(The Center Square) – Spokane County is now facing a $25 million general fund deficit ahead of next year, as projections continue to sour.
The gap follows $20 million deficits that the Board of County Commissioners balanced heading into 2025 and 2026 with significant cuts, fee increases and a 1% property tax hike last year.
Jeff McMorris, senior director of finance and administration, had previously forecasted a $17 million deficit heading into 2027.
He adjusted that projection to $25 million on Monday, attributing much of the increase to liability and medical costs.
The county has underfunded the medical account for the last few years, with high-cost drugs and rising liability claims putting nearly $10 million of additional pressure on the general fund.
“With an all-cuts budget, there would be some serious service-level [cuts],” McMorris warned Monday.
Last year, the commissioners closed a $20 million gap by asking each department to cut spending by about 7%; this was primarily done through cutting 120 positions, nearly all of which had been vacant.
McMorris said with that “low-hanging fruit” already out of the way, they are heading into crisis mode.
Salary and benefits make up most of the county’s general fund expenses, so residents will likely notice the impact of additional reductions compared to last time, when those positions were primarily empty.
Meanwhile, average salary costs are expected to increase by 7% in 2027, with benefits also rising by 12%.
Budget materials show general fund revenues increasing by just 1.2%, while expenditures rise 6.3%.
Outside of salary and benefits, the county’s law and justice departments make up about 75% of the general fund, meaning significant cuts would likely impact the Sheriff’s Office, courts and other areas.
Sheriff vehicles alone are expected to add $1.3 million in spending, giving the board an option to start.
“The one department we have that is not legally a mandate is the parks department,” McMorris said.
However, cutting that non-mandated department would still only free up about $4 million in savings.
If the board decided not to rely on an all-cuts budget, they have a few options to raise taxes and fees.
The first would be increasing property taxes by the annual 1% limit, which would generate $650,000.
The next option would be to take banked capacity from 1% property tax hikes that the board rejected in the past; budget materials show this providing up to $1.07 million to balance the general fund gap.
The county could also do a road levy shift, allowing it to transfer a portion of its taxing authority to the general fund. Doing so would save $7.5 million, but at the expense of county road maintenance.
A major general fund levy increase could provide $98.5 million, but that would require voter approval.
The county could also implement various sales and use taxes to raise $13 million to $17 million.
While the goal is to rely on cuts, the board recognized that it may need to consider other options.
County CEO Scott Simons will send a letter to department heads next month with reduction targets.
“There was a lot of unfilled, but funded positions,” McMorris told the board on Monday, referring to the spending cuts from last year.
“The pain would be felt much more acutely if we had that this year.”
