Kootenai County budget shortfall narrows with plan to use fund balance and cut small grants

Kootenai County commissioners on June 25 reviewed preliminary FY26 budget figures and directed staff to reduce reliance on forecasted interest revenue, use fund balance for several one-time consultant requests and cut a $32,000 grant request from the Rathdrum Westwood Historical Society.

Finance staff reported that, at a 0% proposed tax increase, the county faces a $2,000,000 shortfall for FY26. With a 3% tax increase the projected deficit falls to roughly $216,000 (the finance presentation used a number shown as $217,000). The budget currently assumes no cost-of-living adjustment (COLA) for county employees in the FY26 baseline.

The board and staff debated how much interest income to count as ongoing revenue. Commissioners and the county treasurer said using a high, recurring interest forecast is a risk if interest receipts decline. The treasurer described a conservative posture and recommended against “annuitizing” interest. Commissioners agreed to reduce the ongoing interest assumption from the $3.5 million figure in the packet toward a $2,000,000 baseline to lower long-term risk.

To lower FY26 ongoing costs, staff proposed using one-time fund balance (or the equivalent use of interest) to pay for specific consultant items: $110,000 for an ERP/software-selection consultant in the auditor’s budget, $50,000 in the treasurer’s budget (XTR consultant), and $300,000 for a community development comprehensive-plan consultant. Commissioners indicated assent to use fund balance for those one-time items.

Commissioners also reviewed requests passed through midyear in FY24 that increased the FY25 baseline, noting that some midyear personnel approvals (listed by staff) had added materially to the next year’s ongoing costs. Staff emphasized that elected officials should prioritize their A (personnel) and B (operating) requests because these are ongoing expenses that most affect the structural deficit.

On discretionary community-service funding, the board agreed to cut a $32,000 request from the Rathdrum Westwood Historical Society. Brandy Falcon, presenting the packet, recorded the cut after commissioners indicated concurrence. Staff also flagged other community partners’ line items (senior centers, Safe Passage, University of Idaho extension, etc.), and commissioners asked elected officials to return with prioritized lists showing which items are most critical.

Several commissioners urged prioritizing personnel retention before community grants; others said operational efficiencies and clearer productivity metrics should be pursued to reduce ongoing costs. The clerk’s office and departments were asked to return with prioritized requests and vacancy lists to help the board identify the most effective cuts.

Staff said three more budget sessions will be scheduled with longer time blocks, and commissioners asked that the materials display running totals for prioritized cuts so the board can see cumulative savings as items are removed.

Ending: Commissioners left the meeting with direction to (1) instruct elected officials to prioritize A/B requests and vacant-position plans; (2) count $2,000,000 of interest as the conservative ongoing assumption unless the board later decides otherwise; and (3) use fund balance for the three consultants identified as one-time costs.