It doesn’t take a mathematician to figure out that the county’s budget is headed toward troublesome waters in the upcoming year.

According to budget projections submitted this week to the Kitsap commissioners, the county will need to cut 6 percent of expenditures, or $4.7 million, in the upcoming year.

With substantially lower revenues this year and revenues forecast to be even lower next year, county officials are faced with the necessity of deep budget cuts for the 2011 fiscal year.

“We must aggressively look at unmandated services before we continue to provide services that make us look good and feel good,” said County Auditor Walt Washington. “Service at the government is not like going to a grocery store, where you have the ability to shop across the street for the same thing. We often times are the only vehicle for most services we provide, and those should be the last on the cutting floor.”

“I think the cuts should be equal across all departments,” County Assessor Jim Avery said. “The mandated missions and various services we provide are just too diverse to pick and choose one over another.”

The county is already facing a $610,000 budget deficit for this year and is now looking at another $4.7 million in cuts — and questions about whether that level can be reached.

“A balanced budget is always attainable, but at what cost?” asked Washington. “We will make the cuts necessary to meet budget and service delivery will take the brunt.”
“Cutting the general fund spending by 6 to 8 percent will be painful for all general fund departments, but the budget has to be balanced,” Avery said. “Service levels, although difficult to measure, will certainly be reduced.”

The continuing lower property tax revenues and foreclosure numbers are having a noticeable impact on the budget.

“The statewide initiative that limited property tax increases to 1 percent from 6 percent was monumental,” said Washington. “It’s what the public voted for and what the county has to provide services with.

“As an example,” he said, “when the cost of living and contracts with union workforces exceed 1 percent, the county is already deficit spending. Over the past several years we spent down reserves and now are faced with staff cuts and diminished service delivery to meet the budget shortfall.”

“Property tax revenue accounts for about 35 percent of general fund revenue,” Avery said. “The 1 percent limit (exclusive of new construction) on annual growth is causing a problem because the annual cost of employee benefits (medical, retirement, longevity pay and step increases) is increasing at a much higher rate.”

Discussions surrounded topics such as cutting longevity pay, omitting benefit increases and potentially another round of layoffs.

“Longevity pay is a vehicle that allows long-term employees to exceed the ceiling of the pay grade,” Washington said. “There are built-in steps for most positions, and when you’ve received annual increases to the top step, no other pay increases exist except cost of living.

“Cost of living makes sense when there is inflation to allow employees to keep up with that inflation,” he added. “If there is no inflation, there should be no cost of living. However, previously agreed-upon employee contracts locked the county into payments when revenues were no longer there to support the increases. Longevity is in addition to that and impacts the budget differently.

“I disagree with taking away benefits,” Washington said. “However, there is an opportunity for the county to offer employees self-payment plans to keep benefits at 100 percent, and in many counties and private industry that practice is in effect.

Most of Kitsap county’s elected officials agreed to self-pay medical benefits to match an equal percentage of what staff cuts were the past two budget cycles, Washington told the commissioners.

“Because Washington state law does not allow elected officials to reduce pay once it is into signed into law,” he said, “it was the best option for us to support the budget shortfall and participate at the same level of sacrifice as the employees in 2009 and 2010.”

“With most of our labor contracts expired and open, it’s a good time to be looking at all compensation issues,” Avery said. “I think all departments are planning for another round of layoffs.”

The Public Employee Retirement System “PERS” contribution rates are expected to increase drastically in July 2011.

PERS employer contribution rates will remain unchanged through June 2011, at which point they are projected to increase to 8.7 percent.

The county has already factored into the $4.7 million an increase of approximately $500,000 in additional budget expenditures if the rates increase.