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UPDATED | More layoffs coming in Island County
Island County is facing a budget shortfall of roughly $1 million due to falling investment earnings, and more staff cuts are likely in Coupeville, according to county officials.
The grim news was announced Tuesday afternoon at a staff session for Island County commissioners.
Commissioner John Dean, chairman of the board of commissioners, said the shortfall could mean the loss of roughly 20 positions.
Staff reductions could happen as early as June.
County officials said the size of the shortfall is still not certain.
“While it’s preliminary, we do want people in our courthouse to know that this may be lying ahead,” Dean said.
The $1 million shortfall follows a $2 million budget gap from late last year.
The county cut 31 positions in December to fill the $2 million hole in the 2009 budget, a spending plan that totaled $67.7 million. The cuts included jobs that were left unfilled and positions that were removed by attrition, and a total of 18 workers actually lost jobs. Eleven of those employees were full-time workers, while seven were part-time.
Dean said the impending cuts likely will include a noticeable loss in county services.
Public hours for county offices may be cut. County Treasurer Linda Riffe has already requested a reduction in the hours her office is open to the public.
“I would predict people are going to see a reduction of public service, not because we’re lazy or hiding behind the doors, but because we have limited staff,” Dean said.
“The courthouse is staffed from 8 to 4:30; the office hours for the public may be something like 10 to 3, 9 to 3, but we haven’t decided that yet,” Dean said.
“We want it to be consistent through the whole courthouse; that’s another discussion we’re having,” he said.
Cuts in service may happen by March 1, Dean said.
The county is not looking at across-the-board cuts. Instead, commissioners are asking department heads to identify the priorities in their departments, and officials will also look at ways for county departments to work together.
Though revenues are down from the county’s invested funds, that isn’t the only reason county officials are worried about the bottom line of this year’s budget.
Retailers had a terrible holiday season, with rough winter weather keeping customers away from stores, so the county’s sales tax revenues are expected to drop sharply. The actual amount will likely not be known for another two months.
The slowdown in the housing industry, and the real estate market, will also mean reduced revenues.
“It isn’t just any one thing,” said Riffe. “Investment is only one piece of that.”
County officials have already seen interest rates drop repeatedly through last year.
“There has been a deep trough, much deeper than anyone could have anticipated it would go,” she said.
Riffe said she did adjust the estimated interest earnings downward from last year, anticipating there would be a slip in interest rates and the market.
“I don’t think anybody could have anticipated it would go down as fast and as far as it has,” she said.
Riffe said she had warned county commissioners some time ago the investment revenue estimates would change.
“I’m concerned because this market continues to slip,” she added.
Riffe said the situation would have been worse if she had not “laddered out” her investments a year ago; investments were locked in at higher rates in 2008, and investments are set to mature every two weeks through 2009.
“It will mitigate somewhat this severe downturn for this year,” she said.
Once those investments mature, however, Riffe said they will have to be reinvested under rates that are lower — below 1 percent.
CD rates, for example, have short-term interest rates ranging from .30 percent to .68 percent.
The interest rate for the Washington State Local Government Investment Pool has also fallen. Island County has 67 percent of its investment money, or $79.1 million of approximately $117.7 million, invested in the pool.
Riffe noted the pool’s interest rate dropped from 1.165 percent to 0.965 percent in one day.
The $117.7 million includes money that Island County has invested on behalf of junior taxing districts, such as school, fire and parks districts.
The county’s ability to invest money has also been impacted by the failure of the Bank of Clark County. The Washington Department of Financial Institutions closed the Vancouver-based bank on Jan. 16.
The bank failure left $15.1 million in unsecured debt, an amount that will have to be covered by other banks in Washington that are approved as public depositories.
Riffe said that’s another reason why the county’s options are dwindling for good, safe investments.
“A Whidbey Island Bank representative came to see me last Friday and said they could no longer accept the county’s money for investments,” Riffe said, because the bank is among the group that will have to pick up some of the tab.
“There is no doubt in our mind that we are going to see more bank failures in this state,” she added.
That may further narrow the field of institutions willing to take government investments, which would leave Island County few places to invest beyond the Local Government Investment Pool.
Island County has about 52 percent of its total investments, roughly $19.7 million, in the pool. The county has also invested $59.3 million from junior taxing districts in the pool.
Riffe said she expects the sour economy to last for years.
“I wish I could perform magic. I can’t. The economy is out of anybody’s control,” she said.
“The concern I have is, that looking forward, it makes it very difficult to anticipate or determine how far this economic situation is going to go,” she said.
“A year ago I would have never said things would get this low. It looks like it could go even deeper because unemployment is going up.”
Dean, who has taken some blame for the slow notice to employees last year when the county’s budget started to go south, said commissioners wanted to alert county workers early, even though the depth of the cutbacks won’t be known for weeks.
“We got a handle on this within 30 days,” he said, adding that there was a reason why county officials were careful three weeks ago when it started to become clear the county’s financial troubles weren’t over.
“One of the things we don’t want to do is jump out and say the sky is falling if it isn’t. If we start telling people to prepare for another reduction in staff, we want to be darn sure we’re accurate,” he said.
“I think we’re right on the mark this time around,” Dean said.
Riffe said she has already been thinking about reducing office hours.
“I’m looking at being open for the public from 9 to 4, so that what staff I have left have an hour of uninterrupted time, and then a half hour at the end of the day, in order to accomplish their responsibilities.”
Riffe will be left with 6.5 workers after the current round of cuts.
“People need to just understand the reason why we may have to cut back on our hours or the things that we do,” she explained. “We have state-mandated requirements. With so few staff in here, I cannot compromise our integrity or our internal controls.”
Island County has 451 employees. During the debate on cutbacks late last year, some people suggested looking beyond personnel cuts to bring the budget in line.
Some suggested having county employees prove a county car wasn’t available when they needed to travel on official business, rather than getting reimbursed for mileage. Some said training was given unnecessarily to employees who did not need it. One citizen suggested a 50 percent “symbolic” pay cut for the commissioners, and a 20 percent voluntary pay cut by the county’s top managers.
Others suggested imposing a cap on nightly hotel charges by county employees who travel on county business, or going after the more than $143,000 in animal license fees that aren’t collected every year.
Dean said he is ready for the discussion to begin, and invited residents to share their suggestions at the upcoming commissioners’ forum at 6 p.m. Wednesday, Feb. 18 at the Heller Road Fire Station in Oak Harbor.
“Everything is on the table,” he said.