$3 million short in 2026 county budget

Department requests more than projected revenue

NEWPORT — Pend Oreille County commissioners heard there was a $3 million gap between what departments are asking for in the upcoming 2026 budget year and what county revenue likely will be.

County financial manager Jill Shacklett and Auditor Marianne Nichols gave an update at the commissioners’ regular meeting Tuesday, Sept. 2.

“It’s all in new asks,” Nichols said. There are new positions being requested, as well as salary increases, she said. Those would be ongoing expenses. There are also one-time things such as a new boat and trailer for the noxious weed board.

The Sept. 2 meeting with commissioners was required by statute, with the Auditor’s Office presenting proposed department budgets to the county commissioners. Commissioners will work on setting the budget to be passed by the end of the year.

The county can only increase its budget by 1% annually plus new construction, which amounts to about $21,000 for road budget and the same for the current expense budget, Shacklett said. New construction revenue has come in at about $40,000 a year for the last two years.

The county had a $16.38 million current expense budget for 2025. In addition, another $34.42 million was budgeted in other funds with specific purposes. Shacklett and Nichols anticipate a $2 million ending fund balance, money that was budgeted but not spent in previous years. There usually is an ending fund balance each year.

Revenue is stable, county Treasurer Nicole Dice told commissioners.

“Our revenues are holding steady,” Dice said. “We’re a small county and our revenues don’t really change much.”

County commission chair John Gentle said salaries have been a major focus this year. The commissioners have worked at making the salary schedules reflect the work that is being done by individual positions. Negotiations in collective bargaining agreements are designed to deal with things like cost-of-living adjustments and other increases.

“The real conversation is how long until the first layoff,” he said. “If revenue drops off, how long until the first layoff.” “And I hope we don’t have to go there again,” Nichols said. “But if we take that downturn and revenue doesn’t come in like we’re anticipating, then yeah, that’s always something that’s unfortunately out there. And a lot of our counties surrounding us have done that. I know Stevens and Lincoln and a number of them have. I know that Ferry County, in lieu of raises, went to 32-hour work weeks.”

Dice said San Juan County on the west side of the state also did that. Other counties have already had to lay off people because they didn’t have enough revenue, she said. That shouldn’t be the case with Pend Oreille County, though, she told commissioners.

Dice told The Miner that the county revenue consists of property taxes, sales taxes, fees and a variety of other things like timber excise taxes and federal money such as payment in lieu of taxes and money from the Secure Rural Schools Act. It also gets money from the PUD as a privilege tax and Seattle City and Light, as well as some money from the state.

The state’s budget year is from July 1 to June 30, so the county knows what they’ll get in the first half of the year in the form of state liquor tax and criminal justice tax.

“But depending on what they do next year, we really don’t know what (the state) will do after July,” she said.

Investment interest on the county’s money has increased over the last two and a half years, she said.

“Last year we collected $1.1 million in investment interest,” Dice said. Because she didn’t know what the federal reserve is going to do regarding interest rates, she budgeted $800,000 for 2025. “So far this year we’ve collected $673,000, so we’re almost to $700,000, so I do predict we’ll over-budget on that budget on revenue.”

Interest income has increased over the last few years. In 2021, the county got $11,000 in interest income. In 2022 interest income was $212,000 and in 2023 $900,000.

“So it’s been ticking up, but with (the Federal Reserve) going to lower rates at the end of the month, it might go down a little bit but I don’t think it will be enough to make a huge difference,” Dice said. Trying to predict what the fed is going to do next year impossible, she said. “I try to be realistic and kind of conservative, so I would rather us have more revenue than expected than less.”

Sales tax has held steady, she said. It is collected monthly and distributed two months after it is collected so through June, the county has collected over $1 million in sales tax.

“The last two years we’ve been collecting $1.8 million,” she said. Destination- based sales tax in which the sales tax goes to where the product is delivered — something that’s been going on the last couple years — has helped, she said. There’s been a lot of online shopping and that helps the county, she said.

So far this year the county has gathered $1.5 million of the $2.5 million that was budgeted for property tax revenue. “So we’re over half of our collections,” she said. Dice said that the county will have collected 90% of property tax revenue that was budgeted by the end of the year.

The federal Payment in Lieu of Taxes money came in a little late, but at $1.4 million. The federal Secure Rural Schools money was about half of what it was in 2024. The county road department received about $150,000 after the U.S. House of Representatives declined to vote on it and it reverted to a percentage of timber sales.

The county also gets some of the excise tax the state collects on timber sales, which is divided among different taxing districts, including roads. The first half was $136,000 and she anticipates a similar amount in November.

The county also gets a criminal justice portion of the sales tax that generates about $200,000 a year. In addition, the county collects a motor vehicle excise tax for criminal justice that generates about $400,000 a year.