Jefferson County begins budget discussions

Published 3:30 pm Thursday, March 12, 2026

PORT TOWNSEND — In an effort to overcome a $1.1 million budget gap, currently covered by reserves, Jefferson County is seeking to restructure how it manages its reserves and departmental costs.

In a presentation Monday for the Jefferson County Board of County Commissioners, Finance Director Judy Shepherd outlined recent work aimed at stabilizing the county’s general fund and rebuilding reserves.

“I want not only myself, but our leadership to go into 2027 with their eyes wide open,” Shepherd said. “With plenty of time to pivot where they need to pivot.”

Shepherd has been working on what she called the budget deficit reserve management plan and a three-year cash flow analysis, using data from 2024, 2025 and 2026 actuals to project into next year.

The 2026 numbers are being updated as the calendar proceeds.

“The three-year cash flow analysis is like a living cash flow analysis,” Shepherd said. “The cash flow analysis is going to be taking our budget, distributing it across the months and then replacing those months with the actuals as they happen.”

Shepherd is waiting for revenue details from Treasurer Stacie Prada and information from Assessor Jeff Chapman, she said.

“It’s really important to know what that property tax would be anticipated to be, to know how it impacts our cash flow and how we budget for 2027,” she added.

With property taxes yet to come in, cash flow for the year has been very challenging, Shepherd said.

“It’s a good thing that we came in with more than what I had projected,” Shepherd said. “I’m happy to say I was wrong, but it’s a projection.”

The budget deficit reserve management plan will aim at reducing the deficit while rebuilding county emergency reserves.

It will entail identifying current spending practices and acceptable ways to reduce spending, Shepherd said.

“It’s not enough to reduce the deficit,” Shepherd said. “We could reduce the deficit, but then we are still using our reserves for operational expenditures.”

Two facets of the plan are establishing a fair and equitable cost allocation model and approaching the process over a longer timeframe and in a collaborative manner leading into the 2027 budgeting season.

A fair and equitable cost allocation model could mean that funds which have not historically paid into internal services they use, may need to start, Shepherd said.

Historically, Public Works has paid much of the costs associated with shared county services like accounting, payroll and human resources. An updated approach would charge all of the funds that make use of those services. Or it would no longer charge Public Works.

Shepherd said she plans to have meetings with departments that rely on the general fund. Phased budget conversations, starting early, are hoped to improve the process.

With daily operational expenses currently being funded by reserves, reducing the deficit without relying on the reserves is potentially high stakes, Shepherd said.

“I think about, ‘What if we have a catastrophic natural event here?’” Shepherd said. “We’re going to need that reserve, before FEMA kicks in, or any other agency kicks in.”

Commissioner Greg Brotherton acknowledged the work as a good step.

“It feels like you’re setting up a good path for these challenging conversations,” he said. “It feels like we’ll be in a better place come budget time. I’m impressed.”

“That’s the hope,” Shepherd said. “I don’t want to repeat last year.”

County Administrator Josh Peters said that hopes for state-level relief did not pan out as the Legislature failed to provide increased funding for state-mandated services.

Unless something changes, the 2027 budgeting season is likely to be another challenging one, he said.

“Not only did we not get any relief, but our obligations have only increased with no funding source,” he continued. “That’s just not a good formula.”

Another budget workshop is planned to occur in late April, before a reserve management plan goes before the commissioners for adoption.

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Reporter Elijah Sussman can be reached at elijah.sussman@peninsuladailynews.com