Clallam County is looking at a roughly $2 million budget deficit heading into the 2024 budget season with inflation and other rising costs driving the cash crunch.
“Things are tough,” said Mark Ozias, Clallam County commissioner for District 1. “This is my eighth round of county budgeting and this is by far the most challenging financial outlook that we have faced in my tenure here.”
Speaking to a meeting of the Port Angeles Business Association on Oct. 24, Ozias said the county has a deficit between anticipated revenue and necessary expenses, more than four times what the county would usually see at this point in the budgeting process.
Ozias, a Sequim Democrat, is on the November ballot. He was first elected as commissioner in 2015. His Republican opponent, Stan McClain, announced in August he was withdrawing from the race due to health issues. However, McClain missed the state deadline to withdraw his candidacy, so his name still appears on the November ballot.
Ozias said last week that commissioners have been meeting with department heads and hope to have a draft of the 2024 budget in the coming weeks. The final draft of next year’s budget should be adopted in the first weeks of December, he said.
“We will be relying on reserves to balance the budget, which is the case every year,” Ozias said. “Right now, we are looking at a lien of about $2 million on our reserves, which would put us at the end of next year, according to the projections that we have now, at about $10.8 million in general fund reserves.”
The county has a target of $11 million for reserves, Ozias said, but continuing draws on reserves to balance the budget are “not sustainable.”
Largely driving the increase are inflationary costs that were out of the county’s control. In particular, what Ozias said are rapidly rising rates for liability insurance and workers’ compensation.
Commissioners are looking at ways to mitigate the rising insurance rates, including looking at other insurance options outside the Washington State Health Insurance Pool, he said.
Ozias said some other counties have pulled out of the state pool and commissioners were actively analyzing options in that arena.
Commissioners are also meeting with department heads, including other elected officials, to examine supply lines and areas where budgets can be trimmed.
Roughly 70 percent of the county’s expenses are for personnel, Ozias said, and commissioners are looking to ensure staffing levels at the county are appropriate.
He said commissioners are working hard to not use layoffs as a way to balance the budget and are not currently looking at that option but added that staff reductions are always a possibility.
San Juan County recently moved to a 32-hour work week for its employees as both a cost-saving measure and a recruitment incentive; Ozias said Clallam and other counties are watching to see how that works out.
Commissioners and department heads also are considering certain fee schedules, some of which hadn’t been updated in more than a decade, as a way of bringing in more revenue.
Ozias said he would not want to increase county taxes without putting the question to a public vote.
“If the question comes down to more revenue or less services, I would want the community to tell us what they would like to see,” Ozias said.
“And if that is less service, then we will figure out how to provide less service in a financially responsible way.”
The county’s main sources of funding are sales and property taxes, Ozias said, the latter of which are not allowed to be increased more than 1 percent annually.
“Inflation, even in normal years, is more than that, so it’s always a challenge for local government,” Ozias said.
Commissioners also are considering how to replace revenue lost to junior taxing districts from state Department of Natural Resources land moved into conservation status, Ozias said. The state Legislature has provided several revenue replacement programs for timber lands that are taken offline and Ozias said commissioners are working with DNR to replace timber lands that were taken out of protection for protection of the marbled murrelet.
The City of Port Angeles has requested certain lands to be considered under the state’s Trust Land Transfer program which put certain lands into conservation while opening others to harvest, but Ozias said he and other commissioners would only pursue that program in consultation with junior taxing districts that benefit from timber sales.
“The foundational basis for me and the rest of the board is that needs to be a decision that is entered into jointly by all of the beneficiaries who benefit from that sale, rather than my board making some sort of decision unilaterally,” Ozias said.