Clallam County faces a $2.7 million budget shortfall for 2012 as expenditures fail to fall with revenues.
A dismal projection was discussed at the Clallam County Board of Commissioners meeting Sept. 6.
“We’re now figuring this is the new reality,” Clallam County Administrator Jim Jones said. “The big revenue reductions are a 5.2 percent reduction in state contracts and we’re told we can look for 10 percent more.”
Low interest rates from the Federal Reserve also are resulting in low treasurer’s interest revenue, which in the past has been a strong source of income, he said.
“That may never come back,” he said.
According to an executive summary of the preliminary budget proposal, a mandatory increase in payments to the state retirement fund will raise salaries and benefits costs by $737,197 from last year.
Along with the mandated state retirement fund expenditures, reductions in contracted services, supplies and inter-fund payments already in the budget proposal will increase general fund expenditures by $518,779.
Revenues still are stalled by the weak local economy, though the county expects a small increase in sales tax due to the Elwha Dam removal project. A 1 percent increase in property taxes, as allowed by law, only will bring in about $90,000.
The biggest revenue changes are cuts received from the state in grants and contracts for services, down $520,202 from last year. There also is a significant reduction in fines and forfeits as more people choose to perform community service rather than pay for their traffic tickets with cash. Overall, revenues in the general fund are down 2.5 percent.
The preliminary budget proposal begins a three-month process of finalizing the county’s budget.
“Clallam County has been very frugal over the last three years, cutting costs and freezing new hires,” Jones said, adding that 27.38 full-time-equivalent employees have been eliminated since 2009 and that still isn’t enough.
Union leaders and department heads will meet with county officials to look at options, including wage concessions, closing significant programs, reducing county operation hours and layoffs.
Commissioner Mike Doherty said the county doesn’t have the luxury of dipping into a large reserve fund to cover the gap. Using $2.7 million of reserves would put the county dangerously close to the lawfully required minimum of $6.5 million in rainy day reserves.
Commissioner Mike Chapman said he will begin meeting with union leaders next week.
“I think Jim articulated exactly what those options are,” Chapman said regarding the upcoming union negotiations.
“It will all be on the table,” Doherty said.
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