Washington County asks departments for 10%, 13% and 17% cut scenarios as staff warns of $20M shortfall

Washington County commissioners and county staff on Dec. 5 reviewed the state economic forecast, the county’s recent budget history and a set of proposed FY26 budget principles, then asked departments to prepare three budget-cut scenarios — 10%, 13% and 17% — to help produce a balanced proposed budget.

County staff told the board that the county faces a roughly $20 million gap in next year’s budget, explaining that about 48% of that gap stems from general cost escalation (largely personnel) and roughly 52% is related to the expiration of a SIP fee that will roll onto property tax rolls for other districts. Staff also updated a health-insurance assumption from 10% to 12.5%, a change staff said materially increased the gap and could translate to an anticipated 15% view for late next fiscal year during negotiations with carriers.

The board received a December Oregon revenue forecast presented by Interim CFO John Steyer, who said statewide biennium revenue estimates have improved since the prior forecast and identified personal and corporate income tax receipts as the primary drivers of the change. Commissioners contrasted that state forecast with other regional projections discussed at recent breakfasts and asked staff to follow up with comparisons and additional detail.

The county’s proposed approach centers on a set of budget principles staff circulated to the board, including: prioritizing mandated services, honoring equity commitments, evaluating long‑term capital and operating needs, and positioning the organization for the future. Staff said the principles are intended to guide the county administrator and departments as they build scenario-based budgets.

To create realistic choices for the board and the public, staff asked departments to prepare the three cut scenarios, with the understanding that mandated services (for example, jail operations and other legally required functions) would be treated differently and could be held flat to meet legal obligations. "We can't do across the board cut. Like it just, it doesn't work that way," a county staff presenter said, describing how cuts will be modeled by service area and noting some service-level options could be delayed or phased over time.

Commissioners pressed staff for more granular fiscal impacts of the changed health-insurance assumption and for dollar estimates showing what would be sacrificed to pay benefit and PERS increases. "We have to do less," Chair Katherine Harrington said, stressing that the board must make difficult choices while continuing important services. Several commissioners asked for a plan to communicate those trade-offs to the public and to budget committee members earlier in the process.

Staff captured two additional items for the Jan. 9 roundtable: (1) a communications strategy to explain the budget scenarios to employees and the public and (2) an outline of changes to the FY26 budget document and narrative to increase transparency about trade-offs and service impacts. Staff also noted the board will formally approve the budget principles and priorities on the Jan. 21 consent calendar.

Board members and staff discussed process safeguards to avoid one-time reserves being used to fund ongoing personnel costs, which staff warned would compound future budget shortfalls. Commissioners suggested public forums and earlier engagement with budget committee members to help stakeholders understand how a $20 million gap could translate into departmental service changes depending on which areas bear larger shares of reductions.

Next steps: departments will develop scenario packages for board review; staff will follow up with detailed fiscal estimates about the health-insurance change and with comparative forecast materials; the board will return Jan. 9 for a focused discussion on communications and the budget document outline and will consider formally adopting principles on Jan. 21.