herb Welch has voted for the road levy shift before and wants to avoid the increase again, if possible.

If Monday’s vote on a separate property tax increase has anything to say on how things will go, it could be a contentious vote. On Monday, the commissioners voted on proposals to increase next year’s property tax rolls to take into account for property tax revenue that never showed up in 2013. For the road fund, the county saw a decrease of $19,818, there was a $78,771 decrease to the general fund and a decrease of $222 to the county’s veteran relief fund, which also gets a dedicated chunk of the property tax levy.

The decreases are the result of taxpayers winning cases between the Board of Equalization that their property was appraised too high, unaccounted property exemptions for seniors, as well as other issues. Treasurer Ron Strabbing says that a recent change in state law allows the county to impose a “refund levy” on the rest of the taxpayers in the county to basically pick up the tax bill that other folks didn’t have to pay.

Gordon pushed for his fellow commissioners to impose the refund levy. Cormier said he didn’t feel it was right to impose more taxes on residents.

On a 2-1 vote, with Gordon joined by Commissioner Welch, the county approved imposing the refund levy for the general fund and the veterans relief fund. Welch didn’t support Gordon’s measure to impose the levy for the road fund.

Welch and Gordon said that it was looking like the county would need the extra revenue in the general fund, in particular.

“I think we might have saved a job with that vote,” Gordon said.

The exact dollar amount the levy would place on residents wasn’t clear as of press time.

NO CLEAR PLAN YET

By this time last year, the county commissioners had a solid plan in place and were notifying department heads of their plans. The commissioners had been looking at 5 percent cuts last year and ultimately settled on 3 percent “contra” entries allowing department heads to manage their budgets as they saw fit. Most of those cuts went away and were absorbed by spending reserve cash down within months of Gordon and Cormier taking office after unseating previous commissioners Terry Willis and Mike Wilson.

At this point, everything is still up in the air on what the commissioners want to do and a solid plan to identify revenue increases or cuts has not yet emerged.

The current plan for the county is looking at a $26.1 million operating budget for 2014, which actually spends about $1.8 million more than what was budgeted for this year.

For the past two years, the county has gone into its fiscal years with a balanced budget of about $24 million that matched revenues with expenditures. Next year, the county is still expected to bring in $24.5 million, but it’s preliminary expenditures are budgeted at $26.1 million. That means the commissioners will have no choice but to use $1.5 million out of its reserve funds to balance its budget.

On top of all that, the county still hasn’t finished balancing its budget. There’s still another $951,834 in requested expenditures, including new hires at the county jail, that either need to be eliminated or more revenue would need to be spent.

A big unknown is that all five of the county’s contracts are up for renewal and the expenses for potential raises for county employees have not been budgeted. Commissioner Gordon says he’s worried how those potential expenses could impact the county.

At this point, the county is budgeted to have $5.5 million in reserves at the end of this year. Budget Director Brenda Sherman says if the county becomes a bit frugal in its spending practices, the reserves could land at $6 million by the end of the year. On Monday, Sherman gave more numbers showing that if the county only spent 97 percent of its budget, it could end the year with $6.1 million. If the county spends 95 percent of its current budget, it could end the year at $6.6 million.

The county has a goal of keeping at least 20 percent of its operating fund as a reserve. In this case, the target fund balance is $4.9 million.

Sherman told the county commissioners last week it would be doable for the county to use more reserves to balance its budget if they wanted. If the county spent another $500,000 into reserves and also used some of the increased grant revenue that Sherman identified, the county may only have a budget shortfall of $391,834 that would need to be dealt with through cuts or more revenue.

Gordon says he likes the idea of at least $6 million in reserves and his preference is to keep those funds intact and use the road levy shift.

Last year, the county commission used $750,000 for the road levy shift to balance its budget and used part of those funds specifically to pay for employee raises in order to maintain a balanced budget. Sherman said the county could qualify to shift up to $1 million next year.

The county has budgeted to increase environmental health fees by 5 percent, but there’s no building or planning fee increases budgeted. Cormier says he likes it that way.

“Our income level coming in is pretty much as level as it was last year and then we have inflation, the cost of materials and these numbers we have here have no contracts as of yet,” Gordon said. “Even if we did shift the $1 million road levy shift, it’ll be really tight.”

“We’re a million in the hole, even without the contracts,” Cormier said.