Clallam County projects $1.9 million general‑fund shortfall; board weighs one‑time fixes, hiring review and modest levy

Commissioner Mike French, chair of the Board of Clallam County Commissioners, opened a budget town hall saying the meeting would cover the county’s six‑year transportation improvement program and the proposed 2026 general fund budget.

County Administrator Milkey said the discussion would focus on the general fund — the account that pays day‑to‑day county operations — and described the county’s revenue constraints, noting more than half of Clallam County land is federal or state owned and therefore not on the property‑tax rolls. “When your number‑one tax source is very limited compared to other counties,” Milkey said, “that means you rely more on sales tax and timber revenues.”

Chief Financial Officer Mark Lane presented the numbers the administration used to build the recommended budget. Lane said departments initially reported a $3,258,000 funding gap; finance and departments identified $2,362,000 in net reductions (about $796,000 in revenue gains and $1,566,000 in expenditure reductions), bringing the deficit to roughly $1.9 million. Lane said the 2026 general‑fund revenue is budgeted at about $55.7 million and expenditures at about $58.2 million.

Officials identified the principal pressures on the budget: personnel (about 71% of the general fund), step increases and cost‑of‑living adjustments, and accelerating insurance costs. Administrator Milkey explained that typical annual pay adjustments (a 3% COLA for many units, plus step increases) and rising benefits and insurance drive roughly $3 million in ongoing expenditure growth without additional policy changes.

The administration described a range of budget approaches. An "allowable" budget can rely on one‑time adjustments (for example, one‑time asset sales or repurposed grant funds) to bring revenues and expenditures into alignment for 2026. A stricter, long‑term balancing approach would align recurring revenues with recurring expenditures; Milkey said that would be equivalent to about 11 full‑time positions at the county’s average loaded cost of roughly $120,000 per FTE.

To reduce the gap, finance and the administrator said they used a mix of department reductions, capital funding restraints and revenue assumptions (including a planned modest levy lift on the November ballot). The administration also proposed reducing the assumed vacancy “underspend” the county counts on to balance budgets: last year the county reduced its assumed underspend from 5% to 3%; the administration now proposes using 2% in its 2026 projections (about $800,000). Milkey said the county will apply an "intense hiring review" for vacant positions — every vacancy and future opening will be reviewed by HR, the administrator and the commissioners before hiring, with an explicit exception for correction and juvenile correction officers because of staffing and safety liabilities.

Lane and Milkey also noted items still not fully included in the recommended budget: negotiated contracts still pending with bargaining units (placeholders are included at a high level), a possible coroner position (a ballot item in November), final indirect cost allocations, and repurposing roughly $200,000 of American Rescue Plan Act funds where original projects cannot proceed. The administration estimated these items could total roughly $661,000 more in cost to be resolved in later budget versions.

The board took questions from residents on the fiscal strategy, compensation and recruitment. Several public speakers and a former union negotiator urged the county to explore alternatives to large premium overtime payouts and suggested comp time or “leave credits” as bargaining levers. Administrator Milkey said some premium overtime arrangements (particularly in carceral settings) are in place via memoranda of understanding and can be changed in negotiations or through MOUs; he also said the county has been trading floating holiday accruals and comp time in recent contracts to address long‑term leave liabilities.

Mark Lane emphasized that year‑to‑year comparisons are influenced by underspend and by converting outsourced services to in‑house staff. For example, the county moved some nursing services in‑house after a contractor declined to continue; that increased personnel but reduced contractor costs. Lane said the county’s reserve target is roughly 25% of expenditures; the recommended budget projects ending reserves near 24.4% (about $14.1 million).

No final vote or formal action was taken at the town hall. Commissioners said they will continue to refine the recommended budget before adoption, noting Washington state law requires a budget by December. Milkey said administrators and commissioners will continue to pursue a mix of one‑time and structural measures and will present updated figures to the board for adoption.

Community reactions at the meeting ranged from support for modest revenue increases to calls for more aggressive spending cuts. The administration encouraged continued public input as it finalizes the 2026 budget.