The Clark County Council had its first review of the 2024 budget during a work session Monday. County Manager Kathleen Otto said this was one of the most difficult budgets she’s worked on in her seven years with the county.
“This is a large request, the largest that we’ve seen in the county — probably the hardest budget process I’ve been a part of because of knowing people’s needs, and (we) have limited funding to help support all of those needs,” Otto told the council. “I do appreciate everyone’s work that has gone into this process.”
The county council is scheduled to hold public hearings on the budget at 10 a.m. Dec. 4-5. A third public hearing may be held at the same time Dec. 6, if needed.
The budget process begins with each department preparing and submitting budget recommendations in early October. The finance team, which includes the budget director, deputy treasurer, human resources director and finance director, works with Otto to review the requests and make a recommendation to the county council.
“We do have some advisory boards and committees that review requests. This includes the public safety sales tax and mental health sales tax,” Otto said.
Otto said the council has some important decisions to make in the 2024 budget, such as whether to take the 1 percent property tax increase allowed by state law and how to allocate remaining federal pandemic relief funds.
The council will also have to balance rising salary costs, inflation, capital project needs and increased demand for services without the same increase in revenue the county saw in years prior.
During the pandemic, more people shopped online from home or limited their travel to local areas only. Sales tax revenue increased by as much as 20 percent in some years between 2021 and 2023. Now, that increase is waning. Sales tax revenue is expected to increase by about 4.2 percent in 2024.
The 2024 budget is the first full-year budget to include wage adjustments and increases across all departments that were approved by the council earlier this year.
“Like many organizations, the county has struggled historically with hiring and retaining employees. This is mainly due to two significant impacts. One, we had a lot of retirements that we knew were coming. The other is competitive wages,” Otto said.
General fund revenues are forecasted at $193.4 million in 2024, slightly less than the $194.8 million in the 2023 budget. General fund expenses are estimated at $190.5 million in 2024 compared with $202.8 million in 2023.
The 2024 budget is also the first full year that public safety sales tax revenues will be collected. Revenue for 2024 is forecast to be $7.5 million. Mental health sales tax revenue is expected to be $13.3 million.
Looking past 2024, the county could be facing a general fund budget shortfall within a few years.
“What that means is that we’re dipping into our one-time fund balance to balance the budget,” Otto told the council.
Otto said if no changes are made, the county won’t have a fund balance to dip into by 2027.
“We’re going to be working with the senior leadership team starting in two weeks, potentially looking at reductions for 2025, to ensure we can come in with a balanced budget,” Otto said.
Councilor Gary Medvigy said the county has been warned about a structural deficit for years, but it never seems to materialize.
“These slides have looked exactly the same every year, pretty much. Every year there are dollars slipping out — different years, different amounts. We maximize our expenditures, which is what an accountant should do. And we minimize all our possible revenues, which is a conservative view of what we should do. That paints a pretty good picture but always paints diminishing fund balances,” Medvigy said.
Medvigy said he wants to take another look at sales tax leakage, the amount of sales tax revenue going to Portland, now that shopping habits are returning to pre-pandemic levels.
Following the public hearings in early December, the council is expected to adopt a final budget.