(The Center Square) – Providing what he called a “reality check” on Monday, Jeff McMorris, senior director of Spokane County’s Finance and Administration Division, warned of a $20 million deficit heading into 2026.
McMorris, the husband of former U.S. Rep. Cathy McMorris Rodgers, R-Washington, told the Board of County Commissioners that this is a multiyear issue. He took over from Randy Bischoff, who held the positions until recently and helped balance a similar shortfall last summer into the fall.
Recent projections show general fund revenues dipping to $262 million next year, $2 million less than budgeted for 2025. Meanwhile, McMorris expects spending to reach $282 million next year and more than $350 million by 2030, but revenues are only projected to reach $281.9 million by then.
He pointed to an overarching situation as federal COVID-19 relief aid dries up and municipalities deal with shortfalls nationwide. Meanwhile, Gov. Bob Ferguson is tackling a deficit at the state level as Elon Musk and the Department of Government Efficiency cut federal spending.
“We’re heading into a big contrast,” McMorris said. “The extra money outlook is going in the opposite direction, and that’s going to impact this year’s budget. Things are not super great.”
Tessa Sheldon, budget and financial operations manager, said the issue is countywide, not just in the general fund. Much of the overall budget relies on federal and state funding, so she said the county needs to make those working with every fund “fully aware of our economic situation.”
Major corporations are also cutting their workforce, reflecting reduced consumer spending across the private sector and local economy. Bischoff budgeted a 1% sales growth over 2025, but McMorris set 2026 at 0%, increasing to 1% the following year, 2% in 2028, 2.5% in 2029 and 3% in 2030.
From 2000 to 2023, Spokane County averaged an annual 4% growth in sales tax revenue.
Sales tax makes up the bulk of the county’s general fund revenues at 30%, with charges for services at 26% and property taxes at 24%. Sheldon said these projections don’t include the 1% property tax hike allowed by state law, but even then, the county is short on revenue options.
McMorris said salaries and benefits comprise 69% of the general fund budget, with supplies and services making up the second largest chunk at 28%. Labor contracts and other agreements require the county to provide raises and cost-of-living adjustments, so the ability to cut is limited.
“Our forecast is showing a $20 million deficit in 2026,” Sheldon said.
McMorris said county departments are starting to identify efficiencies. He suggested the board institute a hiring freeze and consider cutting services that state law doesn’t require the county to provide. Another option included eliminating 106 vacant positions for $10 million in savings.
Bischoff asked the county to eliminate a similar amount of positions last year but later withdrew the request to allow the departments to lay out their own cuts. McMorris said he would run the board through a monthly review moving forward to stay on top of the situation.
“We’re not in the hole,” he said. “We have a fund balance. It’s just if we don’t start doing something now, give it a year, and we’ll be in a tough situation.”
