The Okanogan County commissioners expect to approve a $23.18 million budget for 2019 next week, just a small increase over the budget for this past year.
“It’s always a pretty tight budget. It can increase $57,000 to $58,000 a year, max,” said County Commissioner Andy Hover, who’s leading the budget talks for the commissioners.
Although they’re near the end of that process, there’s still almost $570,000 to allocate. Because union negotiations are ongoing, some of that money is likely to go toward salaries, said Hover. Most of what’s left will be put into the county’s contingency reserve fund.
Finance manager Cari Hall incorporated department managers’ requests in a preliminary budget worksheet a few months ago. Since then, the commissioners have been going over the requests with each department head.
In many cases those requests had to be scaled back, said Hover. The Sheriff’s Office wanted six new vehicles, which would have come to $345,000, he said. While there is significant wear and tear on police vehicles, the county can’t fund more than two this year. The commissioners hope to be able to budget two or three new sheriff’s cars a year, Hover said.
Upgrades to communications equipment were also on the wish list — $250,000 for new radios — but that had to be cut in half. The county will purchase half of the radios this year and the rest next year. The old radios are compatible with the new technology, and they’ll be able to use them for spare parts, said Hover.
Because some grants aren’t awarded until mid-year, there’s always some guesswork, said Hall. “In my opinion, there isn’t a department that puts in a bunch of fluff, because they all know we don’t have a lot of money,” she said.
The county has been experiencing a wave of retirements over the past couple of years, said Debi Hilts, the county’s human resources coordinator. Because some spots will be filled by people with less seniority, it could save the county some money, said Hover. But for the retirees who are elected officials, by law their successors receive the same salary.
Trying for a cushion
The county budgets some money — usually between $150,000 and $300,000 — for a contingency reserve fund to cover unanticipated expenses at the end of the year, said Okanogan County Treasurer Leah Mc Cormack. Those expenses could be anything from overtime at the jail to major repairs. The commissioners can draw on the contingency reserve fund with a simple appropriation.
Current-expense reserve is a separate fund intended for a substantial emergency or disaster, and it requires a legal notice and public hearing before it can be spent. The county still has about $550,000 in current-expense reserve from this past year, said Mc Cormack.
Ideally, the county would have 10 percent of its annual budget in current-expense reserve, enough to cover two months of expenses. Payroll comes to $1.2 million a month, said Mc Cormack.
But the county would need $2 million to meet that 10-percent goal. In the 35 years Mc Cormack has worked for Okanogan County, they county has never met that target. “Ten percent is my recommendation. You have to have something in case there’s a disaster,” said Mc Cormack.
In fact, sometimes the current-expense reserve account is completely empty. At the beginning of 2017, the account held about $31,000 but, by February, the balance was zero — and it stayed that way for more than a year.
This June, the county received $800,000 extra through the federal program that compensates counties for non-taxable lands. That unexpected windfall in Payments in Lieu of Taxes (PILT) enabled the county to put about $550,000 into current-expense reserve, said Mc Cormack.
The rest of the PILT receipts — typically about $2.1 million — were already budgeted for departmental expenses, said Mc Cormack. The federal government didn’t explain why the 2018 payments were higher and told counties not to expect extra money next year.
The county is starting to build up the reserve fund after the prolonged impact of the 2008 recession. Before the collapse, the county had more than $1.5 million in current-expense reserve. “In the good old days of government investment banking, we could budget $1.2 million — in interest alone — for the reserve,” said Mc Cormack.
But after the crash, interest went from 4 to 6 percent to virtually nothing — just 0.1 percent, said Mc Cormack.
“This isn’t anything unusual, to any county in the state of Washington,” she said. “When the market crashed, we were lucky to get $25,000 [in interest]. We were all draining our current-expense funds. Something has to give.”
Interest rates have improved this year for the first time in a long time, now ranging from 2.2 to 2.8 percent, said Mc Cormack.
The commissioners and finance committee are meeting this week to go over every line of the budget in preparation for final adoption, said Hall.
