Pacific County Courthouse

Pacific County is in the midst of a historic drop in tax revenue, which may force budget cuts in the near future.

SOUTH BEND — Pacific County department heads and elected officials are preparing for possible budget cuts after a historically bad revenue month in May.

In an email to officials on Monday, June 16, Management and Fiscal Analyst Paul Plakinger said the May financial report “painted a grim picture for revenue collections.” He estimated the county’s financial buffer would last at best two to three months before Pacific County Commissioners would need to reopen the budget and make reductions.

In April, revenue was down by about 19.9%. In May it was down by 38.1%.

The county brought in a total of $811,791 in May revenue. In raw dollars, the county experienced the worst May for general fund revenue collections since the county began using its current accounting software in 2002, Plakinger said.

“The previous low for general fund revenue collections in the month of May was $852,235 in 2011, when the county was still reeling from the financial devastation wrought by the Great Recession,” Plakinger wrote in his email to officials.

The next year, in 2012, the county budget was down by $200,000 and budget losses required the county to cut 2.8 jobs.

In his email to officials, Plakinger indicated similar tough decisions may be coming for the county.

“I don’t see a way out of this without making some major spending reductions unless things dramatically improve — and improve fast,” Plakinger said. “If revenues continue to drop 30-40% per month, we might be looking at major cuts in Fiscal Year 2021.”

Four prominent revenue streams for the county took major hits in April and May.

• Sales tax, which declined by 22.6% in May compared to 2019. However, the state reports sales tax figures on a two-month delay, and this number better reflects sales tax revenue from about mid-February to mid-March. With Gov. Jay Inslee’s “Stay Home, Stay Healthy” order not taking effect until late March, Plakinger said he expects this revenue stream to continue to drop.

• Timber excise tax, which is a tax on private timber harvests, declined by 45.4%. The county projected a decline in timber revenue for fiscal year 2020, and because of this cautious budget projection, the county isn’t far off the mark.

• State timber was down 96.4%, but Plakinger noted this wasn’t as disastrous as the number seemed, since a good first quarter in timber revenue offset the second quarter drop.

• Investment interest dropped by more than 60% and revenue from interest fell every month so far in Fiscal Year 2020, a trend which will “almost certainly continue for the foreseeable future,” Plakinger said.

In addition to general fund revenue, Plakinger noted major losses for two additional funds. The Motor vehicle fuel tax within the County Road Fund dropped by 35.4%. Lodging tax revenue within the Tourism Development Fund fell by 68.7%.

Plakinger was quick to stress that he cannot say for sure whether major cuts would be coming to the county. But that it is something for which county officials must prepare.

“This is such a fluid situation, and economic predictions seem futile, at best,” Plakinger wrote. “I really wish I had more answers, but I don’t — and I don’t think anyone else does, either.”

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