# Budgets, Floods, and Financial Realities: Whatcom County Grapples with Fiscal Challenges In the confines of the Whatcom County Courthouse, the Finance and Administrative Services Committee gathered on April 29, 2025, for what would prove to be a revealing glimpse into the county's financial future. Chair Todd Donovan presided over the hybrid meeting, joined by Committee Members Barry Buchanan and Tyler Byrd, with several other council members participating both in person and virtually. The morning began with technical difficulties—a fitting metaphor for the budget challenges ahead. As IT staff scrambled to fix audio issues, committee members waited patiently while Deputy Executive Aly Pennucci prepared to deliver sobering news about the county's fiscal trajectory. ## Meeting Overview After resolving the technical hiccups by 9:25 a.m., the committee moved efficiently through a substantial agenda. What emerged was a meeting that perfectly encapsulated the tension between continuing community needs and tightening financial constraints. The committee processed eleven consent items worth over $5 million, allocated funding across multiple priorities, and confronted the reality that hard choices lay ahead. The session highlighted both routine governance and significant policy discussions—from flood mitigation studies along the Nooksack River to the fundamental restructuring of how the county approaches budgeting. Most notably, it revealed a government wrestling with the classic challenge of providing expanding services with constrained resources. ## The Nooksack River Studies: Accountability Demanded Four of the eleven consent agenda items involved continued investments in Nooksack River flood mitigation studies, prompting Council Member Mark Stremler to voice community frustration. "The community seems to be wanting a little more results than just studies," Stremler observed, expressing a sentiment that resonated beyond the chambers. Stremler's concerns reflected years of ongoing studies with limited visible progress. "I believe it's time they have an update as well as the council has an update of any like actual work that has been done to help with the Nooksack River and the flooding issues that we see," he stated. His call for accountability struck at a fundamental tension in government: the need for thorough planning versus public demand for tangible action. The four Nooksack-related items totaled over $1.3 million: $590,829 for continued floodplain planning support, $222,698 for high-flow discharge measurement methods, $114,000 for morphodynamic assessment, and $430,000 for the Ferndale levee improvement project design. Public Works Director Elizabeth Kosa responded that they would prepare a comprehensive presentation for June, focusing on actual implementation rather than "graphs and charts and flow meters." This commitment reflected the administration's recognition that public patience with endless studies was wearing thin. "The lower Nooksack River comprehensive flood hazard management plan was done in 1999 and has been updated since then," Stremler noted. "But I would really like to know, and I think the community deserves to know what has been coming out of all these plans and studies." ## Rural Sales Tax Allocation: Housing Takes Center Stage The committee's discussion of Economic Development Investment (EDI) fund allocations revealed shifting priorities toward housing infrastructure. Jill Boudreau from the Executive's Office presented updated allocation targets that would increase housing's share to 30 percent while reducing the reserve fund to 15 percent. The revised allocations would distribute an estimated $16.6 million as follows: 15 percent for reserves, 30 percent for housing infrastructure, 30 percent for Whatcom County projects, and 40 percent for government infrastructure. This represented a significant shift from the previous 20 percent reserve requirement. "I like the idea of getting applicants some certainty about what amounts of money would be available for housing or for other projects," Chair Donovan stated, reflecting growing recognition that housing remains a critical community need. The discussion revealed both opportunity and uncertainty. Boudreau noted receiving inquiries ranging "from requests on we've got a permit fee of $3,000, to a capital project of 20 something million dollars." This wide variance in potential applications underscored the challenge of predicting demand. Council Member Jon Scanlon inquired about best practices for revolving loan fund reserves. Boudreau acknowledged the complexity: "Because ours isn't set up maybe as a true fund, we're revolving generally as you're having your payback dollar balance come in and then that's what you loan out. We're only seeing about $760,000 a year come back in." The committee ultimately approved the revised allocations by a 2-0 vote, with Council Member Byrd abstaining, sending the recommendation to the full council for final approval. ## Mid-Biennium Budget Review: Preparing for Pain Deputy Executive Pennucci's presentation on the 2025-2026 mid-biennium budget review delivered a stark assessment of the county's financial trajectory. "The cost to provide these services and outpacing our revenue growth," she stated plainly. "So we must look at both short and long term actions to stabilize our budget and secure our ability to serve the community." The presentation outlined a comprehensive approach to understanding county spending at a granular level. Departments would be required to detail every service: its purpose, cost, legal requirements, and success metrics. This inventory would create unprecedented transparency about how taxpayer dollars are spent. "Every budget decision, everything that's in our budget was added for a reason at some point to address some critical need or community request," Pennucci explained. "And so these are really hard decisions when we're in a period of contraction." The administration explicitly rejected across-the-board cuts, preferring targeted reductions based on service impact analysis. "We are taking the approach of not flat across the board cuts and really trying to look at where we can make reductions and understand the service impacts," Pennucci emphasized. The timeline extends through October, with departments submitting initial service inventories by June 9, followed by revenue forecast updates and council work sessions. The process would culminate in executive recommendations in September and formal budget transmission in October. Chair Donovan raised questions about council priorities, including potential staffing increases for legal counsel or individual council member support. "Those are discussions we need to have as part of our department's review of the priorities and what gets increased or decreased," he noted. Pennucci outlined multiple decision points: "So you all have a couple of bites at the apple, but I think the best time is to get that idea out there in July after you've had an opportunity to develop your ask, and then look at all of the information on everyone's budget." The discussion revealed the complexity of modern county government. Council Member Carol Frazey referenced potential priorities including a code scrub, expanded planning staff, short-term rental registry improvements, bringing security in-house, and stormwater management enhancements. "I started to make a whiteboard list," she noted, highlighting the range of competing priorities councils face in constrained fiscal environments. ## Budget Amendments and Routine Business The committee processed five budget-related ordinances and resolutions totaling over $6.2 million, all receiving unanimous 3-0 recommendations. These included fish passage improvements, courtroom audio-visual upgrades, flood control district adjustments, road repairs, and general budget amendments. Council Member Scanlon praised the new budget presentation format, noting improved transparency: "This is really helpful to have. We did have this discussion the last time about getting these reports on time." He emphasized the need for continued scrutiny of unpaid budget requests and those relying on fund balance. Council Member Byrd echoed these sentiments: "The new format is incredibly helpful. It's nice to be able to clearly distinguish what's what, what's existing, what's just transferring or technical, what's new, and a whole bunch of other stuff." ## Financial Reality Check: The 2024 Report Finance Director Randy Rydell delivered the county's fourth quarter 2024 financial report, revealing both stability and warning signs. The general fund recognized 98 percent of budgeted revenues but spent only 87-88 percent of budgeted expenditures, resulting in a $2.7 million deficit—significantly better than the projected $16 million shortfall. The report highlighted concerning revenue trends. Sales tax collections came in at $22 million against a $24 million budget, though this was partially offset by $2.3 million in enhanced 911 revenue—a new, ongoing source. Property taxes remained relatively flat, helped only by a $500,000 one-time petrogas settlement. Interest revenue provided a bright spot, generating $8 million—$3 million above budget—as the county's substantial cash reserves earned returns in higher interest rate environments. Personnel costs came in $6 million under budget, reflecting both hiring challenges and the mid-year position freeze. "The decision to freeze positions has been lifted," Rydell noted, but explained that hiring authority had been returned to department directors for more strategic staffing decisions. The report revealed significant departmental growth in key areas: Public Defender's Office up 17 percent, Superior Court up 18 percent, and Health and Community Services up 14 percent. These increases highlighted the challenge of controlling costs in essential services. Rydell emphasized the fragility of current stability: "We had about a million dollars worth of one-time tax type revenue that came in. So those were all things that helped us last year that I don't know if they're out there this year, but we definitely can't be relying on them." Special revenue funds dependent on sales tax faced particular challenges. "So all those dedicated funds are potentially suffering from the flat sales tax," Rydell confirmed, including affordable housing, homeless housing, and public safety funds. ## Looking Ahead: Structural Challenges The meeting revealed a county government at an inflection point. Years of revenue growth that outpaced inflation have ended, while service demands continue expanding. The administration's response—detailed service inventories, targeted cuts over across-the-board reductions, and enhanced transparency—represents a more sophisticated approach to budget constraints. Yet fundamental challenges remain. With most labor contracts open for renegotiation, insurance costs rising, and facility needs mounting, the county faces difficult choices ahead. The mid-biennium review may prove to be practice for even harder decisions in the next full budget cycle. Deputy Executive Pennucci's closing warning resonated: "This is like the easy, hard part, and then when I'm gone, you're all going to have to make even more cuts and harder choices." The comment captured both the immediate challenge and the structural nature of the county's fiscal situation. ## Public Engagement Questions The discussion touched on public participation in budget decisions, with Chair Donovan noting substantial citizen input during the previous budget cycle. The administration expressed interest in more structured engagement for future budget processes, potentially including citizen budget committees similar to those used in other jurisdictions. "We had a lot of public input last year. There were some that came early about specific items, and then I think there was a lot of input the night we voted," Donovan observed. This pattern—limited engagement during development followed by intense input at decision time—highlighted the challenge of meaningful public participation in complex budget processes. ## Closing & What's Ahead The meeting adjourned at 10:44 a.m., with the facilities division presentation postponed due to time constraints. Chair Donovan emphasized the need to schedule Committee of the Whole sessions for budget discussions before the July deadline for council priorities. The day's discussions set the stage for months of challenging conversations ahead. With the next Finance Committee meeting scheduled to prioritize the facilities presentation, and major budget work sessions planned for summer, the county begins its careful navigation between fiscal reality and community needs. The April 29 meeting captured a government in transition—from growth-oriented thinking to careful stewardship, from broad service expansion to strategic prioritization, from assumption of adequate resources to acknowledgment of constraints. For Whatcom County residents, the coming months will reveal whether this transition can preserve essential services while adapting to fiscal realities. As Deputy Executive Pennucci noted, the county's budget reflects "values transformed into action." The challenge ahead lies in determining which values the community can afford to act upon, and which must wait for more prosperous times.