Kootenai County commissioners set FY27 budget direction, warn of $2–3 million health insurance shortfall

Kootenai County commissioners on March 12 gave staff detailed direction to guide development of the FY27 budget, and were warned by the auditor’s office that rising claims could push health insurance costs higher by an estimated $2 million to $3 million.

Brandy Falcon, speaking from the auditor’s office, opened the meeting by asking the board how it wanted departments to assemble budgets that begin next Monday. "I expect our health insurance budget to go up 2 to 3 million minimum," Falcon said, citing high medical claims in FY25 and FY26 trends.

Falcon told the board she will ask the commissioners at the upcoming fund-balance meeting to set aside $3 million so "we know we're going to have to make the health insurance fund whole again at the end of FY26," an action she said is intended to prevent another deficit in that fund.

Why it matters: rising benefit costs, plus new facilities and overtime pressures, are likely to tighten the county’s overall budget picture and force tradeoffs between personnel and operating or capital needs.

Key directions from the board - Personnel steps: Commissioners confirmed the longstanding practice of applying anniversary step increases individually over the year rather than granting steps en masse on Oct. 1. Falcon said departments should not submit individual step requests and that steps should be approved countywide or not at all. - Bonuses and service awards: The board signaled it will allow departments to submit requests for bonuses and service awards, provided requests are tightly justified and prioritized against other needs. Commissioners emphasized limiting "fluff" and prioritizing items that are job‑related or safety‑related, such as jackets or boots. - HR review: All personnel requests must be reviewed by HR before inclusion in the budget, with limited exceptions for changes to overtime, on-call pay, or adding positions that already have job descriptions and grades. - Measurable metrics: Falcon proposed, and the board agreed, that personnel requests presented by elected officials include measurable metrics substantiating the need, shifting the burden of justification to the requesting official. - COLA vs. steps: The board asked staff to delay preparing a formal cost‑of‑living (COLA) calculation for the initial budget kickoff and to first gauge the projected deficit; commissioners noted that steps are less costly than a COLA and may be prioritized. - Operating budgets and trends: The auditor’s office will provide two‑year trend data and year‑to‑date line‑item detail to elected officials ahead of their budget presentations (Falcon cited a statutory requirement for two‑year comparisons). Departments were asked to submit operating requests in line with recent trends and to substantiate deviations. - Procurement and capital requirements: Falcon said new contracts and non‑capital requests should include at least one quote to substantiate dollar amounts; capital requests should include anticipated useful life and three quotes. Commissioners stressed departments must demonstrate need and prioritize among personnel, projects, and other spending.

Other budget pressures discussed included jail and 911 overtime, the rising maintenance costs tied to new facilities (the justice building and a coroner facility), and a forecast that interest revenue will be lower than recent years. Falcon noted the auditor’s office budgets state revenue and will coordinate with the treasurer’s office for interest revenue estimates.

No formal votes were recorded; the meeting produced board direction and consensus on the items above. The auditor’s office will communicate the guidance to departments as they begin assembling FY27 budgets. With no public comments the session adjourned at 9:33 a.m.

Next steps: staff will begin budget development next week and present elected‑official budget meetings with two‑year trend and supporting line‑item detail; the auditor will raise the proposed $3 million fund‑balance reservation at the next fund‑balance meeting.