DEBT AND DEFICITS aren’t synonyms.
Debt is money owed.
Deficit is insufficient funds to pay for expenses.
Debt is huge in some counties.
In 1996, a first-term Kitsap County commissioner told me he was dismayed to find every penny his county collected in property taxes went toward debt.
Such is not the case in Clallam and Jefferson counties.
The last debt Clallam incurred paid for the new courthouse and Camp David on Lake Crescent, during Mike Doherty’s first stint as a county commissioner, 1976 to 1980.
Clallam saved timber revenue and paid cash for capital projects, notably because of the leadership of Lawrence Gaydeski, who represented the West End from 1982 through 1994.
When paying off those bonds showed up in the proposed 1998 budget, Doherty told the then-commissioners, myself included, that debt keeps current taxpayers from fully paying for public facilities that future generations will use.
Elected in 1998, Doherty, who now seeks a fourth four-year term, challenged by Robin Poole, inherited a debt-free county with healthy reserves.
So did Steve Tharinger, elected in 1999, who’s now vying for state representative against Jim McEntire.
To their credit, Clallam remains debt-free, with a shrinking cushion of banked reserves.
It may draw $1.6 million from reserves to help fill a $2.6 million deficit, according to the preliminary budget message.
Balancing the budget would also entail $1 million of spending cuts, and a 1 percent increase in revenue from property taxes.
No new taxes are proposed. Read the summary at http://tinyurl.com/23aubgy (you need to be able to read PDF files).
Jefferson County’s debt totals a bit over $8 million, which is supposed to be paid by real estate excise taxes.
Last year, for the first time, the real estate revenues didn’t cover the full debt payment, and likely won’t this year or next, County Administrator Philip Morley told me.
“This year, we’re anticipating having to make up about $256,000, but not out of the general fund,” Morley said.
By 2012, a “modest recovery of the real estate industry” should cover bond payments, he said.
“Refunding” — the equivalent of refinancing a mortgage — could lower the interest rate, which would reduce payments and total costs.
On the other side of the ledger, Clallam and Jefferson counties both have interest-earning economic development accounts, funded by a small portion of state sales tax revenue, under legislation sponsored in 1998, by state Sen. Jim Hargrove, D-Hoquiam.
Hargrove envisioned that Clallam would issue bonds to buy the Rayonier mill that had closed in 1997, and use the sales tax money to repay the bonds.
Instead, Clallam created the Opportunity Fund and Jefferson County created its Public Infrastructure Fund.
These funds collect interest, rather than paying it, while helping to fund local governments’ projects, such as designing the Port Hadlock and Carlsborg urban growth area sewer systems.
However, counties’ overall interest income took a huge hit from federal and state banking reforms.
Clallam anticipates interest revenue will plunge from $2.6 million per year to $400,000 per year, a loss of $2.2 million, which equals 7.2 percent of total general fund revenue.
Jefferson County’s Public Infrastructure Fund is “not huge dollars, but it makes a difference,” said Morley, who is wrestling with a growing shortfall.
Since Morley was hired two years ago, Jefferson County’s budget has been cut $2.3 million, but revenue cannot sustain existing services in 2011 and beyond.
Since September, a projected $900,000 gap in the $15.6 million general fund budget for 2011 as grown to $1.1 million, as revenues come in below dismal projections.
Proposition 1, now on Jefferson County ballots, would fill part of that deficit by adding a three-tenths of 1 percent public safety sales and use tax, equal to 3 cents per $10 purchase.
Pre-election, the budget must be balanced as if Prop. 1 won’t pass. Explaining proposed cuts to core services, Morley said:
“Essential, yes. Immune, no.”
Tax structure that has the property tax base steadily falling behind inflation, regulations that have every other category of revenue in decline and the continuing recession, spell one certainty, Morley said:
“County government’s going to be getting smaller.”
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Martha Ireland was a Clallam County commissioner from 1996 through 1999 and is the secretary of the Republican Women of Clallam County, among other community endeavors.
Martha and her husband, Dale, live on a Carlsborg-area farm. Her column appears every Friday.
E-mail: irelands@olypen.com.
