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Homola proposes new tax

With continued bad news about the economy, Island County officials agreed that just about all possible options for balancing the budget are on the table, including new taxes.

That could mean a new county utility tax, layoffs, reduction of hours, furloughs, cuts in overtime or voluntary relinquishment of health insurance.

The shortfall stands at $1 million, but it may get worse. This comes after commissioners trimmed $2 million from the budget and cut the equivalent of 31 positions late last year.

Commissioners, elected officials and department heads discussed the fiscal emergency during a roundtable meeting Monday morning in Coupeville. The commissioners again confronted the budget woes during a meeting in the afternoon. The first step in the process, they decided, will be to set funding priorities at a meeting at 3 p.m. Monday, March 2.

“The numbers are so dramatic that we need to move ahead with great haste to make decisions,” Commissioner Helen Price Johnson said, adding that “these are impossible decisions we will be forced to make.”

While Price Johnson emphasized urgency, Commissioner John Dean said they should take some time to involve county officials in the process. “The mistake we made last year was not involving them,” he said. “We made a commitment to work with them.”

Commissioner Angie Homola said she was interested in the idea of creating a storm and surface water utility tax in the county, which is commonly a per-parcel tax. The tax could fund water-related activities — such as surface water monitoring — and free up money in the current expense fund that’s currently being spent on these activities.

Homola described the cost as “four pizzas a year.”

“It’s the way we have to go,” Homola said. “Most other counties are doing this already.”

Public Works Director Bill Oakes and Health Department Director Keith Higman have discussed the issue and plan on making a presentation to the commissioners next Wednesday. Higman said Tuesday that they discussed a tax in the range of $25 to $40 a year for each parcel.

The latest financial news is grim. Treasurer Linda Riffe described the economy as “the closest thing to the Great Depression.”

“Nobody, not even someone with a crystal ball, could have anticipated the depth of the trough or the length,” she said.

Riffe revised her revenue estimates early this month to the tune of a $1 million deficit, largely because of a catastrophic decrease in investment earnings. In an interview Monday, she admitted that she may have to revise revenue estimates downward again later in the year.

The numbers tell the story. Riffe announced that revenues for the current expense — commonly known as the general fund — were only at 5 percent of the budget at the end of January. That’s 3 percent below the target of 8 percent.

The county received $344,000 sales tax in January, which was $43,500 less than the same month the year before. That’s an 11 percent decrease.

The income for real estate excise tax is less than half of what it was the year before. It decreased from $10,740 in January of 2008 to $4,753 in January of 2009. The tax is charged when a house is sold or changes ownership.

The county is also seeing a giant decrease in revenues from fees. Revenue from building permits, for example, decreased from $92,000 in January of 2008 to just $35,000 in January of 2009.

The county will lose thousands of dollars this year in franchise fees because Broadstripe cable firm went bankrupt.

Riffe said she processed paperwork for 19 small businesses that went out of business in January. All but one were on Whidbey Island.

“They were all small businesses. There was a bed and breakfast and an auto repair shop,” she said. “There was not one particular type of business, but it was all over the map.”

Riffe described another ominous sign of the tough times. State Treasurer James McIntire sent a letter to all county treasurers, urging them to consider moving their investments to non-interest-bearing accounts, which are fully covered by the FDIC insurance in the case of bank failures.

“The ramifications are tremendous,” Riffe said, adding that she is investing in the Local Government Investment Pool and federal agency notes. They offer low interest rates, she said, but they’re safe.

Riffe said she has $4.1 million in certificates of deposits in Whidbey Island Bank and Banner Bank. She said she’ll probably leave the money there for now, but she won’t invest in CDs in the future since the banks simply aren’t interested.

“I don’t like painting the picture of doom and gloom,” Riffe said, “but I think we need to be realistic so we’re prepared.”

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