Cowlitz County finance director warns fund balance may shrink; asks departments to identify cuts ahead of 2026 budget

Kathy, the county finance director, told the Cowlitz County Board of Commissioners on Tuesday that preliminary year-end figures show the county will end 2024 with an estimated general fund balance of about $19.1 million and that current forecasts point to a year-end 2025 balance near $13.9 million.

Kathy said the preliminary accounting indicates 2024 revenues of roughly $60 million and expenditures of about $63.8 million, producing an estimated draw on reserves of approximately $3.5 million. For 2025 she said she is projecting a smaller draw than is currently budgeted — about $5.0 million instead of the $15.7 million shown in the revised 2025 budget — primarily because departments historically underspend payroll and other lines.

The finance director framed the decline as largely structural: constrained property tax growth under state limits, slower state revenue collections, inflation-driven cost increases and recent salary and benefits increases for employees. She noted the state auditor’s office and best-practice guidance prefer reserve levels equal to about 60 days of operating expenditures; the county’s board policy currently targets one month. Kathy said the county remains above both benchmarks today but the trend is downward and should be monitored.

Kathy told commissioners she would ask general-fund departments in May to prepare “what-if” worksheets showing the programmatic impact of hypothetical reductions (for example, 5% and 10% cuts) so administrators and elected leaders can evaluate options ahead of formal budget submissions in July and public hearings starting in September.

On revenues, Kathy reported mixed signals: statewide collections were running below forecast in recent state reporting, but local sales-tax receipts for January (received in March) were 6% higher than the prior year. She emphasized timing effects: through March the general fund appeared slightly in deficit because property tax revenues post in April; she expects the budget picture to improve once those taxes arrive.

Kathy also reviewed other large funds briefly, noting the solid-waste enterprise posts large early-year transfers to closure and post-closure reserves that create a timing deficit through March but are expected to normalize.

The board agreed there would be a departmental review process ahead of formal budget entry. The county scheduled a public hearing for a second-quarter budget amendment for May 27 and will post required notices before that hearing.

Looking ahead, Kathy recommended keeping a conservative approach to revenue assumptions and reminded the board that a prolonged decline in reserves could affect bond ratings and other fiscal metrics if not addressed.

Ending: The finance director said she will circulate budget worksheets to departments in May and return with updated projections after the April property tax receipts are posted.