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Home My WebLink About2027-09-22 Budget memo 1 TO: Board of County Commissioners (BOCC) FROM: County Manager Ryan Barrett and Budget/Risk Director Becky Butler DATE: September 22, 2026 SUBJECT: 2027 preliminary budget Pursuant to RCW 36.40.050, and using the alternate budget calendar set by the Board of County Commissioners under RCW 36.40.071, the 2027 preliminary budget is submitted to the BOCC on September 22, 2026. The Board shall now consider the budget in detail and make any revisions or additions it deems advisable. In accordance with RCW 36.40 , the call letter for the preliminary budget was distributed on July 22, 2026, to all elected officials and department directors. That memorandum served as official notice requiring all offices and departments to prepare and submit Preliminary Budget Proposals in OpenGov by August 17, 2026. The BOCC directed that General Fund operations be built at a 0% increase over the 2026 budget. The preliminary budget for salaries and benefits includes annual step increases and projected COLAs as provided in the collective bargaining agreements. During 2025 negotiations, the BOCC approved wage increases for all 14 agreements ranging from 2.7% to 10%. 2027 PRELIMINARY COUNTY BUDGET The total 2027 preliminary budget for all funds (including operating transfers) projects revenue of $179,967,735 and expenditures of $185,524,198. The $5,556,463 difference is covered by beginning fund balance carried forward from prior periods. That variance includes projected use of $3,683,317 in the General Fund and planned 2027 CIP projects funded from prior-period resources. General Fund revenues are projected at $49,364,943, a 1.1% increase compared with the 2026 revised budget. Investment interest remains budgeted at $3,700,000, as recommended by the Treasurer, until 2025 and 2026 reconciliations are complete. Sales and use tax collections are up approximately 9%, or $496,288, compared with 2025 collections through June. District Court traffic-infraction penalties are at 81% of the annual budget through August and are expected to exceed the budgeted amount. Payment in Lieu of Taxes from the Department of the Interior was fully funded, adding $622,915 of unanticipated revenue in 2026. Local governments cannot tax federal lands; these annual payments help offset the cost of community services associated with those lands. Revenue from County trust lands managed by the Washington State Department 2 | Page of Natural Resources is already at 97% of the annual estimate through August and will likely exceed the $900,000 budgeted amount. The 2027 estimated property-tax revenue is approximately $300,000 below the 2026 budgeted amount because of refunds added to the 2026 levy. Refunds, new construction, and other changes to the General and Roads levies will be calculated for the BOCC in early November and incorporated in the final budget, along with any other third-quarter revisions. General Fund expenditures are estimated at $53,048,260 (including operating transfers out), an increase of approximately 1.6% over the 2026 revised budget of $52,192,762. The change from the 2026 revised budget reflects the net effect of reduced one-time expenditures and higher salaries and benefits. The 2027 salary increases are estimated by 4.2%, or $1,074,023, over the 2026 revised budget; benefits increase 3.5%, or $310,807. Items excluded from the preliminary budget include wage and benefit adjustments for two labor contracts under negotiation, final rates from medical providers, and rate increases from the Washington Counties Risk Pool/Self-Insurance program. Caseloads and filings drive indigent defense costs and will be adjusted as required to meet State mandates. BUDGET INCREASE REQUESTS The BOCC set the General Fund preliminary budget at a 0% increase over the 2026 budget for operations. The BOCC will review expenditures beyond this limit during September–November budget meetings; a summary is listed below, and detailed request forms are included as attachments to this memo. Fund # Office/Department Name: Funding Source Amount Requested: Exp. Type Description 0010-009 District Court General Fund 74,256 Salaries/Benefits Unfreeze 1 FTE 0010-016 Court Security General Fund 8,103 Operations Increased contract costs 0010-021 Sheriff General Fund 427,334 Salaries/Benefits 2 Deputies previously under Opioid Settlement 0010-022 Jail General Fund 171,724 Operations Jail Medical 0010-060 Coroner (Option 1) General Fund 101,721 Salaries/Benefits 1 additional FTE 0010-060 Coroner (Option 2) General Fund 50,793 Salaries/Benefits Changing current .5 PTE to 1 FTE 0010-060 Coroner General Fund 78,000 Operations Autopsy and Toxicology costs 1060 Southwest WA Fair Operating Transfer (General Fund) 334,000 Operations Request to increase transfer for prof services budget Total General Fund 1,245,931 1100 Mental Health Court Mental Health Tax 26,221 Operations Change Mental Health program to dedicated Mental Health Court 5070 Facilities Capital Maintenance 37,258 Operations & Salaries/Benefits Increase transfer from Capital for Park maintenance Total Other Funds 63,479 Total 2027 Preliminary Increase 1,309,410 3 | Page Contract attorneys also requested an additional 10% rate increase in the Superior Court contracts for 2027. We are currently reviewing the proposal and will provide the Board with the cost analysis during the October 7 budget meeting, which the attorney representatives will be attending. REVENUE ASSUMPTIONS For the General Fund, sales and use tax continues to run above 2025 collections and is up approximately 9% year to date. The 2027 projection assumes a 10% increase over 2025 actuals of $11.0 million, or about $12.1 million. Department of Revenue Quarterly Business Review data for unincorporated Lewis County shows taxable retail sales of $230.6 million in the fourth quarter of 2025, up $37.1 million, or 19.1%, from $193.5 million in the fourth quarter of 2024. The largest industry gain was construction of buildings, which rose from $18.6 million to $34.2 million, or 83.9%. Total construction increased 23.9%. Other large dollar increases were in health, education, and related services and in miscellaneous retail. That local strength supports a 10% 2027 assumption; economic changes can drive fourth-quarter construction activity, so these estimates will be reviewed again with the third-quarter revision. Investment interest is held flat to the 2026 budget at $3.7 million, as recommended by the Treasurer, and will be revised in the third quarter after the 2025 and 2026 reconciliations are complete. For reference, 2025 investment earnings were $3,608,469. The 2027 property-tax revenue estimate in the General Fund does not include a 1% levy increase, new construction allowed under state statute, or available banked capacity. The County Assessor will provide detailed estimates and any refunds for the final budget in early to mid-November. Under RCW 84.55.005– .0101, no local government may increase its regular property-tax levy by more than 1% each year, and the County is limited to the lesser of 1% or the rate of inflation (implicit price deflator). If inflation falls below 1%, the County may adopt a resolution of “substantial need,” allowing an increase to the levy (or banking of unused capacity) up to the full 1%. The BOCC will consider final 2027 levy decisions for the General and Road Funds at the hearing on December 7. The General Fund preliminary budget includes $1,193,831 of traffic-policing reimbursement from the Road Fund at the 2026 revised level, as the BOCC directed on June 10. The Road Fund preliminary budget does not yet include that payment and must be adjusted before adoption if the Board continues the practice. RCW 36.33.220 and RCW 36.82.040 allow a county to use road property-tax revenue for services in the unincorporated area, including traffic law enforcement. If the BOCC continues the $1,193,831 reimbursement, the Road Fund expenditure budget should be increased by that amount before the final budget. If the Board does not continue it, General Fund Sheriff revenue should be reduced by $1,193,831. This will have a significant impact on the General Fund. An option to offset the Road Fund impact of the $1,193,831 traffic-policing reimbursement is to assign REET 1 and/or REET 2 to a 2027 Road capital project already listed in the TIP, leaving Road levy available for the reimbursement. After HB 1791, both REET 1 and REET 2 may be used for streets, roads, and bridges; they may not be used for Sheriff operations or routine road maintenance. REET collections are volatile, and both REET funds already appropriate more than 2027 projected revenue, so any backfill should be a one-time project substitution rather than an ongoing operating plug. If the Board directs this offset, staff will identify a qualifying TIP project of approximately $1.2 million before the final budget and present the REET and Road Fund adjustments together. 4 | Page RECOMMENDED FUND BALANCE – GENERAL FUND (CURRENT EXPENSE) The 2027 General Fund preliminary budget estimates use of $3,683,317 in fund balance, leaving an estimated ending balance of $12.6 million. Best practice is a General Fund balance equal to at least two to three months of operating expenditures (roughly $8–12 million for Lewis County). Actual use of fund balance is often less than budgeted because of vacancies, unspent appropriations, and unanticipated revenue. OTHER FUNDS Other funds (special revenue, debt service, capital acquisition and maintenance, enterprise, and internal service) project 2027 revenues of $130,602,792 and expenditures of $132,475,938. Changes from the 2026 revised budget reflect completion of capital projects and Transportation Improvement Plan (TIP) adjustments, including completion of all ARPA-funded projects at the end of 2026. A full presentation of the Roads TIP will be given at the budget meeting on September 23. TRANSPORTATION: ROAD FUND IMPACTS Lewis County’s Road Fund supports maintenance and improvement of county roadways and bridges. Counties remain the primary owners of Washington’s local road network. The 2025 Washington State Association of County Engineers / County Road Administration Board study found the 39 counties manage more than 39,000 centerline miles — over half of the roadway system managed by cities, counties, and the State. WSAC continues to report that counties are responsible for roughly 60% of statewide road centerline miles and about 45% of the state’s bridges, while receiving a much smaller share of Motor Vehicle Fuel Tax (MVFT) distributions. STATE FUNDING OUTLOOK MVFT distributions to counties have been flat to slightly down for a decade, even as the state fuel-tax rate has risen, because of higher vehicle efficiency and lower gallons sold. The Economic and Revenue Forecast Council’s June 2026 transportation forecast reduced 2025–27 distributions to counties by about $5.8 million from the prior forecast. Property tax — the largest local road-fund source — remains capped at 1% plus new construction, so purchasing power does not keep pace with asphalt, labor, and bridge costs. Annexations and incorporations further shrink the unincorporated tax base that supports the Road Fund. PRELIMINARY 2027 BUDGET OUTLOOK  Lewis County continues to face structural General Fund pressure despite significant reductions over the past several years. With no new local revenue and rising costs in mandated services for public defense, employee compensation, and Jail medical, current service levels cannot be sustained without further tradeoffs.  Washington State is entering the 2027 legislative session with a projected operating shortfall. OFM has warned agencies of significant 2027–29 gaps in both the operating and transportation budgets; House fiscal staff have cited an unrestricted Near General Fund–Outlook (NGFO) shortfall on the order of several billion dollars for 2027–29. The State’s narrowed outlook may reduce shared revenues and put pressure on pass-through programs, including foundational public health services. The Governor has indicated he will not propose new taxes and will rely on spending restraint. 5 | Page  Although the State increased statewide Office of Public Defense (OPD) improvement funding by approximately $8.3 million annually, Lewis County’s incremental share is only $106,728 — far short of the approximately $2.6 million the County spends to provide public defense. Compounding that gap, the Washington Supreme Court issued new public defense caseload standards on June 9, 2025, effective January 1, 2026, and phased in over 10 years (minimum 10% annual reduction toward the new limits). This remains an unfunded mandate and will further constrain resources available for other general government services. Effective January 1, 2026, the Washington Supreme Court reduced maximum annual caseloads for full-time public defense attorneys from 150 felonies to 47 felony case credits and from 400 unweighted (or 300 weighted) misdemeanors to 120 misdemeanor case credits.  Rising costs for general liability insurance and property insurance, healthcare, and utilities continue to impact expenditures. Following the most recent Self-Insurance program review, Washington Counties Risk Pool rates are expected to increase again. General Liability allocations alone have risen from $1.4 million in 2023 to $3.4 million in 2026. Those costs are allocated to all offices and departments and affect every budget.  The Law and Justice Council, reconvened under Lewis County Code 9.20, is reviewing criminal-justice system needs and the advantages and disadvantages of a voter-approved public safety sales and use tax under RCW 82.14.450. The Council will report its findings to the BOCC in early 2027. If the Board later placed a proposition on a primary or general election ballot and voters approved it, state law would allow a county rate of up to 0.3% (30 cents on a $100 taxable purchase). Combined city-plus-county public safety rates may not exceed 0.3%. A county-imposed tax is shared 60% to the county and 40% to cities on a per-capita basis. At least one-third of the revenue must be used solely for criminal justice purposes; remaining proceeds must follow the purposes stated on the ballot. Motor- vehicle sales and the first 36 months of vehicle leases are exempt.  In 2026, Opioid Settlement funds supported the Sheriff’s Enforcement Team, Jail substance-use and mental-health treatment, and an agreement with the Community Action Council for the Youth Advocacy Center. Current settlement levels are not sufficient to sustain all of those programs into 2027. Additional payments may arrive, but the timing of the most recent distribution remains uncertain. Known ongoing payments are projected at approximately $230,000 per year. The Board has directed those funds toward a portion of continued SUD treatment in the County Jail for 2027. NEXT STEPS • September 23 and 29, and October 7 – Budget meetings with County Officials, BOCC • October–November – Budget working sessions for final 2027 decisions • November 10 – Public meeting on the 2027 budget at 5:30 p.m. in the BOCC Hearing Room • December 7 – Statutory public budget hearing per RCW 36.40.070 and .071 6 | Page Figure 1. General Fund Dept. # General Fund Departments/Offices 2026 Revised Budget Rev 2026 Revised Budget Exp. 2027 Proposed Preliminary Anticipated Rev 2027 Proposed Preliminary Exp. 001 COMMISSIONERS 612,000 1,808,612 465,000 1,301,831 002 AUDITOR 865,284 1,820,847 886,784 1,894,099 003 ELECTIONS 256,000 673,486 259,000 690,110 004 ASSESSOR 15,200 2,829,819 20,100 2,788,814 005 HUMAN RESOURCES - 664,290 - 674,513 006 TREASURER 40,232,442 1,242,976 41,516,888 1,159,698 007 CLERK 466,236 1,520,990 499,736 1,627,337 008 SUPERIOR COURT 112,691 2,199,269 114,691 2,208,231 009 DISTRICT COURT 1,909,937 2,440,237 1,696,937 2,428,089 010 PROS ATTORNEY 531,776 4,308,718 531,776 4,765,029 014 COURTS: INDIGENT DEFENSE 297,790 2,929,940 297,790 2,584,412 015 COUNTY ADMINISTRATION 59,900 406,962 59,900 417,967 016 COURT SECURITY - 202,983 - 202,983 020 CIVIL SERVICE - 21,057 - 21,064 021 SHERIFF 1,495,309 11,093,331 1,529,960 11,835,343 022 JAIL 521,025 11,178,509 541,150 11,436,340 023 JUVENILE 711,427 5,050,731 680,001 5,232,605 051 AIR POLLUTION CONTROL 250 32,402 250 32,489 052 ANIMAL SHELTER 248,729 629,985 123,975 660,070 053 BOUNDARY REVIEW BOARD 1,784 - 054 SENIOR SERVICES 5 100,000 5 100,000 060 CORONER 144,490 1,002,553 141,000 1,012,879 070 WSU EXTENSION - 188,846 - 205,560 080 BOARD OF EQUALIZATION - 13,413 - 13,510 082 STATE EXAMINER 123,800 140,000 083 WACO & WASC 35,780 41,000 099 INDIRECT COST ALLOCATION (2,452,389) (2,425,796) 901 GENERAL FUND OP TRANSFERS 326,975 2,123,831 - 2,000,083 Grand Total 48,807,466 52,192,762 49,364,943 53,048,260 Change in Fund Balance (3,385,296) (3,683,317) Figure 2. All Funds 7 | Page Fund # Fund Name 2026 Revised Rev. Budget 2026 Revised Exp. Budget 2027 Proposed Prelim. Rev. 2027 Proposed Prelim. Exp. 0010 GENERAL FUND 48,807,466 52,192,762 49,364,943 53,048,260 1010 EMERGENCY MANAGEMENT 550,805 492,519 513,399 560,892 1030 VETERANS 450,604 427,140 476,210 542,882 1040 SOCIAL SERVICES 7,125,720 4,724,416 7,197,263 4,524,889 1050 LAW LIBRARY 39,000 38,123 39,000 35,320 1060 SW WASHINGTON FAIR 1,747,795 1,813,733 1,605,050 1,605,050 1070 COMMUNICATIONS 5,470,996 7,180,001 6,207,378 4,535,684 1080 TREASURER'S O&M 92,500 175,313 92,500 183,226 1090 DRUG CONTROL - 25,000 - 5,832 1100 CD-MH-TC SALES TAX 4,586,275 4,476,492 3,494,198 3,933,413 1110 TREASURER'S INVESTMENT POOL MAINT 80,000 87,725 120,000 101,128 1120 NOXIOUS WEED CONTROL 435,900 522,741 417,600 517,132 1130 SELF INSURANCE RESERVE - - - - 1160 PARKS & RECREATION - - - - 1170 ROADS 48,146,087 53,154,542 45,878,039 47,628,387 1210 COMMUNITY DEVELOPMENT 3,000,000 2,922,499 3,142,863 3,002,315 1220 CHE RVR BASIN FLOOD CNTRL AUTH 370,770 362,755 359,485 359,485 1250 FLOOD CONTROL ZONE DIST 95,629 95,629 77,990 77,990 1260 COWLITZ RIVER BASIN SUBZONE 154,100 154,100 50,924 50,924 1280 PATHS & TRAILS 20,000 178,000 20,000 192,000 1300 DISTRESSED COUNTIES 2,210,000 2,240,000 2,210,000 1,640,000 1320 REET E-TECHNOLOGY 16,500 - 16,500 - 1370 CRIME VICTIM/WITNESS ASSISTANCE 120,000 241,218 120,000 143,571 1380 DISPUTE RESOLUTION 15,300 13,800 15,300 13,800 1400 COMM DEVLPMNT BLOCK GRANT 1,725,820 1,725,820 111,385 111,385 1410 COVID-19 RESPONSE - - - - 1420 AMERICAN RESCUE PLAN ACT 1,046,262 1,379,686 - - 1450 DISPUTE RESOLUTION CENTER 15,800 13,800 15,800 13,800 1470 DISP RES COURT FACILITATOR 9,620 9,620 9,620 9,620 1500 GRANT AWARD (SHERIFF) 22,500 41,986 15,000 42,070 1520 ANIMAL SHELTER DONATIONS 21,075 155,624 17,500 15,000 1580 ELECTION RESERVE 104,000 104,934 104,000 104,934 8 | Page 1590 AUDITOR'S O&M 104,600 89,666 106,000 91,233 1600 CRIMINAL DRUG INVESTIGATION 10,000 100,000 10,000 100,000 1610 PAO DRUG ENFORCEMENT - 30,000 - 30,000 1900 PUBLIC HEALTH 3,247,112 3,326,946 3,542,053 3,542,053 1910 FOUNDATIONAL PUB HEALTH SRVCS 1,458,319 1,458,319 1,201,715 1,201,715 1980 TOURISM PROMOTION 1,178,561 1,066,684 1,189,445 1,029,801 2120 2012 DEBT SERVICE 737,450 737,450 741,600 741,600 2150 2015 DEBT SERVICE - - - - 2200 2020 DEBT SERVICE - - - - 2210 2021 DEBT SERVICE 606,901 606,901 605,250 605,250 2230 2023 DEBT SERVICE 723,990 723,990 723,988 723,988 3010 CAPITAL MAINTENANCE & REPAIR 3,206,926 2,779,354 1,062,264 2,354,870 3100 CAPITAL FACILITIES PLAN 1,835,019 3,582,372 2,000,200 2,459,437 3110 REET 1 2,056,000 2,334,144 3,371,000 4,160,000 3120 REET 2 1,000,000 1,903,088 1,000,000 2,016,401 3250 GEN GOV CAPTL CONSTRUCTION - 213,053 - - 3300 COMMUNICATIONS BLDG AND EQUIP 3,902,250 3,381,202 996,250 2,100,000 3350 TECHNOLOGY REPLACEMENT FUND 112,903 780,763 112,903 109,274 3400 BROADBAND INFRASTRUCTURE 1,582,395 1,582,395 - - 3450 JAIL CAPITAL IMPROVEMENTS - 673,381 - - 3500 HOMELESS SHELTER CAPITAL 90,000 90,000 90,000 90,000 4010 SOLID WASTE 4,804,176 4,612,100 5,159,160 5,134,065 4020 SW CAPITAL RESERVE 360,469 135,950 409,995 447,000 4050 PACKWOOD AIRPORT 1,157,534 1,255,961 125,212 121,899 4070 SOUTH COUNTY AIRPORT 981,032 1,059,030 1,386,435 1,435,466 4100 MIDDLEFORK WATER-SEWER SYSTEM 607,800 606,037 451,765 455,869 4150 SOLID WASTE DISPOSAL DIST #1 11,202,850 10,855,454 11,440,000 11,568,273 4200 WATER UTILITY-VADER 662,969 696,113 618,380 618,380 5010 EQ RENTAL & REV-FLEET 6,869,776 7,366,844 7,360,000 7,191,059 5060 PITS & QUARRIES 462,000 420,000 462,000 421,437 5070 FACILITIES 5,040,581 5,146,971 5,304,039 5,355,533 5100 COUNTY INS - WORKERS' COMP 831,668 920,946 824,980 750,927 5120 RISK MGMT GENERAL LIABILITY 5,039,824 4,393,799 4,236,919 3,934,795 9 | Page 5140 RISK MGMT UNEMPLOYMENT - 170,378 - 100,599 5160 RISK MGMT LEOFF 1 255,000 532,662 255,000 100,000 5200 RADIO SERVICES - - - - 5400 INFORMATION SERVICES 3,331,498 3,253,498 3,489,235 3,534,285 Grand Total 189,940,127 201,835,429 179,967,735 185,524,198 Budgeted use of Fund Balance (11,895,302) (5,556,463)