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Draft county budget draws $1 million from reserves

Kitsap County balanced its 2008 budget without dipping into its reserves, but was unable to accomplish the same feat this year due to a severe revenue decrease.

Instead, the preliminary numbers submitted this week required the borrowing of $1.17 million from the reserve fund as “an anti-recessionary measure.”

“There were two things that contributed to the unexpected shortfall,” said North Kitsap Commissioner Steve Bauer. “There was a downturn in the economy, which caused a decrease in sales tax revenues. We also have to deal with the structural problem, where the 1 percent annual hike of property taxes we are allowed do not cover the increase in our expenses.”

While a government’s the ability to develop a budget that operates within its means gets bragging rights, the failure to do so is not necessarily a danger signal.

County Administrator Nancy Buonanno Grennan said reserves were specifically designed to compensate for revenue shortfalls in tough economic times, which certainly qualifies today.

Additionally, Administrative Services Director Shawn Gabriel said the optimal reserve level is 7.5 percent of the total budget. Since the current reserve fund holds $9 million on an $88 million total budget, Kitsap is doing a little better than average.

On the other hand, it is the historical tendency of the county commissioners to dip into the reserves that has caused the current shortfall, since a much larger reserve was frittered away by five years of such behavior.

Grennan said that all three current commissioners have resolved to discontinue that particular habit. And South Kitsap Commissioner Jan Angel, the only board member still serving from more prosperous times, has often said she regrets not taking a harder line.

Kitsap wasn’t operating in a vacuum and is not the only county that followed a less-responsible financial path.

Like the rest of the country, it will need to live with less by cutting certain programs.

As belt-tightening occurs, people will need to learn how to live with decreased service, an attitude that must continue when conditions improve.

The currency is measured in personnel, with each department required to cut a certain number of full time employees (FTEs). The sheriff's department will lose two deputies, and the prosecuting attorney will need to cut one position in its civil division.

Further savings will be realized with decreased disbursements to outside agencies, such as the Health District, Kitsap Economic Development Alliance (KEDA) and the Kitsap Regional Coordinating Council (KRCC).

The county is also negotiating with unions, to convince them to accept smaller pay increases that are due from their current contracts.

Grennan, a former labor negotiator, said this can be a hard sell.

“This is a delicate dance,” she said of the negotiations. “We need to keep the people we have and also be able to recruit new workers. The unions might ask us to cut people and pay those remaining a full salary, but pretty soon there is no one around to do the work.”

Other cuts are in Information Services, postponing planned hardware and software improvements. The Sheriff’s Office faces a reduction in travel, training and per diem charges.

These provide a mixed advantage, money is saved but technology purchases and state-of-the-art procedures can increase efficiency and save time.

In the longer term, the citizen’s budget committee is due to present its recommendations about general efficiency in the early part of 2008. “We hope they will be able to show us ways where we can further streamline our operation,” Bauer said.

The quality of customer service will also decrease.

For instance, the commissioners’ office is shuffling around responsibilities, maintaining the equation of one assistant per commissioner while sharing front desk duties.

South Commissioner Charlotte Garrido will hire her own assistant, since outgoing Commissioner Angel will be taking Debbie Austin to Olympia.

The public is invited to provide input during a special meeting at 7 p.m. Dec. 1 in the commissioners’ chambers in Port Orchard.

Grennan said that public input could possibly change priorities and cause certain cuts to be restored. However, for every such action the equal and opposite reaction of another cut will become necessary; the commissioners will just say no to any further requests to dip into the reserves.

Grennan said that a ripple effect has shaken all levels of the economy, which local governments cannot resist.

“Everyone in the nation is feeling this,” she said. “We need to look ahead and just get on with it. If our grandparents were still grousing about the causes of the great depression we wouldn’t have made any progress since then.”

The complete document:

Kitsap budget memo

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