Spokane County staff propose shifting rising liability costs into departments as $30 million gap looms

Spokane County budget staff told the Board of County Commissioners on June 1 that new actuarial figures and benefit increases have enlarged the county's budget gap and that staff will begin allocating liability-insurance costs directly to departmental budgets.

Budget staff framed the session around a $30 million planning gap, saying, "we have, as I say, I guess, officially moved our number from 25 to 30,000,000," and attributing the change to steep insurance increases and benefit-cost pressures. Staff also described a roll-up sheet showing a proportional split of that $30 million by agency and an estimated FTE impact if departments were required to absorb the shortfall through personnel reductions.

Why it matters: staff said the county's liability-insurance line moved from an actuarial baseline of $4.4 million to an amended $8.7 million for 2026 and that, for 2027, forecasted liability charges to the general fund could reach roughly $12.1 million. Under the proposal, about $7.7 million of that liability increase would be absorbed within departmental target budgets rather than paid from a central fund balance, making the cost visible to department managers and the board.

Staff said the county previously used fund balance to smooth liability spikes but that continued reliance on fund balance is "not sustainable." The budget office recommended placing department-level liability lines on the packets departments receive so managers and elected officials can see the service-level impacts. Staff explained the visual includes the agency's proportional dollar amount, the average salary/benefit package for that department, and an estimated number of FTEs that amount would represent.

Commissioners and staff argued about how to present reductions and where cuts would appear. One commissioner asked whether the office's proposed contra (salary) line would be the only mechanism, and staff said the contra is intended as a visual way to show reductions if departments do not meet target submissions; the budget office intends to follow up proactively with departments in August and to provide an information sheet that explains where adjustments show up in each department's packet.

The sheriff's department drew particular attention: a commissioner asked how liability for deputies who work in Spokane Valley is handled. Staff said those awarded costs above insurance coverage would be absorbed by the sheriff's department under current contract terms because the Valley's contract does not provide for recovery of increased liability costs.

Staff also presented options to close the gap beyond departmental reductions, including tax and revenue options and personnel-cost levers. On the revenue side, staff outlined property-tax capacity and sales-tax increment options and said any board action on those options would close part of the gap. On personnel costs, staff discussed reducing double-step wage progression to a single step and adjusting employee/employer benefit-share percentages; staff cautioned some changes would require collective-bargaining negotiations.

The board agreed staff should proceed with the approach of giving departments a clearer revenue trendline, educating department heads and elected officials about the new liability line, and returning with more refined materials after departments submit budgets later in July; staff also scheduled follow-up briefings and union outreach. The meeting adjourned with no formal vote taken on the redistribution plan.

What comes next: staff will provide department packets showing the liability allocations, follow up with departments identified as at risk of large impacts, and return to the board after budget submissions with more detailed impact estimates. The board directed staff to include clarity in the packet to avoid confusion about why numbers change.