Council weighs new taxes and spending cuts

Published 1:30 am Wednesday, May 27, 2026

San Juan County is facing a mounting budget challenge. At the May 11 County Council work session, officials laid out a stark picture of the county’s fiscal health — a projected $2.1 million shortfall for 2027, compounded by the potential exhaustion of the County’s entire $4.459 million cash reserve. Taken together, the County faces a gap of roughly $6 million, and that figure may still grow.

“If you eat all your cash, you are still looking at a $2.118 million shortfall,” County Manager Jessica Hudson told Council members, adding that the projections do not yet account for upcoming guild contract negotiations or insurance rate increases estimated at 30-35% for 2027, a figure consistent with the 34% jump budgeted the prior year.

The crisis deepened in April when voters rejected a levy lid lift that would have provided critical relief. The margin of defeat was wide enough that staff initially did not recommend returning the measure to the November ballot, instead suggesting a 2027 attempt. However, Council member Kari McVeigh reported hearing overwhelming community support for a November retry. “I’ve never had a week where so many people were tapping me to say the same thing … we absolutely need to have this go back on the November ballot … we need a very strong, structured campaign, not on county time, to counter all the misinformation that came out during this campaign about how the money was to be used,” McVeigh said. Council member Jane Fuller was more cautious, stating she had not supported the April timing in the first place and warning against rushing back to voters without demonstrating sharper fiscal discipline first. Both Council members indicated support for preparing two versions of the 2027 budget — one reflecting cuts if the levy fails again, and one showing what could be preserved if it passes.

To bridge the gap, Deputy County Manager Tillery Williams presented two new revenue tools emerging from recent state legislation. The first is a local law enforcement sales and use tax of one-tenth of 1%, which would generate approximately $800,000 annually in San Juan County. The funds are broadly defined and can support criminal justice purposes, including domestic violence services, public defenders, diversion programs and mental health services. Councils may implement the tax without a public vote until June 30, 2028, after which voter approval would be required. To take effect Jan. 1, 2027, the Council would need to act by approximately October of this year.

The second option is a public health clinic property tax of five cents per $1,000 of assessed value, projected to generate around $741,000 annually. Allowable uses include primary care, dental care, behavioral health, substance use disorder treatment, family health and nutrition, and reproductive health care. Hudson noted that state foundational public health funding reductions have now been finalized at the high end of projections, at 15-16%. Mark Tompkins, RS, director of County Health and Community Services, said the new property tax revenue could help offset those reductions and support public health clinic funding currently drawn from the County’s general expense fund.

Fuller sounded a note of caution on the pace of new taxes, reminding colleagues that the Council has already passed three taxes without voter approval in three years — two sales taxes and a conservation district parcel tax increase.

“We are clearly spending more than we’re bringing in,” she said.

On the spending side, the council discussed a range of cost-cutting measures, including a potential hiring freeze, review of contracts with the Town of Friday Harbor, fee increases for services that have not been adjusted in years and restrictions on non-essential travel and training. An early retirement incentive package was also analyzed. Staff did not recommend this approach.

A longer, more detailed budget session is scheduled for May 26, where the Council will provide formal direction to departments on how to develop their 2027 budget proposals.