‘To eliminate negative impacts, additional revenue is needed’

County schedules budget workshops

Hood River County has scheduled two workshops on the county’s budget issues: One in the community building of the County Fairgrounds in Odell on Oct. 24, and a second in the Hood River Valley Adult Center on Nov. 8.

Both run from 6:30-8:30 p.m. and will be structured as drop-in open houses.

The intent of these workshops is to educate the public on the complicated budget issue, answer questions and give residents a chance to provide input on potential solutions. County administrators recommend that attendees plan on staying at least one hour to learn about the county’s budget issues and discuss with county commissioners and fellow residents.

Hood River County has been struggling with its budget for a long time: Since 2006, it had to pull over $7 million out of its Reserve Fund to balance each year’s budget, despite significant cuts.

So, how did we get here?

County commissioners and staff agree that there are four reasons why the county is facing such a high budget shortfall:

  1. Fluctuating log prices: Since timber sales are “the largest single source of revenue for Hood River County,” revenue value has gone down as a result of the fluctuating prices.
  2. Property tax limitations: The county’s property tax rate is stuck at $1.41 per $1,000 of taxable assessed value — the ninth lowest rate of Oregon’s 36 counties — due to two pieces of legislation passed in the ‘90s: Measure 5, which established limits on Oregon’s property taxes, and Measure 50, which limited the growth of a property’s assessed value. For reference, the state-wide average property tax rate is $2.81 per $1,000 of assessed value, and Wasco County’s rate is $4.25.
  3. Increasing costs of operations: The biggest chunk of both the General Fund (62 percent) and the budget as a whole (43 percent) goes to personnel services, which include the Public Employee Retirement System (PERS), wages, benefits, and insurance premiums.
  4. Loss of shared revenues: Over half of county land is owned by state or federal government and, historically, Hood River County has received upwards of $2 million in recognition of timber production on tax exempt land; but this year, the county budgeted to receive $70,000 and it’s unclear whether or not the county will receive any additional federal revenue. The county has also had to transfer some program costs to the General Fund as the state pulls funding.

The county had an approximate $1.6 million General Fund budget deficit in the 2017/18 fiscal year and the current General Funds deficit is about $1.46 million.

A draft of the county’s 2018/19 budget presented in April detailed approximately $918,810 in cost reductions and left out much-needed capital improvements, such as vehicle replacement.

“The proposed General Fund budget does not reflect the status quo. It reflects a dismantling of county operations and significant diminishing of capacity to deal with events, issues and problems, as well as day-to-day services,” state County Administrator Jeff Hecksel and Budget and Finance Director Sandra Borowy, in a signed message prefacing that budget document.

Most of the budget discussion is focused on the General Fund, which provides operating expenses, services and employee payrolls for most services except roads.

The total General Fund for the 2018/19 fiscal year is about $12.8 million. The largest chunk goes to personnel services, which include employee salaries and benefits, at 62 percent (approximately $7.94 million).

Capital outlay — money spent on fixed assets such as land and facilities — is 2.6 percent (about $332,800) of the General Fund and the remaining funds goes to other expenses such as materials and services.

Within these other categories falls the county’s largest single expense: Payment to NORCOR for jail services, at about 12 percent (around $1.54 million) of the total General Fund. The county’s $200,000 contingency (1.6 percent of the total General Fund) also falls in this category — but the Board of County Commissioners (BOCC) recently voted to pull an extra $31,276 from that fund to support the County Veteran’s Service Office.

The budget committee added many of the proposed cuts back into the budget before it was approved — including funding for the Oregon State Extension Services, the museum, the county’s Forest Trail program, GIS web mapping, code enforcement and Sheriff patrol deputies — but the county had to pull $721,000 from its rapidly diminishing Reserve Fund to balance the budget.

The BOCC resolved to limit withdraws from the Reserve Fund to a maximum of $750,000 in the next two years until solutions can be found, Hecksel said. If the county is able to stick to this limit, Hecksel estimates that the county will likely have $750,000 left in the Reserve Fund in 2020.

Capital improvements also remained out of the budget.

The 2018/19 budget assumes that the county will receive no new voter-approved revenue details a number of cuts meant to decrease reoccurring costs, but “to eliminate negative impacts, additional revenue is needed,” Borowy and Hecksel said in the budget message.

A retail marijuana tax that would add an estimated $20,000 to the General Fund is on the November ballot and the commissioners hope that the upcoming workshops will give them a chance to gauge public opinion on some potential revenue sources, including a potential food and beverage sales tax that could be on the March ballot.

For more information on the upcoming workshops, contact county administration at administration@co.hood-river.or.us or 541-386-3970.

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