— Corrected 6/2 to reflect no dates have been set for next steps in budget cut decisions.
Despite federal and state funding that is earmarked for expenses incurred due to the COVID-19 pandemic, a loss of millions of dollars in revenue has Skagit County officials considering budget cuts.
“We’re left with still a very large balance to pay,” Skagit County Administrator Trisha Logue said of how increased expenses and decreased revenue are expected to shake out.
Logue presented to the Skagit County Board of Commissioners an early estimate Monday of how COVID-19 may impact the county’s general fund through 2020.
She has calculated a $4.5 million loss for that section of the budget alone. Combined with an estimated $6.3 million increase in spending from the fund, the county may have to use about half of the $22.4 million in reserves from 2019.
“We have a $10 million gap,” Logue said. “Spending over $10 million of a fund balance in one year is definitely not a sustainable action.”
An interim financial forecast document Logue provided to the commissioners states: “Action should be considered now to reduce expenses.”
Most options are focused on staffing, including instituting a hiring freeze, leaving vacated positions unfilled and offering retirement packages to those nearing that point in their careers.
Commissioner Ken Dahlstedt said staffing is the county’s largest cost, and he supports ways to trim that expense without resorting to layoffs.
Another option for reducing the county’s costs is to close operations several days of the year.
Logue said closures were used to reduce expenses following the 2008 recession, and can save $84,000 in a single day.
“It’s a very quick and effective way of saving money,” she said.
While Monday’s discussion was focused on the county’s general fund, Logue said other funds will be impacted by the pandemic as well, particularly those that receive revenue from motor vehicle, fuel, real estate excise and sales taxes.
With many businesses closed and most residents staying home, little shopping, driving and home purchases have taken place since March.
“There are many other funds that will also see a reduction in revenues related to this pandemic,” Logue said. “A whole host of funding sources will be decreased.”
Commissioner Ron Wesen, chair of the board, said the county is bracing for some difficult decisions.
Commissioner Lisa Janicki said it’s important the county starts thinking now about how to navigate the budget in 2021.
“If there’s an orderly way to go into 2021 having already slimmed it down a bit, that makes a lot of sense. 2021 will be really ugly if the economic impact of this turns out to be multiyear and our reserve is already down,” she said.
The commissioners directed Logue to continue assessing budget cut options and to keep them updated as the financial impact of the pandemic becomes clearer.
In the meantime, they asked her to bring a proposal June 8 for how to use grant funds to help rebuild the local economy.
“As we look at where to reduce money, where to cut, I think concurrently we need to look at where we can strategically invest,” Janicki said.
The three-member board of commissioners was in agreement that some government funding should be funneled into local businesses hurt by the pandemic.
“Small business is the heart of the community. We have to do what we can,” Wesen said.
Logue said she will work to determine how a portion of the $7.1 million in federal CARES Act funding allocated to the county could be offered to businesses through a county-operated grant or loan program.
If the money isn’t spent on qualifying COVID-19 related expenses by Oct. 31, the balance will go back to the federal government.
“We don’t want this money going back when there are so many local needs. We want to make sure every dollar is helping our businesses and our community recover,” Dahlstedt said.
In addition to CARES Act funding, the county expects to receive funding from several other programs.
In all, the county may be eligible for about $9.7 million to help with expenses such as increased staff time, increased sick leave, operation of the COVID-19 testing site, the sanitizing of facilities, the installation of plexiglass and technology upgrades to keep officials and staff connected during the pandemic.
Deputy Administrator Kayla Schott-Bresler said work is already underway on some upgrades.
Remodels to allow for jury trials and ballot counting with adequate physical distancing are among the largest projects being undertaken. Computer and software upgrades are among the smaller needs being addressed.