San Juan County says it is at “the beginning of a new era” as it releases its preliminary 2017 budget.
The 435-page document prepared by county auditor Milene Henley and county manager Mike Thomas includes a “Status Quo” scenario, which includes no discretionary changes from 2016.
The included “Budget Message” explains the county’s financial status, effects of the 2008 recession, and future goals. “San Juan County stands at a cusp,” it begins. “The local economy is booming. Employment is expanding. Real estate prices are recovering. The population is growing. Tourism is exploding. These are all positive indicators, in sharp contrast to what we were experiencing eight years ago. We stand, truly, at the beginning of a new era. Yet with the positive changes also come negative changes. Though property tax growth is limited, sales tax revenue is growing extraordinarily fast. Reserves are building. Real estate activity is supporting an overdue capital maintenance program. More people on the island require more services, and we are attempting to keep pace with the demand for those services. Yet government, too, has a hard time finding employees. Even if a new hire is able to find housing, wages at the county for working-class employees are barely able to support living here.”
The preliminary budget is available online. It also includes a “Preliminary” column, which includes changes recommended by the Budget Team (Henley and Thomas, along with Chief Deputy Auditor Kim Herrenkohl, and Health and Community Services Director Mark Tompkins). According to Henley, the county has used a slightly different accounting method this year, so that each department’s designated cash reserve is included in its expenditures total.
“Currently, the single greatest problem facing the county is a shortage of affordable housing,” write Henley and Thomas. “A critical shortage of rentals is forcing rents up and some renters off the islands.” The budget sets aside $363,053 for the affordable housing fund, which Henley says is generated by a surcharge on recorded documents and used to provide rental subsidies for disabled and senior residents and to help local home trusts develop properties.
“Growing businesses are unable to find employees,” explains the budget message. “Housing is in critically short supply.” Henley and Thomas cite ongoing difficulties in filling jobs in the county that are due to high cost of living, especially housing. Henley told the Journal that often, the county finds that people with mid-level professional jobs are interested in moving to the islands, but decide they just can’t afford to.
“People who are paid a decent wage cannot afford to live here,” she said.
Budget authors cite increased “phishing and hacking activity in financial systems” as reason for a proposed $3,100 to install dedicated, secure computers in the treasurer and auditor offices that directly connect to the county’s bank.
The county’s total full-time equivalents would go from 227 in 2016 to just over 230. That equates to about 147 full-time workers paid under the General Fund (including 34 in the Sheriff’s Department, 15.5 in Community Development, 11.5 in the Prosecutor’s department, 12 in the Auditor’s department and 24 in Health and Community Services); 54 in Public Works; 23 in Special Revenue Funds; and 6 in Information Technology.
The budget includes the addition of two FTEs. During the recession, the Office of the County Manager gave up a position which handled risk management, communication, and public records, among other tasks.
“The requested Management Analyst would assist the County Manager with project management, contract management, policy development, communications and staff development, freeing the County Manager to champion long-term needs and projects, such as a strategic plan for the County,” write Henley and Thomas.
The second proposed new FTE is a Maintenance Worker position for Facilities, to be based on Orcas Island.
In addition, at the WSU Extension office two county positions will be swapped out for higher-FTE WSU positions, and WSU will carry the benefits cost for these positions.
Yet overall, state Henley and Thomas, “To this day, re-hires have not reached the staffing level of 2008.”
Future financial security
In regard to the county’s future financial security, write Henley and Thomas, “the long-term stability of the government’s revenue sources is questionable. Sales tax is a fickle mistress, as we learned in 2009. Increases in the cost of doing business, led by the pressure to pay a living wage, continue to outpace growth in property tax revenue. Long-term, a more fiscally sustainable revenue model will need to be identified.”
The county has established a Budget Stabilization Fund, with a long term goal of setting aside 15 percent of the Current Expense budget in cash reserves. The 2017 budget places $1,367,355 in the fund.
Asked about alternative revenue models, Henley said any alternative would require state legislation – a modification of the current 1 percent limit on increasing the general levy.
“We can do levy lid lifts, and we have, but that requires going to voters every time we want to renew,” said Henley. “We’ve adopted most of the available funding sources we can.”