Q&A | Dissecting King County's general-fund shortfall

King County is facing budget cuts next year that officials now call unprecedented.

What initially looked like a $25 million shortfall in the general fund has grown, in stages, to $90.6 million.

Department heads were alarmed in the spring when they were told to plan to cut 2009 spending by 8.6 percent to 33 percent below what it costs to maintain current service levels, depending on whether their services were required by state law.

Then County Executive Ron Sims' budget office told them in August that slumping sales-tax revenue and galloping inflation would force cuts to deepen by another third in the $662 million general fund.

The situation has worsened since then. The county has already reined in this year's spending.

Sims presents his proposed 2009 budget to the Metropolitan King County Council on Oct. 13, and it's not yet known for sure what he'll cut. But at a minimum, it looks like there will be fewer sheriff's deputies and prosecutors, cutbacks in courts and social services, and perhaps closures of some public-health clinics.

How could this happen?

Here are answers to some frequently asked questions about the budget:

Q: Why does the county say it doesn't have enough money to pay for basic government services?

A: Bottom line: higher costs, flagging revenues. The sluggish economy first hurt the county by reducing the interest it earned on money in the bank and the amount of property tax it collected on new homes. Then sales taxes slumped. Now it appears inflation will trigger a hefty cost-of-living adjustment for union-represented employees.

Then there's the 5-percent-a-year pay raise negotiated with sheriff's deputies and the yet-unknown cost of improving conditions in the county jail to prevent a federal civil-rights lawsuit.

Those problems are on top of an underlying "structural deficit." Since 2002, state law has allowed the county to increase collections of its primary-funding source — property tax on land and existing structures — by no more than 1 percent a year without a vote of the people. That's less than inflation.

Making the problem worse, cities have annexed most of the large retail areas that generate sales tax, leaving the county to govern residential areas without that tax source.

"There's been a convergence, the perfect storm of bad news," Sims said this month.

Q: My property-tax bill went up way more than 1 percent this year. How could the county possibly be facing a deficit?

A: Total tax collections on land and existing structures went up 6.6 percent this year. Most of that increase is going to voter-approved school-construction bonds, park expansion, Medic One and the county's newly created ferry and flood-control districts.

More than half of the typical tax bill goes to public schools. Cities and the unincorporated-area road fund are the next biggest beneficiaries of property-tax revenue, followed by the county general fund, libraries, parks, hospitals and Medic One. Thirteen percent goes to the county general fund.

Q: What about county spending? Hasn't that gone up, too?

A: Yes. In fact the county's former chief economist, Chris Bushnell, recently said the main reason for the budget gap was increased spending — particularly for more employees and higher pay. The number of employees this year is 2 percent higher than the county forecast in 2005, he pointed out. Wages, forecast to go up 3.8 percent, actually have gone up 6.7 percent since 2005.

County officials say the budget shortfall results from a combination of sluggish revenues and rising costs.

Q: Are all county services at risk?

A: No, the biggest problem is in the $662 million general fund — the part of the overall $4.9 billion budget supported mostly by local taxes and over which county officials have the greatest spending discretion. (The County Council's adopted general-fund budget is $662 million, but the county budget office, accounting differently for some expenses, uses the figure $687 million.)

Some of the biggest operations in the county budget, including transit, wastewater and garbage disposal, are not paid for out of the general fund, but run as customer-supported businesses. Metro Transit, hit hard by rising diesel costs, raised bus fares 25 cents in March. More fare increases are expected.

Q: What is the plan for balancing the budget?

A: Agencies that provide services required by state law are looking for fee increases or spending cuts about 11.5 percent below the amount that would maintain current service levels. These agencies include jails, sheriff, courts, elections, county executive and County Council.

Other agencies — primarily public health and human services — are preparing for about 44 percent reductions in their general-fund spending.

Q: What do these cutbacks mean for me?

A: Of course, the final budget isn't set, but even under a best-case scenario, Sheriff Sue Rahr has said she will have to eliminate deputy positions, likely cutting back the Marine Patrol and investigations of narcotics, organized crime, cold cases, domestic violence and thefts and vandalism.

Prosecutor Dan Satterberg has already reduced his staff and next Monday will begin filing many drug-possession cases and thefts or vandalism with losses below $5,000 as gross misdemeanors rather than felonies.

Some public-health clinics could be closed and cuts may be made to programs that control infectious diseases and provide vaccinations. Support for youth counseling, assistance to victims of sexual assault and domestic violence, and senior and community centers is at risk. One positive note: Mental-health care, housing programs, alcohol and drug treatment, and Medic One may escape the deepest cuts because they receive outside funding.

The county's highly touted drug and mental-health courts are expected to stay intact in 2009, but with more deficits in the following years, Sims says, "There isn't any long-term prospect for those courts."

Q: Is there some way these cuts can be avoided?

A: There isn't much hope for avoiding significant cuts starting Jan. 1. Sims and County Council members hope to persuade the Legislature to take steps that could restore some funds later next near. Among the ideas: Give counties more flexibility to transfer funds from one account to another, allow courts to charge fees for filing some documents, and possibly let counties collect tax on utilities and business.

Don't look for the state to bail out the county, though. It has its own shortfall that Gov. Christine Gregoire now puts at $3.2 billion for the 2009-10 biennium.

Q: Didn't Sims say in 2005 the "era of deficits" was over? Then why is there a looming deficit for 2009?

A: Yes, he did say that, three weeks before he was re-elected. County Councilmember Larry Phillips, who is considering running against fellow Democrat Sims, has made much of that remark.

Sims went on in his 2005 budget speech to say "the structural deficit has not been permanently solved" and inflation and possible cutbacks in federal and state spending could bring create new shortfalls.

Q: Are other counties in financial trouble?

A: Yes, to varying degrees. Snohomish County Executive Aaron Reardon has proposed cutting 70 positions in order to close a $9.3 million shortfall next year. The county-supported Snohomish Health District, facing a $4.4 million deficit, plans to lay off 35 employees. Pierce and Thurston counties are trimming their budgets, and the Washington State Association of Counties, which lobbies on the behalf of all the counties, will ask for help from the state Legislature.

A 2007 report by the state Department of Community, Trade and Economic Development said "every county in Washington is fiscally distressed," in part because counties are funded by a "two-legged stool" of property and sales taxes, while cities' three-legged stool includes business and utility taxes.

Keith Ervin: 206-464-2105 or kervin@seattletimes.com