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Whatcom County Council Finance and Administrative Services Committee

WHA-FAS-2025-05-27 May 27, 2025 Budget & Finance Committee Whatcom County 12 min
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May
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The Finance and Administrative Services Committee met for 72 minutes to review ten consent items totaling approximately $2.1 million in contracts and amendments, receive a quarterly financial report, and make recommendations on two significant fiscal matters. The session highlighted growing budget concerns with mixed revenue signals and ongoing challenges in multiple county funds. Finance Director Randy Rydel delivered sobering news about sales tax collections, reporting that while February showed a 6.76% increase year-over-year, March collections dropped 3.5% compared to March 2024—translating to $166,000 in lost monthly revenue. This follows a flat 2024 performance that has already put the county's budget projections at risk. The mixed signals come as the county grapples with a $3 million wage savings from 14 unfilled positions across departments, suggesting both fiscal constraint and operational impacts. The committee approved a controversial $4 million interfund loan to shore up the financially struggling road fund, acknowledging that the county has already cut services including the chip seal program and small area paving while deferring maintenance and capital projects. Council Member Tyler Byrd raised concerns about pending cost increases and revenue shortfalls, attempting unsuccessfully to remove $155,000 for assessor's office renovations from a budget amendment. The quarterly report revealed warning signs across multiple funds, with the behavioral health fund facing potential adjustments and the ferry fund under close monitoring. Despite $39 million in cash after April property tax collections, the projected year-end fund balance will drop to $26.5 million from last year's $29.5 million. The committee emphasized the need for enhanced financial monitoring as departments prepare to absorb unexpected cost increases in the upcoming 2026 mid-biennium budget.

**Consent Agenda (10 items) - APPROVED 3-0:** All ten consent items totaling approximately $2.1 million were approved unanimously, including: - DentALL jail dental services amendment: $69,000 (new total $320,600) - Glyph Language Services interpretation amendment: $48,329 (new total $141,329) - Arc of Whatcom County developmental disabilities contract: $203,882 - Opportunity Council behavioral health outreach: $117,849 - State Department of Ecology water planning grant amendment: $214,400 (new total $700,000) - Various HVAC and construction amendments totaling over $1 million **Road Fund Interfund Loan (AB2025-355) - RECOMMENDED 3-0:** Approved $4 million interfund loan author…

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**Sales Tax Revenue Crisis:** The most significant policy concern emerged from Finance Director Rydel's quarterly report showing deteriorating sales tax performance. After 2024's flat performance against projected growth, March 2025 collections dropped 3.5% year-over-year—a $166,000 monthly shortfall that could signal deeper economic challenges. The revenue decline compounds budget planning difficulties as the county built its 2025 budget assuming growth on top of 2024 projections that never materialized. **Artificial Intelligence in Government Operations:** Council Member Byrd initiated discussion about replacing $48,000 annual interpretation services with AI technology, citing recent Google advances in real-time translation. Health Director Beck noted challenges with field situations, medical certification requirements, and lack of county AI implementation guidance, but expressed willingness to collaborate with other departments on future solutions. **Fund Balance Management:** The county's financial position shows stress across multiple funds. The behavioral health fund faces potential mid-year adjustments as m…
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**Randy Rydel, Finance Director:** Emphasized cautious optimism about Q1 results while flagging sales tax concerns. Advocated for enhanced real-time financial monitoring and warned about impending cost absorption requirements for departments in 2026. Stressed the importance of wage savings from unfilled positions to offset upcoming budget pressures. **Council Member Tyler Byrd:** Pushed for technology adoption to reduce costs, questioning $48,000 interpretation services that could potentially be replaced with AI. Opposed $155,000 assessor renovation as inappropriate timing given revenue uncertainties and upcoming cost increases. Advocated for deferring non-essential spending until 2026 biennial planning. **Council Member Barry Buchanan:** Generally supportive of presented items, asked clarifying questions about funding sources and implementation timelines. Opposed Byrd's amendment to remove assessor renovation funding, suggesting commitment to previously planned facility improvements. **Council Member Todd Donovan (Chair):** Facilitated discussion while showing concern about multiple fund monitoring situations. Supported bringing behavioral health fund issues back for future com…
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**Randy Rydel, Finance Director, on sales tax concerns:** "March numbers came in this morning and they are down. And there are, as with sales tax, there's always anomalies here and there... but ultimately, when correcting for a very large purchase that threw off 2024, we are still down three and a half percent for March." **Council Member Tyler Byrd, on AI for interpretation services:** "This seems like another thing that we could easily be using AI for. If you look at the newest and most rec…
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**Immediate Actions (May 27 Council Meeting):** - Introduction of Verizon easement sale resolution (AB2025-378) with corrected address - Introduction of flood control zone budget amendment (AB2025-384) - Final action on budget amendment (AB2025-337) and road fund loan (AB2025-355) **Upcoming Committee Discussions:** - Behavioral health fund review to be scheduled in either Finance Committee or Public Works and Health Committee - Monthly check-in proposed for June to review April sales tax collections - Future discussion of opioid settlement spending plan from Health Department **Pending Contract Actions:** - Water rights legal services contract amendment coming June 10th alongside budget authorization -…

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**Immediate Budget Impacts:** After this meeting, Whatcom County authorized $4 million in interfund loans to stabilize the road fund while acknowledging ongoing service reductions including 14 vacant positions and eliminated programs. The county also approved $1,053,510 in additional budget authority including critical environmental health software funding that must be spent by June 30th. **Revenue Monitoring Enhanced:** The county shifted from quarterly to more frequent sales tax monitoring after March collections showed a 3.5% decline worth $166,000 monthly. This represents a significant change from previous reporting cycles and indicates growing concern about revenue projections built into the 2025 budget. **Grant Accounting Policy Change:** The finance department implemented a new accounting method for grant revenue received in advance, moving from recognizing revenue when received to matching it with eligible expenditures. This affects approximately $6 million in opioid settlement, vape…
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# County Finance Wrestles with Uncertain Sales Tax Trends and Budget Pressures The Whatcom County Council's Finance and Administrative Services Committee convened on Tuesday morning, May 27, 2025, for what began as a routine review of contracts and budget items but evolved into a searching examination of the county's financial health amid troubling revenue trends and mounting cost pressures. Committee Chair Todd Donovan presided over the hybrid meeting in Council Chambers, with members Tyler Byrd and Barry Buchanan participating. Also present were non-committee council members Kaylee Galloway, Jon Scanlon, and Mark Stremler, underscoring the significance of the financial discussions on the agenda. The meeting moved efficiently through ten consent agenda items worth over $2 million in various contracts and agreements, from jail dental services to HVAC improvements at county facilities. But the real substance lay ahead in Randy Rydel's quarterly finance report and subsequent budget deliberations that would reveal both immediate fiscal challenges and longer-term structural concerns. ## AI Translation Services Spark Technology Debate The first sign of deeper scrutiny came when Council member Byrd questioned a seemingly routine $48,329 contract amendment for language interpretation services with Glyph Language Services. In an era of rapidly advancing artificial intelligence, Byrd wondered aloud whether the county was missing an opportunity to modernize. "I'm just curious about the $48,000 for interpretation services," Byrd said. "This seems like another thing that we could easily be using AI for. If you look at the newest and most recent announcements last week from Google at their event, I mean, it's pretty much real time translation of video calls." Byrd painted a vivid picture of the technology's capabilities: "They literally have one person sitting there speaking in English, the minute they get done talking, they immediately speak exactly what they said in the foreign language and then the next person responds in their language. And they immediately once they're done, translates it to English." Ann Beck from Health and Community Services acknowledged the potential but explained the practical limitations. "It's my understanding with this contract that it's covering all of our different services within health and not all of these are in situations where technology might be available to have those conversations. So it could be out in the field meeting …
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### Meeting Overview The Whatcom County Finance and Administrative Services Committee met on May 27, 2025, to review routine contracts, receive the quarterly finance report, and consider budget amendments. Committee members focused heavily on county finances, particularly concerning sales tax revenue trends and budget management. ### Key Terms and Concepts **Consent Agenda:** A group of routine agenda items that can be approved together without individual discussion, unless a committee member requests to pull an item for separate consideration. **Sales Tax Revenue:** A key county revenue source where the state collects sales taxes and distributes them to local jurisdictions. Whatcom County has been experiencing volatility in these collections. **Wage Lapse:** Budget savings that occur when positions remain unfilled, creating a gap between budgeted personnel costs and actual expenditures. **REET Funds:** Real Estate Excise Tax dollars that counties can use for capital improvements and facilities projects. **Fund Balance:** The county's financial reserves, typically maintained at 15% or more of annual expenditures as a financial safety net. **Grant Revenue Recognition:** The accounting practice of matching grant revenue with eligible expenses rather than recognizing all revenue when received. **Interfund Loans:** Internal borrowing between different county funds to address cash flow issues, in this case to support the struggling road fund. ### Key People at This Meeting | Name | Role / Affiliation | |---|---| | Todd Donovan | Committee Chair | | Tyler Byrd | Committee Member | | Barry Buchanan | Committee M…
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Budget & Finance Transportation & Infrastructure Government Operations Arc Whatcom County Dentall Pllc Glyph Language Services Opportunity Council State Department Ecology Tiger Construction Verizon Wireless Whatcom County Meeting Fas Committee Andrew Hester Ann Beck Barry Buchanan Bennett Knox Elizabeth Kosa Gary Stoyka Kayla Schott Bresler Randy Rydel Rebecca Xczar Todd Donovan Tyler Byrd Artificial Intelligence Behavioral Health Budget Finance Facility Maintenance Grant Revenue Infrastructure Maintenance Interfund Loans Interpretation Services Revenue Projections Road Fund Sales Tax Revenue Wage Savings Water Rights