The evaporation of interest earnings won’t hit local entities as hard as the decline in revenues has hurt Island County, according to officials at junior taxing districts across Whidbey Island.

Island County is grappling with the loss of $1 million in revenues from its investments, and the budget crisis has elected officials in Coupeville considering layoffs and cuts in services. Some have suggested that as many as 20 jobs may be lost in county government.

The big budget hole has been blamed on declining returns from the county’s investments as interest rates continue to plummet. The county has more that $117.7 million in investments that earn interest — including certificates of deposit, federal agency notes and money in the Local Government Investment Pool — and nearly $80 million of that amount is money the county has invested on behalf of junior taxing districts, such as school, fire and parks districts.

Both park and school districts have been watching the market closely.

South Whidbey Parks & Recreation District director Terri Arnold said the district’s exposure was minimal.

“We don’t invest enough money for this short term economic roller coaster to affect us, although we watch what’s happening very carefully,” Arnold said.

The park district’s investment varies monthly depending on revenue and expenses in the maintenance-and-operations fund.

In 2008, the park district received $5,500 in revenue.

In January, it had $152,000 invested with the county, but as expenses are deducted, that will drop to a constant $132,000.

“Due to sound financial practices over the years, we have a strong reserve representing 30 percent of the property tax revenue received the previous year,” Arnold said.

“A small portion is invested with the county, and our revenue stream from that source is not significant,” she said.

At the South Whidbey School District, business manager Dan Poolman said the lowering interest rates won’t have a big budget impact, either.

Over the year, the district invests anywhere between $600,000 and $1.8 million with the county.

“Different amounts are invested each month with the county treasurer,” he said.

“We saw that interest rates were dropping and planned for it,” Poolman added. “We budgeted for a 2 percent return that will give us about $16,000 from September 2008 to August.”

Island County Fire District 3 may have cut its investment losses this year by spending money last year.

Because it built and paid cash for the new $1.5 million Langley fire station, the district had less money to invest this year, said Paula Schuler, administrative assistant for the district.

Last year the district received $97,000 on its investments.

This year, $60,000 in investment income has been budgeted, but it’s not expected, she said.

“That’s a shot in the dark,” Schuler said. “It’ll be nice if we get it, but I don’t see it happening.”

Last year, the district’s total revenue was a little more than $2 million, and 2009’s operating budget is about $1.8 million, about the same as 2008.

Schuler said the district has been debt-free for more than 10 years.

As for investment earnings, she said: “We do know it’s something you can’t depend on, but nobody’s job is at stake.”

Schuler pointed out that junior municipalities such as the fire district are under the county’s umbrella financially, because the county collects property taxes that provide operating income.

“They hold it for us, but they don’t spend it or invest it without our saying so,” she said.