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Washoe County managers warn of structural budget gap despite one-time FY25 gains
Summary
Officials told the Board of County Commissioners the county closed FY25 with a clean audit and a modest net fund-balance gain, but projected five-year forecasts show personnel, PERS and benefit costs growing faster than recurring revenues, producing a structural deficit that will require prioritization and efficiency measures.
Washoe County officials presented a sobering budget outlook during a Feb. 3 workshop, saying the county ended fiscal year 2025 with a clean audit and a net $2.5 million addition to fund balance but faces a widening structural gap unless recurring revenues or policy choices change.
Comptroller Kathy Hill said the independent audit concluded FY25 with an unmodified opinion and that the net $2.5 million addition excludes unrealized investment gains. ‘‘We did successfully complete FY25 with a clean audit opinion,’’ Hill said, and flagged several near-term pressures: an expected hit from a recent heart-and-lung legislative change that could increase claims obligations, persistent health-benefit premium pressures and a roads fund that will continue to need support.
Division Director of Budget Lori Cook outlined the five-year forecast the staff uses to inform the manager's proposed budget. Cook said average revenue growth over recent years has slowed while personnel-related costs have risen faster: average revenue growth of about 7.6% versus average uses of 10.5% across a multi-year baseline, with personnel costs alone increasing roughly 11.2% historically. She said the modeled paths show fund balances declining toward board policy thresholds absent corrective action.
The county's managers urged a combination of short-term one-time investments and longer-term structural choices. Manager Kay Thomas and Assistant County Manager Dave Solero said they will recommend limiting new ongoing personnel requests in the manager's proposed budget, ask departments to pursue net-zero position reclassifications where feasible, and prioritize one-time technology or implementation projects that can deliver efficiencies.
Thomas emphasized protecting current staff: ‘‘By adding no new personnel, what we're not interested in is reducing the existing personnel that we have,’’ he said. The administration also plans a Budget Congress with department representatives to identify operational changes before releasing the tentative manager's budget on April 14, when a proposed budget must be filed with the state.
Officials identified several risks that could change the forecast: the November PERS rate-setting cycle, legislative impacts, health-care cost trends and the possibility that projected property- and sales-tax growth could underperform. Cook said the forecast assumes modest contingency and excludes one-time capital requests.
The board asked for more detail on mandated services versus discretionary programs, revenue sources and the dollar mapping of mandated services. Commissioners also requested follow-ups on specific topics, including ICE detainee costs and how much the CARES campus costs the county, as staff prepare materials leading up to the manager's proposed budget.
The county will present the tentative budget on April 14, hold the statutorily required public hearing in May and adopt a final budget before the statutory deadline in June.
