Council discusses budget priorities, planning for 2027 budget amidst funding challenges

Current estimates for revenues and expenses in 2027 show that the County is facing a $4 million budget deficit. Council gears up for ongoing discussions on anticipated cuts to staffing and service levels.

||| FROM SAN JUAN COUNTY COMMUNICATIONS |||

During the May 26th meeting, the County Council discussed strategies for balancing and preparing the 2027 budget. County Auditor Natasha Warmenhoven, Budget Analyst Dr. Molly Foote, and County Manager Jessica Hudson led a discussion with Council about the upcoming budget process and the projected financial challenges to presenting a balanced budget for next year. 

 Draft budget forecasts show that the County is facing a significant financial challenge for 2027 – specifically, a projected $4 million deficit, likely due to several factors: 

• During the COVID 19 pandemic, and in the recovery period that followed, the County was substantially supported by federal funding – particularly ARPA funds. The stimulus bill brought approximately $2.1 million into the County’s Current Expense Fund that stretched through 2025. An additional $1.2 million of federal funding supported the Public Health Coronavirus Response.  This funding is no longer available. 
• Expenses have increased in the Current Expense fund over time, with the cost of ongoing operations, specifically insurance costs, staffing, and inflation rising steadily over time. Stagnated revenues, including decreasing federal funding across multiple departments and no levy lid lift since 2020, have also contributed to the deficit. Council placed a current expense fund levy on the April 28, 2026, ballot but the lift was unsuccessful. Increased expenses outweigh revenues in the Current Expense Fund as cash balances are projected to be fully consumed to balance the2027 budget.
• These problems are not unique to San Juan County with many other jurisdictions across the state facing similar budget challenges. San Juan County will continue to seek ways to balance the budget that prioritize mandatory and essential functions with anticipated reductions in service levels.   

Council Discussion and Direction  

During the meeting, staff sought feedback and guidance from Council for the development of a one-year budget in 2027. Council shared insight into their priorities for reductions and additional revenue sources. The following were decision points or direction provided to staff from Council: 

• The target for reductions for 2027 is approximately $4 million; this is more than twice the amount that was reduced in the 2026 adopted budget and is about a 12% decrease in current expense expenditures. This number also represents a reduction in the amount of cash on hand to be utilized to balance the budget. It comprises of an anticipated $2.5 million direct budget deficit as well a reduction of $1.5 million in cash utilized to balance the 2027 budget.
• The draft budget is to be developed at this point without additional revenue. Council indicated a potential interest in revisiting the local law enforcement sale sand use tax made available for local governments in Engrossed Substitute House Bill 2015, passed by the state legislature in 2025. This tax could generate approximately $800,000 a year in San Juan County. Council may also explore a new public health clinic property tax made available to local governments in Engrossed Substitute House Bill 2442, passed by the state legislature this year. The law allows for a county to impose a property tax levy at a rate of up to 5 cents per $1,000 of assessed value for the operation, maintenance, and capital expenses of public health clinics which could generate approximately $740,000 in additional revenue. However, before engaging in more serious discussions about these two potential revenue sources, Council requested a clearer idea of expense reduction scenarios to be recommended by staff in the coming weeks.
• Although there remains no formal hiring freeze in place, many departments are holding positions vacant pending budget decisions for next year. 
• Last year, all departments were asked to provide options for across-the-board budget reductions of 9-10%. This year, Council is looking at programmatic and service based reductions instead, which may vary by department. 

Next Steps: Additional Council Meeting Dates to Discuss Preliminary Budget Development

The timing for development of the 2027 budget was also discussed, and the following dates were confirmed for additional Council discussion: 

• In order to accommodate additional budget discussions and provide department-specific budget direction, Council added three meeting dates to their June calendar and now will be meeting this month on: June 8, 9, 15, 16, 24, 29 and 30. These conversations will be an opportunity to discuss program and service reduction options at the department level, and to solicit Council feedback and direction before departments submit their proposed departmental budgets to the Auditor’s office for inclusion in the 2027 county-wide preliminary budget.
• The Auditor’s Office will present a balanced preliminary budget to Council on August 25th.

The public is invited to tune into these meetings and provide feedback. Review the County’s budget process, past documents, quarterly reports, and more on the Auditor’s webpages here: https://www.sanjuancountywa.gov/2030/San-Juan-County-Budget.    

Questions? Contact: TilleryW@sanjuancountywa.gov