Washington County staff recommend setting aside $11.6M stabilization fund and $7M capital reserve from SHS one‑time carryover

Washington County commissioners heard an update Dec. 16 on Supportive Housing Services (SHS) finances and one‑time funding recommendations as staff outlined a conservative plan to protect ongoing homelessness services amid a volatile revenue forecast. County staff told the board the county began the 2025–26 program year with roughly $97,000,000 in carryforward and, for planning purposes, is including Metro's forecasted revenue plus a $10,000,000 one‑time allocation from Metro’s unused administrative funds, yielding an estimated $207,000,000 in total resources.

Why it matters: SHS funds a network of homeless and housing stability services across the county. Staff said the funding source—personal and business income taxes administered regionally—is volatile and concentrated among a small share of filers and businesses, so the county is proposing rules to reduce the risk that programs must cut services mid‑year.

What staff proposed: County staff presented a tiered prioritization framework for one‑time balances and laid out specific holdings and recommended set‑asides. Already committed amounts include the board‑approved program budget ($131,000,000) and required reserves ($24,000,000). Staff recommended the board treat remaining unassigned carryforward (about $24,000,000) with a multi‑part approach:

• Stabilization approach: budget only 90% of the forecast in the next fiscal year and set aside an "annual forecast stabilization account" to bridge downturns. Staff recommended an initial deposit in the range of $11,600,000 toward that account to lessen the need for sudden program reductions if Metro lowers its forecast. "So going forward, we would only budget 90% of the forecasted revenue," staff said when explaining the measure.

• Capital reserves: create a $7,000,000 reserve for long‑term capital reinvestment in shelter, access centers and transitional housing owned by nonprofit or public partners.

• Capital projects: set aside up to $3,700,000 for phase‑two completion of selected capital projects (named projects included the Odd Village site and Cornell Road renovations for transitional housing).

• Program continuity: hold flexible funds to support move‑in assistance, homeless prevention and eviction prevention so partner agencies do not exhaust one‑time budgets mid‑year; staff specifically flagged a one‑time investment to restore an eviction prevention hotline impaired when state reductions affected Oregon Housing and Community Services funding.

Forecast context: Staff reviewed Metro’s updated forecast and said the regional change represents approximately a $90,000,000 program‑level reduction over the forecast horizon; Washington County’s share was described as roughly 30% of that, or about $28,000,000. Staff also noted that a very small share of filers produce a large share of revenue: "the top thousand filers... account for 25% of the personal income tax and the top 2% of businesses account for 60% of business tax revenue," a point staff made to explain sensitivity to single‑payer or single‑business fluctuations.

Board response and next steps: Commissioners broadly supported the proposed approach but asked for clarity about timing and next steps. Several elected officials emphasized that this meeting provided directional approval and asked staff to fold the board direction into the FY 2026–27 budget work. Chair Catherine Harrington said the board wanted a clear, timely step from staff that documents the board's direction into the formal budget; staff confirmed the recommendation was for directional approval now with formal budget adoption to follow in the regular budget schedule. No formal roll‑call vote was taken at the work session.

What remains unresolved: Staff will incorporate the board's direction into the formal budget development process and bring back the detailed budget language and schedule. Staff also noted the Metro IGA for the $10,000,000 one‑time allocation is in progress and depends on final intergovernmental arrangements.

The board moved on after the discussion; staff will include these set‑asides and the stabilization account approach in next year’s budget proposals.