Cowlitz County reviews 2025–27 budgets, staff proposes one-time cuts and levy path to cover shortfall

Cowlitz County finance staff presented a revised general-fund budget and a menu of one-time and recurring options Tuesday as the county faces a projected 2026 shortfall and a larger gap in 2027.

Kathy, presenting Budget Boss figures, told commissioners the county’s largest revenue stream — taxes including property and sales taxes — produces about $63 million for 2025 and roughly $61.9 million for 2026 and 2027. She said personnel is the single largest expense, with salary and benefit budgets shown at about $46.9 million for 2025 and a projected $48.0 million in 2027.

The nut graf: staff projected that, under current assumptions, expenditures will exceed revenues and reduce the county’s reserved fund balance. Kathy said the budget as presented would produce about a $2.4 million negative difference in 2026 versus revenues and an $8.1 million gap between total expenses and revenues in 2027. The county’s designated budget-stabilization and related reserves were noted in discussion as roughly $5.4 million in restricted accounts.

To address 2026, staff proposed a combination of one-time and recurring moves. One-time measures included drawing on internal reserves (staff noted an IT reserve of more than $5 million and proposed a one-time use that could reduce general-fund impacts by about $1.0 million), reducing billings and returning over-collected internal service charges, and using onetime reductions in the industrial-accident and emergency-management billings (examples cited: $200,000 and $45,000, respectively). Staff also proposed moving two sheriff mental-health positions off the general fund and onto the opioid fund (if eligible), shifting related internal service charges, and lengthening equipment refresh cycles for sheriff transfers.

Kathy identified several recurring or structural options for 2027 that would each require policy steps and public process, including a road-levy capacity shift to the general fund, the creation of a 0.1% criminal-justice sales tax (described as subject to statutory requirements), hiring freezes or targeted reductions in force and continued departmental reexaminations of overtime and program-level expenditures.

Commissioners pressed staff on tradeoffs and fairness. Staff emphasized that a road-levy shift transfers levy capacity (not existing cash) from the county road levy to the general fund and that the tax incidence changes — when capacity is shifted to the general fund the cost is spread across all county taxpayers rather than only those in unincorporated areas. Commissioners expressed concern about taxpayer confusion and distributional fairness if the county changed levy capacity frequently.

On short-term, targeted reductions, county finance staff (Katrina) outlined a package of items that could reach roughly $500,000 in one-time savings to close the 2026 gap, including a one-time $300,000 reduction in the benefit-administration transfer, trimming janitorial contracts ($~202,140/year), landscaping ($~$60,000/year) and administrative building security (about $100,000/year for the administrative contract). Katrina said combining those adjustments would likely allow the county to meet its near-term reserve-policy target for 2026 while staff and department leaders pursue larger, structural changes in 2026.

Commissioners and staff discussed department-level efficiencies raised in earlier retreats. Multiple elected officials urged exhausting internal reorganization, operational efficiencies and cost-sharing before seeking new voter-approved revenue sources. One commissioner said large structural savings would likely require personnel reductions but others proposed operational shifts (for example, custodial and facilities staff taking on some landscaping or cleaning tasks) to avoid layoffs.

Levy direction and abeyance funds: staff reviewed three certification options for the general fund levy calculation — (1) highest lawful levy (banked capacity + 1% + new construction), (2) banked capacity + new construction but not the 1%, and (3) new construction only (no banked capacity and no 1%). Katrina and staff noted option 3 had been the approach used in recent prior years (including 2024 and 2025). Commissioners signaled support for option 3 — certifying only new-construction growth plus a refund levy (an amount to recoup exemptions or administrative refunds not collected in the prior year) — and asked staff to prepare levy paperwork on that basis. One commissioner also announced abeyance/settlement balances already held for next year that will reduce the certified levy to taxpayers (about $383,676.88 from a settlement credited to the general fund and about $319,205.75 for the road fund, as announced on the record).

Next steps: staff will incorporate the board’s direction, analyze the one-time items identified (security, janitorial, landscaping and a benefits-administration transfer reduction), and finalize levy paperwork in November. Staff emphasized the 2027 structural gap will require additional work and recommended investing time in 2026 to research and implement longer-term options rather than relying on repeated one-time fixes.

No formal board vote was recorded during the meeting; commissioners provided direction and consensus on levy approach and asked staff to return with updated budget and levy documents for formal adoption.