On Jan. 15, Lane County officials warned county commissioners of difficult times to come, delivering a grim outlook for the upcoming 2025-2026 fiscal year.
According to Budget and Financial Planning Manager Christine Moody, the county faces a projected $6.3 million shortfall in its general fund starting in the upcoming fiscal year, which begins in July. The projected gap, 0.5% of the county’s $1.24 billion total budget, accounts for more than 4% of the $143 million general fund — the largest pool of discretionary funds at the county’s disposal.
Around the same time last year, county officials predicted a $7 million general fund deficit. To address that gap, the county implemented a series of cost-saving measures, including keeping vacant positions open longer, cutting funding for material and service accounts and eliminating approximately 15 full-time positions across multiple departments.
Since the county adopted the current fiscal year’s budget in June, two supplemental budgets have increased the total budget by more than 8% or roughly $103 million. The money came from unspent funds the prior year, state and federal grants, transfers between different county funds and additional county revenue. The spending increases will help pay for county infrastructure projects, public safety enhancements and other social services not included in the adopted budget.
Lane County officials said their budget woes have two key drivers: unstable revenue and skyrocketing expenses that have continued to outpace revenue growth in recent years. Next fiscal year, costs are projected to increase nearly 10%, while revenue is expected to rise by just 3%. The forecast marks a significant change from last year’s projections, which showed costs increasing by more than 5% and revenue rising by 2%.
“The money going out the door is leaving faster than the money that we can collect coming in the door,” longtime Lane County Administrator Steve Mokrohisky said. “Our expenses are growing faster than our revenues.”
Mokrohisky cited several reasons for the current imbalance between revenue and costs. He said revenue is unstable because the county has a lower property tax rate than other Oregon counties that provide similar services. He added that the issue is further complicated by high inflation following the coronavirus pandemic, the county’s past reliance on declining timber tax revenue and 1990s statewide voter measures restricting property tax increases.
Officials say the imbalance has resulted in chronic underfunding of essential county services, like public safety and health and human services. They say the problem has been further exacerbated by the county not receiving enough state and federal funding.
Another reason for the imbalance is that other county expenses, like wages and county retirement plans, are growing faster than revenue, officials say.
Late last year, Eugene city officials painted a similarly bleak financial picture, saying the city council must implement a fire safety fee to close a $11.5 million general fund budget gap or make the equivalent cuts. But, unlike Eugene, the county is not considering implementing additional fees or taxes to address its projected shortfall.
Moody said the current area of focus for potential cuts is in the county’s central services departments. She said the county is looking at making cuts in the departments at 5% to 10%. The departments include technology services, county counsel, human resources, county administration, financial services, budget and financial planning, policy, operations and facilities.
Another area officials say cuts could be made is in the county’s health and human services department. Department director Eve Gray said by eliminating funding for vacant positions in the department, a current department plan, the county could save $3 million — nearly half of the county’s projected budget gap.
In addition to those potential budget cuts, officials say other essential county functions may be at risk, including public safety, land management and parole and probation.
Chair David Loveall, who represents Springfield on the Board of Commissioners, said the county’s budget gap is growing and getting worse. He said addressing the shortfall will be a delicate balancing act.
“We are going to have to do some serious prioritizing,” Loveall said, adding that he hopes to prioritize funding for public safety.
While the county could dip into nearly $360 million in reserves to cover some or all of the gap, as they have done previously — most recently last fiscal year when they spent roughly $2.6 million in reserves to close a $7.2 million shortfall — Loveall said that would be a “last resort” for him. Doing so could jeopardize funding for future county projects, like the Lane Behavioral Health Stabilization Center in Springfield, he said.
It is not clear yet how the shortfall will be resolved. The county is in the early stages of its budget process for the upcoming fiscal year.
To date, the county has only completed forecasts for the general fund. The projections for the total budget deficit will not be complete until April, officials say. The gap may widen further as more analysis is done.
In mid-June, county commissioners will vote on the final budget before the 2025-2026 fiscal year begins on July 1. There will be opportunities for the public to weigh in when the county’s budget committee starts meeting in May.
