PORT ANGELES — After working through an initial deficit forecast of $4.2 million, the three Clallam County commissioners unanimously approved a balanced budget for the upcoming year with $57.3 million in predicted revenue and $56.6 million in expenses.
The budget deficit largely was reduced through what the county called “the 7 percent exercise,” in which each of the county’s 18 departments reduced their impact to the general budget by 7 percent.
It was also balanced, in part, through payroll underspend.
When the county budgets for payroll, it budgets as if each position is fully filled throughout the entire year. However, it is almost certain that not every position will be fully staffed throughout the entire year due to retirements, open positions and other employee turnover, Chief Financial Officer Mark Lane said.
This year’s predicted payroll underspend is $1.2 million. If there was no payroll underspend, the county would be facing an operating deficit of $538,000.
Next year’s general fund revenue prediction, at $57.3 million, is 6.3 percent higher than what was collected this year. Forty-seven percent of it comes through taxes, primarily property and sales taxes, Lane said.
Expenses, at about $56.6 million, are predicted to be 4.6 percent higher than this year. The main expense is personnel costs, which, with a little more than 333 full-time-employee positions, accounts for 71 percent of the general fund budget.
Although the budget has been adopted, it is never set in stone. There are still some unknowns that could have small to large impacts as more information becomes clear.
“There’s a myriad of storm clouds on the horizon … for counties in general,” Lane said.
Some potential future expenses not budgeted include changes to the public defense caseload standards, impacts associated with staffing reductions and the need to assist distressed districts.
Bailing out distressed districts is mostly a hypothetical at this point, Commissioner Mike French said, and it’s something the county hasn’t done before.
However, he noted that some small fire districts and water systems have encountered increasing financial struggles over the past few years.
“The concern is, the county might be the one who is asked to fix the problem,” French said.
If budget assumptions hold true — and budgets are based on assumptions, County Administrator Todd Mielke said — the county will end next year with a general fund reserve balance that is 24 percent of its predicted expenditures.
The general fund reserve is intended to cover unanticipated “opportunities, emergencies [and] threats,” Mielke said.
However, the county tries to strike a balance between having sufficient reserves to cover unanticipated expenses without having an exorbitant amount.
If the county has too much in reserves, Mielke said that indicates it is either collecting too much money or not providing enough in services.
The county’s goal is to keep the reserves about 25 percent, Lane said, to help offset unanticipated expenses and to make the county eligible for better interest rates if it attempts to secure bonds in the future.
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Reporter Emma Maple can be reached by email at emma.maple@peninsuladailynews.com.
