Thurston County's total revenue is projected to decrease in 2023 compared to 2022, largely due to COVID-19 relief funding winding down. But expenditures are expected to increase.
The county completed public hearings on its proposed midterm budget adjustment last week.
During the hearings, Assistant County Manager Robin Campbell said total revenue for all budget funds would reach about $537.4 million in 2022 and $422.7 million in 2023. She said expenditures would reach $508.4 million in 2022 and $515.7 million in 2023.
On Tuesday, Commissioner Gary Edwards asked Campbell why total expenditures appeared larger than revenue in 2023. Campbell responded by saying the county has built up large fund balances that must be spent.
"When we collect taxpayer money, we don't do it to put it in our bank account," Campbell said. "We do it to provide programs that provide benefits to the citizens of the county. So, we've accumulated a lot in these accounts and it's time to spend it down."
When looking specifically at the county's general fund, total revenue is expected to fall from nearly $117.4 million in 2022 to $117.3 million in 2023. Yet, total expenditures are expected to increase from $123.6 million in 2022 to $129.5 million in 2023.
This fund may be used flexibly for any legal purpose at the Board of County Commissioners' discretion. The county's preliminary budget report indicates the general fund balance is healthy, meaning some of it can be used to fund expenditures.
County offices and departments usually spend about 3% less than their appropriation, according to the budget report. In most years, revenue exceeds expenditures.
As a midterm adjustment, Campbell said any amendments would be limited to unanticipated items such as grants, technical changes, rollovers of unspent money, and emergent needs.
This means the adjustment won't include funding for major policy changes. Such items were included when the biennial budget was approved last year.
The Board of County Commissioners is scheduled to adopt the final changes to its biennial budget during its last meeting of the year on Friday, Dec. 16.
In the preliminary budget report, the county described a positive outlook for its finances despite the continued impacts of the COVID-19 pandemic and inflation. The county attributes strong tax revenues to its ability to weather challenges in recent years.
Revenue from property taxes remained stabled in 2021 and the county expects that to continue in the 2022-2023 fiscal year. The county budgeted $87.1 million in property tax revenue for 2022. For 2023, the county projects property tax revenue to reach $90.6 million.
The county retains only about 16 cents per dollar of property tax the Treasurer's Office collects. Most of it goes to schools and the rest goes to cities, fire districts and all other jurisdictions in the county.
Sales tax revenue has remained strong during the pandemic. This is partly due to stimulus payments, unemployment benefits and a shift to online shopping that has been keeping consumer spending afloat, according to the budget report.
Even with a slowdown in 2022, the county expects sales tax revenues to remain at pre-pandemic levels. The county expects to collect just under $27 million in sales tax in 2022 and just over $27 million in 2023.
Most sources of operating revenue, including taxes, all appeared to increase from 2022 to 2023 in the budget report.
The one exception is intergovernmental revenues, which primarily comes from federal and state governments. This is where pandemic relief funding factors in.
In 2021 and 2022, the county received at total of $56.4 million from the federal American Rescue Plan Act. The board has spent and earmarked these funds for a variety of uses meant to help the county, businesses and community bounce back from the pandemic.
Campbell said these funds must be spent or obligated by the end of 2024, but there have been some concerns it may be doing so too slowly, The Olympian previously reported.
On Tuesday, she said the county's COVID-19 recovery fund still had a $35 million fund balance. In the summer, the county released a performance report on how it has spent these funds and a strategic plan to spend the remaining funds.
Operating budget expenditures are expected to increase from about $453.7 million in 2022 to nearly $462 million in 2023. This includes all expenditures except capital improvement projects which are in a separate budget.
COVID-19 response spending made up a significant portion of the 2022 budget, according to the budget report. For 2023, the county expects to spend a substantial amount of its remaining COVID-19 fund.
This budget is also being affected by the state of Washington v. Blake court case, which decriminalized simple drug possession. The ruling means the county must hold re-sentencing hearings and repay legal financial obligations in cases from 1971 onward.
The county says the decision will cost the county millions of dollars if the state government does not fully reimburse it.
In 2022, the county provided a 2.5% cost-of-living adjustment for staff in all offices and departments.
For 2023, the county has budgeted additional cost-of-living adjustments and a one-time bonus for all employees. The budget report indicates corrections deputies will see a 4% raise, sheriff deputies will get a 4.1% raise, and all other staff will receive a 2.5% raise.
Additionally, the county has factored in an increase in insurance premiums paid by the county.
Thurston County had about 1,277 full-time equivalent (FTE) positions in 2022, the most it's had in at least 11 years, according to the county.
Capital budget expenditures are expected to increase from about $54.7 million in 2022 to $53.8 million in 2023. This includes various construction and maintenance projects.
The public can review the county's budget by visiting its website.
