Rising costs, federal cuts challenge some counties

Key Takeaways

Some counties across the country are reducing staff to alleviate budget deficits, as a result of rising operational costs and cuts to funding and jobs at the federal level.

Skagit County, Wash., facing a $19 million shortfall prior to budget cuts, eliminated 51 staff positions and extended the county’s hiring freeze indefinitely. Public health and senior services were impacted the most, and a new provider will take over the county’s senior nutrition program, according to Lisa Janicki, who served as a county commissioner for 11 years before retiring in January. 

A new 0.1% public safety sales tax, which will help expand the number of social mental health professionals in the county sheriff’s department, will be implemented in April. It’s expected to boost revenue by $3 million in its first year and $4 million-$5 million ongoing annually.

“I think it’s really incumbent on us to be true to our strategic plan as to where our priorities are and to staff accordingly in the near term and the longer term,” Janicki said. “It’s a tough time … Law and justice is like 75% of our general fund, so it leaves very little for the things that people really expect and see and understand that county government pays for.”

More cuts are expected ahead, and the county has asked departments to create contingency planning, determining where more costs could be cut by 10% or 20%, according to Janicki.

“You’ve got to know what that next step is before it’s time for that next step,” Janicki said. “That’s the part that’s really important, but it doesn’t all have to be done at once.”

Fairfax County, Va. has also asked its agencies to reduce budgets, by 5%, according to Fairfax County Chairman Jeff McKay. 

The county is facing a projected budget shortfall of $131.5 million, the two biggest drivers of which are “chronic underfunding” of public education at the state level, and cuts at the federal level, according to McKay. The county budget for the next fiscal year won’t be adopted until May, but staffing cuts are expected, McKay noted. 

“I think this year, there’s probably no way around having to make real cuts to county employees and positions and doing layoffs, which is a really tough thing, obviously, to do,” he said. “It’s been a long time since we’ve had to do that in Fairfax, and we’re going to have to do it this year, because of what’s happening in Washington, D.C., and because of the increase that schools have requested.”

Counties across the country are set to face cost shifts from states and the federal government, and Fairfax County is disproportionately impacted by job cuts in Washington, D.C. due to its proximity to the capital. Last year, more than 317,000 federal employees left their positions, due to a combination of a hiring freeze, voluntary buyouts and involuntary layoffs — many of whom live roughly 50-20 miles outside the city, in Fairfax County.  Other states notably impacted by the federal layoffs include Florida, Georgia, Maryland and Washington state.

The potential for more federal layoffs in the DC Metro area leaves a lot of uncertainty for what’s ahead for Fairfax County, McKay said. 

“If you cut those incomes out of our economy, and many of them are very high incomes, that has a disabling effect on everything for local government,” McKay said. “That’s potentially, someone who loses their salary and doesn’t build the deck on the back of their house or doesn’t build an addition, those are things that — bottom line — affect our economy.”

Some federal contractors are also having to walk away from leasing property in the county, which is another hit, noted McKay. 

“That has an effect on our economy,” he said. “That means more homeowners are footing the bill for the county budget, as opposed to them being offset by commercial growth.”

The total impact of recent federal cuts won’t be felt in this budget cycle, McKay said. 

“There’s this multi-year cascading effect that will occur, because it takes a while for those all to be registering on our county ledger,” he said. “So, this year we’re seeing some of that effect. What I’m bracing for is next year and the year after more so, because that’s when a lot of those things will then be able to go through the full realization.”

Fairfax County recently implemented a 4% meals tax, which became effective Jan. 1. Estimates predict it will generate $150 million a year, according to McKay. 

While the county initially hoped the revenue could move the needle on school funding or real estate tax relief, it will likely be used to make up part of the budget shortfall, he noted. 

“We were looking for revenue diversification ideas before we got slammed with these federal cuts,” he said. “You get this feeling if you’re in local government in Northern Virginia, you plan for revenue diversification, you put it in place, and then you get hammered in another area, and it’s like, ‘Well, there went that.’”

In addition to requesting that each agency come up with budget reduction planning (with the exception of public safety), the county has created a portal for all county staff to have the ability to provide input and ideas for potential cost savings, so that the Board of Supervisors has a fuller picture when it adopts its budget, according to McKay. 

“Those are eyes and ears on things that there’s no way individual Board members could find,” McKay said. “We’re hoping to share the pain. We’re hoping that one particular agency doesn’t bear the brunt of this.”