Washington Countys budget team told commissioners on Nov. 6 that an unusually large increase in assessed value this year masks a near-term revenue challenge: fee-based transfers from Strategic Investment Program (SIP) contracts are falling, and the county projects a $7.2 million general-fund gap for fiscal year 202627.

"The real market value increased from 197,000,000,000 last year to over 207,000,000,000 this year. That's a 5.24% increase," Joe Nelson, director of Assessment, Taxation, Records & Elections, told the Board. "The assessed value went from 86,000,000,000 to 96,000,000,000. That's 11.31% increase. In my history, I've never seen that before. This is an anomaly year." Nelson and budget staff attributed the anomaly to the expiration/roll-off of SIP contracts (notably earlier Intel agreements) and the coming online of large data centers.

John Steyer and county budget staff translated Nelsons numbers into budget impacts: total tax dollars across the county rose from about $1.559 billion to $1.742 billion (an $183 million increase), but Washington Countys general-fund SIP allocation declined from $60 million last year to $41 million this year, a roughly $19 million negative swing for county cash flow. On the county side, property-tax distributions to the county entity increased from about $189 million to $210 million (+$20 million), but the net near-term effect on county general fund resources is smaller because of the SIP reduction.

"At the end of the day, the budget gap we're projecting is $7,000,000 and that's about 3% of our expenditures," Steyer said. He and staff told the board the $7.2 million figure is the lowest projected general-fund gap in the past five years but that a five-year forecast shows the gap expanding (to approximately $15.6 million in a subsequent year) if no policy changes are made.

Key figures and mechanics

- Real market value (countywide): ~$197 billion -> ~$207 billion (+5.24%).
- Assessed value (countywide): ~$86 billion -> ~$96 billion (+11.31%).
- Total tax dollars (all taxing districts): ~$1.559B -> ~$1.742B (+$183M, +11.74%).
- Washington County distribution (government entity): ~$189M -> ~$210M (+$20M, +11.1%).
- Washington County SIP allocation: ~$60M -> ~$41M (-$19M cash-flow impact).
- County collection rate: ~96% of levied taxes (after early-payment discounts and delinquencies); budget planning uses collection assumptions.

Why the numbers diverge: SIPs and compression

Nelson explained SIPs are contract-based incentive agreements (often 15-year terms or tranches) that can defer fee revenue while equipment is covered by contract; when a SIP expires the fees previously collected can convert into taxable value. The county has had multiple overlapping SIPs; some (for example earlier Intel SIPs) produced large fee flows when active and then converted to taxable value when the SIPs expired. Staff described the 2014 Intel SIP as a complex multi-tranche contract that can produce staggered roll-offs and overlaps that drive year-to-year anomalies.

County-level impacts and allocations

County staff emphasized that the county government receives only part of the aggregate tax portfolio: roughly 16% of countywide tax distributions flow to the Washington County government entity; roughly 46% goes to education, 15.5% to cities and so on. Staff said they treat SIP transfers as an important ongoing general-fund resource (the forecasted SIP transfer supports about 11.5% of general-fund expenditures in the current forecast).

Forecast assumptions and pressures

Budget assumptions noted in the briefing include a return toward normalized property-tax growth (modeled at ~4.25% next year), a 2.82.0% COLA/CPI assumption (CPI-West trending ~2.6%), and a 15% increase in health-insurance costs. PERS contribution rates are fixed for the two-year state-set cycle and were not changed in the forecast. Key expenditure pressures cited by staff included health-care inflation, personnel costs, materials and services, capital needs, and mandated or partially funded state requirements.

Personnel, public safety, and ARPA exposures

Staff said the county has cut positions in prior budgets (about 26 positions previously reduced in the sheriff's office) and is proposing partial restorations tied to recruiting and operational needs: staff stated the county plans to restore roughly 13 positions (the presentation and subsequent clarification noted some numerical reconciliation was needed; staff committed to verify the final counts). The sheriff's office has continuing recruiting pressures for patrol deputies; the county also discussed restoring jail service staffing and criminal-record positions.

ARPA-funded positions and projects were raised as an additional uncertainty: ARPA funds used to support some positions and projects expire in December 2026; staff warned that employees paid from ARPA may seek other employment before funding expiration and that unspent ARPA obligations must remain eligible under ARPA rules or be reallocated to approved ARPA activities.

Capital projects, medical examiner mandate, and CIP gaps

Staff identified an approximate $53 million of unfunded capital items next year in the county's CIP (capital improvement plan), including major jail needs and facility repairs. Separately, staff underscored an urgent need for a medical examiner facility: ORS requires counties provide medical examiner services, Washington County currently lacks a dedicated facility, and a funded study will return short- and long-term options.

Five-year outlook and board direction

The five-year forecast presented shows a structural divergence between revenue (property tax, SIP) and expenditures; staff projected the $7.2 million FY 26/27 gap would grow to larger gaps in subsequent years unless the board pursues a mix of options that can include expenditure reductions phased over multiple years, fee/levy adjustments or new revenue options, and longer-term capital and service-level decisions. Commissioners instructed staff to return with further service-level assessments, options for midterm reductions that could take effect over a two-year window, and additional detail on how revenue options (local option levies, bond levies, the $10 per $1,000 cap interaction) interact with constraints such as Measure 50 and statutory caps noted in the presentation.

Board questions and next steps

Commissioners asked staff to quantify adopted budget revenue vs. forecast revenue levels and to provide a clearer line-by-line picture for FY 26/27 and FY 27/28 scenarios. Staff committed to return updated budget assumptions, verify FTE restoration counts, and present refined service-level and revenue-option scenarios at upcoming roundtables and the December 4 budget direction item. Staff also flagged the upcoming January and February calendar milestones (February 9 pencils-down deadline for department submissions). The board asked staff to include an intergovernmental briefing with local elected colleagues in January similar to prior years.

Why it matters: The county faces a near-term combination of a one-time assessed-value bump and the expiration of fee-based contracts that reduce SIP transfers. Even though assessed values and total tax levies rose this year, the SIP reduction creates a large cash-flow effect for the county general fund and contributes to a multi-year fiscal challenge that staff told commissioners will require a mix of measures to address.

Staff and presenters

Joe Nelson, director of Assessment, Taxation, Records & Elections, led the portfolio overview. John Steyer and county budget staff led the fiscal forecast and scenario discussion. Staff committed to returning with more detailed numbers and policy options for the board to consider during the budget cycle.

The board recessed for a short break and then voted 5-0 to enter executive session pursuant to ORS 192.660(2)(f) to discuss exempt records.