Clallam County projects $1.35M general-fund shortfall for 2026; officials flag Medicaid jail-billing pilot and RECOMPETE grant timing as risks

Clallam County officials told a Forks town hall they have narrowed the 2026 general-fund budget gap but still face an approximately $1.35 million shortfall and described two new revenue streams that have timing and implementation risk.

Todd Milke, county administrator, introduced the county finance team and framed counties as an extension of state government with many mandated responsibilities. "Counties are an extension of state government," he said, noting services such as assessments, courts and jails that the county must provide.

Chief Financial Officer Mark Lane said the county began the budget process with a roughly $3 million gap, found $2.4 million in revenue gains and expenditure reductions, and reduced the shortfall to about $1.9 million before leaving some items unreflected. After additional adjustments the administrator recommended a remaining operating deficit of about $1.35 million.

Lane and Rebecca Turner, deputy CFO, outlined revenue assumptions: property taxes and sales taxes together fund a large share of the general fund, while intergovernmental revenues (grants) are volatile. Lane said the county expects property-tax growth near the 1% levy-limit plus new construction and forecast modest sales-tax growth. He warned intergovernmental revenues were forecast to decline in 2026 by about $5.5 million largely because one-time grants in 2025 will not recur.

Two sources drew repeated questions from residents. First, the county has a pilot with the Washington State Health Care Authority (HCA) to bill Medicaid for inmate health care. HCA advanced the county about $4 million to pay for capital and startup costs for jail health services; staff said counties expect to backbill Medicaid but cautioned that billing is complex and HCA has paused some reimbursements and contracted for a billing vendor. "We've been advanced a little over $4,000,000 next year, to basically make investments... so we can begin submitting for Medicaid reimbursement," Lane said. Staff said they have submitted some bills but that reimbursement timing remains uncertain.

Second, the county and partner organizations are implementing components of the EDA/RECOMPETE program. County staff said reimbursements tied to that federal program are paused or delayed; the county currently funds three RECOMPETE positions and spends roughly $15,000 to $17,000 per month on the program while it waits for federal processing. Staff said if reimbursements pause long-term the county could be required to suspend related expenditures or draw on reserves.

Lane and Milke described reserves management: Clallam County has maintained reserve levels close to the recommended 25% of expenditures, which staff said allows the county to provide short-term working capital for large grant-funded projects but warned that reserves are one-time money and depleting them for ongoing operations is risky.

Milke outlined options to close the remaining gap: an "allowable" budget that uses some one-time adjustments to preserve services for 2026, or a move toward a balanced budget that aligns ongoing revenues and expenditures but could require removing roughly 11 full-time-equivalent positions (the staff equivalent of $1.2M'$1.4M in payroll, fully loaded). Commissioners said they plan an additional hiring-review layer that will send vacancy refills to the board for approval as a way to control ongoing costs without immediate large layoffs. No final budget decisions were taken at the town hall; the county must adopt a budget by December 2025.