Walla Walla County commissioners will hold a public hearing Monday to consider the 2021 budget, including proposed allocations of funds remaining from the 2020 budget.
The initial proposal includes $87,637,693 in projected revenue and $91,544,259 in requested expenditures, leaving a projected shortfall of $3,906,566.
However, the county expects to start the budget year for 2021 with an overall fund balance of $5,629,303. At Monday’s virtual public hearing, set for 10 a.m. to 4 p.m., commissioners will discuss ways to balance and adopt a budget by December 31, as required by law.
County budgeting is unlike a household budget, where typically a salary comes in regularly and regular expenses remain relatively constant. The situation with county budgeting is quite different.
“This is hard to explain,” said Commissioner Todd Kimball, “but here goes.”
The County has two main sources of revenue: sales taxes and property taxes. Sales tax revenue is relatively stable throughout the year, while property tax is not.
Sales tax flows in every day, with a slight ebb and flow based on seasonal spending patterns. Property taxes are collected just twice a year, in April and October, resulting in an influx of revenue to the county in those months.
The budget for the months immediately following that collection benefit from a cash-rich situation.
However, since revenue in the other months of the year comes only from sales tax, the amount collected at any point in time is often less than the expenses for that period.
This results in a windfall/shortage cycle in revenue, while expenses remain more or less constant, absent the unexpected emergency.
To even things out the County has established a Current Expense Reserve Fund. The CERF is designed to hold in reserve an amount equivalent to 25% of the approved budget for any given year.
The plan is for the CERF to be fully funded in 2026, the point at which the budget’s current expense fund is expected to have enough cash to withstand the months when revenue is only coming from sales tax.
“Think of it like dipping into your savings account,” Kimball said. “The 25% was set up to be a savings account. The County has been using its savings account to float the months where revenues were less than expenditures.”
For this reason, and to reach the goal of a fully-funded CERF, the county budget includes annual transfers of $1.5 million into the reserve fund.
At Monday’s hearing commissioners will discuss ways to continue funding the regular activities at reasonable levels, while setting aside money for the CERF as a rainy-day fund.
Part of the discussion will be about a budget surplus from 2020 of about $3 million. The surplus is due to unexpected revenue from several different sources.
According to Gordon Heimbigner, Walla Walla County treasurer, the county has received about $700,000 more than anticipated in sales tax revenue in 2020. He attributes this to increased online shopping, where taxes are charged at the rate of the destination of the product sold, which in Walla Walla County is 8.1%.
County Auditor Karen Martin added that there have been substantial savings because staff haven’t been using their travel budgets this year, since nearly all business meetings have been online.
An important source of unanticipated revenue comes from the county’s response to COVID-19, using funds from the federal CARES Act. Because many county employee activities shifted to COVID-19 response activities which could be funded using CARES funds, the original funding sources, especially for wages, remain untapped.
“We were able to pay a portion of their salaries out of CARES funding,” Kimball said. “Since Walla Walla County luckily did not see a significant revenue shortfall, as predicted, our ending cash balance is better than expected.”
Kimball’s proposal to fellow commissioners for distribution of the $3 million includes:
• $100,000 to to set up an Emergency Response and Removal function at the fairgrounds.
• $130,000 to pay off fairgrounds properties bought over the past few years on 4th Street and Orchard Avenue.
• $200,000 to build up the Superior Court Emergency Fund, which has been depleted in recent years for murder trials.
• $750,000 to the CERF.
• $200,000 to the Law Enforcement Officers and Firefighters Fund, which helps to pay required medical expenses for LEOFF1 members.
• $200,000 to the Law and Justice Building, to replenish fund for jail elevator repairs and the proposed gate-securing project for the Sheriffs’ Office.
• $200,000 for prior and proposed electrical repairs to the Courthouse, as well as help fund a generator project there.
• $120,000 to help cover costs related to delayed maintenance and upgrade projects at the fairgrounds
• $100,000 to help fund the Geographic Information System department move to the IT department from its current location at Public Works
• $1,000,000 to the Tech Services Capital Fund. The County will be required in the near future to replace its accounting software. It also will also set up a fund for computer replacement
The public can join the Monday’s virtual hearing by phone or with a video call. Phone in to 1-408-418-9388 access code: 146 784 0290, or use the meeting link at ubne.ws/3cAgNTv .