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Klamath County presents $264.6 million budget and warns of a $27.2 million shortfall
Summary
Treasurer Vickie Noel told the Board and Budget Committee that the proposed FY2026–27 budget totals $264,620,642 but relies on one-time funds and faces a $27,190,388 gap; officials warned the county will need new revenue or spending cuts if Payment in Lieu of Taxes and SRS are not sustained.
Klamath County Treasurer Vickie Noel presented the proposed fiscal year 2026–27 budget to the Board of Commissioners and the Budget Committee, saying the total county budget is $264,620,642 and that "current spending is not sustainable." She told the committee the general fund shows current revenues of $15,280,400 against expenses of $17,280,400, creating a projected gap of $27,190,388 that has so far been covered by prior-year savings and one-time grants.
Noel emphasized the county’s reliance on temporary federal and state dollars, including LATCF transfers and opioid settlement funds, and said many of those sources “are not replenishable.” The budget packages $12 million in LATCF and opioid settlement reserves and budgets $4 million from reserves to maintain cash flow until property tax revenues arrive. She also noted ARPA funds remain but must be spent by December 2026.
The nut of the problem, Noel said, is structural: recurring operating costs — notably personnel and pension obligations — are outpacing recurring revenues. Personnel and benefits remain one of the largest cost centers, with county employees in a mix of pension arrangements including Oregon PERS and county 401a plans. Noel told the committee that rising minimum wages, competitive pay efforts and existing union agreements have increased personnel costs and limited options for short-term reductions.
Committee members and department heads discussed contingency strategies. Public Works and the Sheriff’s Office highlighted heavy reliance on SRS and other restricted funds for roads and patrol staffing; Noel warned that nonrenewal of SRS after 2027 would force the county to use reserves or make difficult service cuts. Commissioners urged departments to identify efficiency gains and new revenue streams but acknowledged the limited options available without structural revenue changes.
Looking forward, the county faces decisions about borrowing, tapping reserves, or reducing services. Ashley Trushell, the Budget Committee chair, and Commissioner Minty encouraged strategic planning and technology investments where they can demonstrably reduce net operating costs, while also noting that one-time investments cannot substitute for sustained revenue. The committee recessed with direction to continue refining budgets and explore options to close the structural gap.
The county will consider these budget decisions in subsequent meetings; audio recordings and materials remain available from the County Commissioners’ office.
