Jefferson County government started shrinking Monday in response to what officials called "economic reality."
County Administrator Philip Morley, on the job only a month, warned Jefferson County commissioners in the morning that program and service cuts would be needed in 2009 and beyond because inflation is rising and revenue is dropping.
By midafternoon, six employees in the county's Department of Community Development (DCD) had been notified they were being laid off in two weeks. The department also announced it would reduce its workweek to 36 hours starting Dec. 1 and be closed on Fridays starting Dec. 5.
More cuts are likely in fee-dependent departments such as the health department, but officials were mum Tuesday on where cuts might be and when they might be announced.
Morley said Tuesday the DCD layoffs were necessary now because of dropping fee revenue and an immediate need to transfer $300,000 from the general fund to DCD to make up for a projected shortfall in 2008.
DCD Director Al Scalf said Tuesday it is the first time he has seen RIFs (reduction in force) in his 23 years with the county.
Scalf's department was seeing a significant drop in building permit applications. By the end of October 2007, there were 173 permits for "stick-built," "bread-and-butter" homes, compared to 108 by the end of October this year.
Revenue at the end of 2007 was $1.86 million; DCD projects it will be at $1.5 million by the end of 2008, Scalf said.
"I need $160,000 a month to maintain services as budgeted. In October, we made $50,000 and I could see we weren't going to be able to close the gap. August was $210,000, and I still had hope," Scalf said.
"We're the indicator," Scalf said, "but it's going to the Courthouse," he predicted.
The six staff members being laid off include a planning clerk, an administrative clerk, permit technician, building inspector and two planners. Scalf said he also is accepting volunteer retirements.
He started the year with 25 employees. A compliance coordinator retired in September and a building inspector retires in February. They won't be replaced. By the end of the year, he expects to have 17 employees.
In addition to reducing DCD hours, Scalf also is taking a pay cut to reflect reduced hours.
One official said a counselor would be on hand this week for DCD employees being laid off.
"We've been digging a hole and we're trying to stop digging," Morley said of the DCD layoffs.
Morley warned of a long-term tightening in county government.
"This economic downturn could easily last into 2010 and beyond," Morley told commissioners. "It worsened in October and into November," the administrator said of forecasts given in September. Morley took the helm as administrator Oct. 16 and has moved his family to Port Townsend from Edmonds. He said he did not know how bad the budget situation was when he took the job.
Property tax increase?
Morley also told commissioners Monday that Treasurer Judi Morris and Assessor Jack Westerman III agree that it is time to take a look at what is called banked capacity in property taxes, essentially the highest amount the county could legally collect. Using that taxing authority, which county commissioners have not used since 1998, would bring in an estimated $485,000 additional revenue in 2009.
To the average taxpayer whose home is valued at $275,000, the tax would cost another $25 in 2009, Westerman estimated.
"If the commissioners find themselves in the unenviable position of having to take the banked capacity in 2009, when the economy turns around they could recreate it," Westerman said of the board then not taking banked capacity in following years. He and Morris both noted that Republican-dominated and Democratic-dominated commissions have taken banked capacity in the past when needed.
Morris said that she supports using banked capacity.
"We, as good stewards of public funds, have held it aside for a rainy day and now it's beginning to rain, so I think it's time to use it," Morris said.
Morris said it also would be good to use banked capacity and use less reserved cash to make ends meet in 2009 because a new bond rating the county just received lowered its possible interest rate should the county be able to pursue a $50 million sewer project in Hadlock.
Morley said he would not recommend taking banked capacity in either the road fund or conservation future funds. The county recently learned it would receive money from the federal government to help with roads.
More cuts coming?
As for possible additional layoffs in the county, Morley declined yesterday to say what other programs or services might be cut in 2009.
Morley was going office to office and department to department asking elected officials and other department heads where they could cut.
A budget exercise that former Interim Administrator Dennis Richards had asked departments to do was to see what 25 percent cuts and 30 percent cutbacks would look like. Those "exercises" have not been made public.
One department that has grown quickly this decade is the health department, which had a budget in 2001 of $2.76 million and in 2008 was at $4.16 million, according to Auditor Donna Eldridge.
Health Department Director Jean Baldwin was gone Tuesday and could not be reached for comment on whether her department would be facing cuts similar to those of DCD. Both departments rely on fees to support some programs and services.
County Commission Chairman Phil Johnson, D-Port Townsend, said Tuesday he was not aware of any other pending cuts and those decisions hadn't been made.
Like Morley had on Monday, Johnson noted inflation and limits on property tax, combined with decreased sale-tax revenue, were a problem for the county.
"People in the state resoundingly voted in favor of a 1 percent cap on property taxes, and we live in a 4 to 5 percent [yearly] inflation reality. That coupled with the lack of sales and construction tax is hurting the county," Johnson said.
Johnson paused and said: "It's tough. These are all really good employees."
Johnson was at a meeting Monday when one county employee, Ryan Hunter, announced it would be his last meeting because he was one of the six being laid off.
County Commissioner David Sullivan, D-Cape George, had acknowledged on Monday that declining revenue would translate into job losses.
In the meantime, Morley is fine-tuning a proposed 2009 budget with elected officials and expects to present it in early December, with a public hearing planned for Dec. 8.
"We're trying to size up the gap we need to fill," he said yesterday.
Morley said he would propose to use only part of a $1.2 million excess fund balance the county expects to end the year with because it might have to "last the next three or more years."
An analysis of the general fund Morley presented Monday showed that service cuts and budget savings in 2009 would need to be between $450,000 and $800,000, depending on whether banked capacity is used.
"Further cuts will be necessary each year through 2014, unless the economy turns around sooner than assumed in this model," Morley wrote in an update of a 2009 budget recommendation.
Asked Tuesday what cuts might be made, Morley noted that "this is a scenario that has been developing for quite some time and it's difficult to walk into.
"It's an issue that confronts the entire county and its citizens. What can we afford? What services can we provide with what we can afford? These are important services citizens rely on," he said, declining to be more specific.
DCD
For now, DCD is the only department that has announced layoffs.
"Both building and planning staff are affected by this workforce downsizing," said DCD Director Scalf in a press release Monday night. "The slow economy has not picked up, and the department must adjust to these conditions for the remainder of 2008 and as we budget for 2009."
Scalf said his department had been cutting back this year by leaving positions open when people retired and making reductions in travel and training, but that the slumping economy forced the staff reductions.
"All the individuals affected are highly valued and quality employees -this is a very difficult time for the department," Scalf added.
Morley had a similar conclusion in his Monday report.
"It is only out of economic necessity that we are now forced to begin examining program and service cutbacks that may affect both the community and our employees. This is not a task we enter by choice, but it is one forced upon us by today's economic realities."
Reader Comments
Posted: Tuesday, November 25, 2008
Article comment by:
Jim Switz
"DCD Director Al Scalf said Tuesday it is the first time he has seen RIFs (reduction in force) in his 23 years with the county."
Well, it's about time, in fact it's years too late! We're tired of the relentless growth of government overhead and accumulation of drones.
The Normal-American Community, running real businesses that actually have to produce useful goods and services, and make actual customers actually happy, adjusts to changing circumstances all the time. Time for our "public servants" to do the same - they work for us and we don't need nearly as many of them.
Let the layoffs continue and the excessive burdens on taxpayers diminish. Hopefully this is just a start in limiting Big Government.
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