The Wahkiakum County Eagle - Established as The Skamokawa Eagle in 1891

Commissioners announce factors

affecting county's budget shortfalls Wahkiakum County has been hit hard by revenue shortfalls in 2008, which is causing many to ask why the county could not have predicted the shortfalls.

County officials have released a statement explaining that the primary factors affecting revenue shortfalls are a direct result of the declining housing and timber market. The effects of these markets could not be accurately predicted when the 2008 county budget was developed last year. The county's revenue shortfalls were caused by the following factors:

1. The federal government reduced the primary interest rate from 4 percent to 2.35 percent in 2008 to stimulate the national economy. This caused the state pool earning to drop, which is where the county's investments are held. The interest rate drop caused the county to realize a shorfall of $200,000 in "earned interest income".

2. The county's "criminal justice" revenue, which comes from the state, declined by $200,000 because it is generated by real estate excise tax, which is tied to the state's housing market. When the housing market plummeted, so did the taxes received for criminal justice.

3. In the last year, the Douglas Fir prices fell from $600 per thousand board feet to $250 per thousand board feet, which is a 41 percent drop in price. Timber revenue generated from blow down sales came in 40-50 percent lower than the Department of Natural Resources projected.

4. The Department of Natural Resources errored when it reported the "Between Cougar Rose" timber sale would generate $1.8 million for the county in 2008. In actuality, this timber sale only generated slightly more than $1 million for the county. The remaining revenue went to other trusts, causing the county a $739,000 shortfall. The county became aware of this error at the end of June, when logging was completed.

The combination of these revenue shortfalls has left the county with a $1.25 million deficit in its current expense fund. The current expense budget must balance by the end of the year. Commissioner Dan Cothren stated, "The county is not alone in its financial challenges. We have a lot of hard working families and retirees on fixed incomes that are having a difficult time making ends meet. The effects of sky-rocketing inflation, the poor housing market, lower interest rates, and the decline in the timber market create challenges for our county, but we will weather this storm. Officials will work together to find creative solutions to sustain our local government during these challenging times."

For more information about the county's revenue shortfalls, the public is encouraged to call Wahkiakum County Treasurer Paula Holloway at 360-795-8005, or refer to the Treasurer's Report located on the county's homepage at http://www.co.wahkiakum.wa.us.