Hood River County weighs budget deficit

HOOD RIVER — Tammy Lohr-Schweitzer from Baker Tilly, an advisory, tax, and assurance firm, attended a Hood River County Board of Commissioners work session July 20 to discuss the county’s fiscal situation. Baker Tilly has worked with county leadership and staff for approximately the past six months.

Lohr-Schweitzer posed two fundamental questions during her presentation: “First, is Hood River County financially sustainable over the long term? And then, second, is the organization structured in a way that allows it to continue delivering services within those financial realities?”

She then introduced three primary objectives: Develop a long-range financial forecast that projects the county’s financial position over the next 10 years; conduct an organization-wide assessment of staffing, operations, and service delivery to identify opportunities for improved efficiency and effectiveness, and then identify where there might be some potential cost savings opportunities; and prepare a fiscal sustainability plan to support new revenue, cost shifts, and alternative service delivery models.

“The goal is really to provide county leadership with a cost shift that’s realistic for you and help you maintain your operations,” she said.

Deficit projected

Hood River County’s 2026-27 budget has a projected $2.75 million deficit that is expected to reach $10 million in the next 10 years if the county makes no changes. General Fund Reserves are expected to be exhausted after a year.

“Oregon’s property tax structure under Measure 5 and Measure 50 has significantly constrained the county’s ability to increase revenues,” Lohr-Schweitzer said. “In addition to that, about three-quarters of your county land is exempt from property taxes, which also makes it more difficult to raise those revenues. And then, at the same time, the cost of delivering services has increased, so you have labor benefits-applied services that have all increased alongside inflation, which is obviously outpacing the 3% rate that is established in work and state law.”

In a survey conducted among county employees, nearly two-thirds of respondents indicated their departments are not appropriately staffed for the workload. It was recommended that existing employees work more efficiently, as opposed to reducing staff.

However, peer benchmarking revealed that the average turnover for county staff is around 17%, compared to 10-12% for other public  sector jobs.

One proposal suggested that, since Hood River County is the second smallest county in the state in both population and geography, consolidating with organizations providing similar services — such as Hood River Valley Parks and Rec, public safety and emergency management, and select administrative functions — may be appropriate. The county is also considering a prepared food and beverage tax.

Council comments

Commissioner Arthur Babitz expressed concerns about public reaction to the report without proper context, citing how roughly 75% of county land is tax-exempt — because that is federal land — as an example.

“You have to understand exactly what’s going on and caution people against trying to make conclusions from the statistical work that is in this report,” he said. “We will end this fiscal year with adequate reserves. The problem is that if we continue spending at this rate without making any changes, then we will quickly [diminish] those reserves. But we’re not going to do that.”

“In order to get to this year’s budget, we had to go through significant cuts — three rounds of cuts — and hold positions open,” said County Administrator Allison Williams. “And we’re still in a deficit position ... I wanted to acknowledge that our staff feels like we have been in a deficit position for years because we have not had the revenues or the resources to provide the services the way that we feel like they should be provided.”

Commissioner Chad Muenzer also made a point to acknowledge county employees. “They’re working really hard, and no matter where we go with this, we have to create revenue,” he said. Muenzer also stressed the importance of employee retention, adding, “I thank all these people. I think they do a great job, and we need to figure out how to make them feel comfortable in their position.”

Williams recommended reconvening on Aug. 3 to discuss priorities and next steps.