Snohomish County’s budget crisis is bigger than previously thought, Snohomish County Executive Aaron Reardon said Wednesday, and some employees will be laid off next year to balance the budget.
“You can call it rolling debt, rolling deficits. You can call it bankruptcy. The bottom line: It’s very, very bad. And it’s red ink as far as the eye can see,” Reardon said.
Reardon said the county is “broke” and faces a $40 million deficit by 2009 if it stays on its current spending path.
He outlined the county’s gloomy financial picture during a speech to the Marysville Noon Rotary.
If the county continues on the same spending path, the executive warned it would not be able to hand out paychecks by the middle of next year. “We’d be shutting down every branch of government to avoid foreclosure.”
“We, as a county, are broke, and we’ve got bad credit,” Reardon said.
The costs of running the new jail are the main reason for the budget woes. County officials got their best look at the budget problem Monday, after earlier financial forecasts were recalculated.
The new five-year financial forecast shows the balance of the general fund – the pot of money that pays for basic government services such as sheriff’s deputies, parks and other programs – will hit a deficit of about $644,000 next year.
Snohomish County has a general fund budget of about $169 million this year.
The forecast predicts deficits of $11.2 million in 2006, $21.2 million in 2007 and $30.7 million in 2008.
Continuing to tap the county’s reserves to pay for government services also could jeopardize the county’s bond rating, which would hurt the county’s ability to finance park improvements and road construction projects. The bond rating already has taken a hit and was lowered last year after the county started tapping its reserve funds to cover the budget gap.
Reardon said later that personnel cuts would be deep. He did not know how many employees may not have jobs in the coming year.
The number of employees let go will depend in part on employee benefits.
“We’ll be working with them to get an idea of what it is that they expect,” Reardon said. “The cuts could vary depending on how much they want in their benefits packaging and how much they want as a cost-of-living adjustment.”
County officials are hoping to limit the budget shortfall when the new jail opens next year by leasing beds to the state and housing state prisoners in the county jail.
Talks are ongoing, but no agreement has been reached, said Susan Neely, an executive director for Reardon who oversees public safety issues.
“No way is this a done deal. But we are talking,” Neely said.
Reardon is sending a letter to the county council and county employees this week outlining the budget problems.
County finance director Roger Neumaier said the council would get a briefing on the financial forecast next week.
Reardon said he hopes to prevent problems with the budget in the future by creating a “savings plan,” two new reserve funds in the budget. The proposed ordinance that sets up the accounts says money could not be taken from the “rainy day” reserve unless a supermajority of the council – meaning four of five council members – voted to shift funds from the account.
Shortfalls also will be avoided in the future by setting up a priority-based budget system. That will make future county spending more predictable, Reardon said.
Reporter Brian Kelly: 425-339-3422 or kelly@ heraldnet.com.
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