Financial Report of Revenues & Expenses Cowlitz County ...

Financial Report of Revenues & Expenses Cowlitz County, Washington 1st Quarter 2008 120

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0 1st Qtr

Jan

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2nd Qtr

Apr May Jun

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Jul

Aug Sep

4th Qtr

Oct

Nov Dec

4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Jan

Feb

Mar

Apr

May

Cowlitz County Office of Financial Management 207 4th Avenue North • Kelso, Washington 98626 Telephone: (360) 577-3065 • Fax: (360) 423-9987

Jun

Jul

Aug

Sep

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Dec

Table of Contents Executive Summary ...........................................................................................................................2 General Fund: Historical Data ...........................................................................................................6 General Fund: Revenues ....................................................................................................................8 General Fund: Expenditures ..............................................................................................................20 General Fund: Fund Balance Analysis ..............................................................................................27 General Fund: Cash & Investment Activity/Per Capita Analysis......................................................29 Capital Projects Summary..................................................................................................................31 Debt Service, Loan & Bond Summaries............................................................................................34 Special Revenue Funds ......................................................................................................................38 Enterprise Funds ................................................................................................................................40 Internal Service Funds .......................................................................................................................42 Trust/Agency Funds...........................................................................................................................43 Appendix A: Explanation of Revenue Categories .............................................................................44 Appendix B: Explanation of Expenditure Categories........................................................................45

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Office of Administrative Services 207 Fourth Ave. North Kelso, WA 98626 TEL (360) 577-3065 FAX (360) 423-9987

Board of County Commissioners Kathleen A. Johnson District 1 George Raiter District 2 Axel Swanson District 3 Office of Financial Management Claire J. Hauge, Director

www.co.cowlitz.wa.us

OFM Claire J. Hauge Director RISK MANAGEMENT Clyde Carpenter Risk Manager PEOPLESOFT PROJECT Kathy Sauer Project Manager

To:

Board of County Commissioners

From:

Claire J. Hauge, OFM Director

Date:

April 28, 2008

Subject:

Financial Report 1st Quarter 2008

EXECUTIVE SUMMARY. The results of the County’s General Fund financial activity for the First Quarter 2008 (ending March 31) are summarized in the first section of this report. Actual revenue collections for year-to-date are shown and compared to anticipated (budgeted) receipts. Likewise, actual expenditures for year-to-date are shown in comparison to the final approved budget. The Charts and Tables presented throughout this report provide a comprehensive comparison of actual revenue and expenditures to anticipated and budgeted amounts. The charts also provide historical context. General Fund revenue collections through March 31, 2008 total $6.3 million or 16.6% of anticipated amounts. This compares with revenue collections for the same time period last year of 18.2%. When annualized, revenues for the quarter are expected to exceed budgeted revenues by $435,000. Actual General Fund expenditures through the end of the First Quarter were $9.9 million or 23.7% of the approved appropriations. This compares with expenditures of $9.5 million for the same time period last year. Year-to-date, reserves of $3.6 million have been used. However, it must be noted use of reserves at this point in the fiscal year is not unexpected. Property taxes amount to nearly 42% of total General Fund revenues thus the largest single revenue source. The majority of tax collections are received only twice a year on April 30 and October 31, therefore cash reserves must be used to pay expenses prior to receipt of this revenue. The actual 2008 adjusted beginning cash balance was $7.4 million, less than the $8.5 million anticipated. This is due in large part to the fact that $527,500 revenues anticipated in late 2007 were received in the first quarter 2008. The total anticipated General Fund revenues and fund balance currently meet expectations. 2

GENERAL FUND.

1 2 3

General Fund: 2008 Overview of Total Estimated Expenditures & Revenues Budget As Budget As Actual Adopted Forecast 1st Qtr Fiscal Year 2008 12/11/2007 03/31/2008 Expenditures $41,878,571 $40,203,428 $9,946,023 Revenues 37,918,354 38,351,001 6,288,675 Reserves Used ($3,960,217) ($1,852,427) ($3,657,348)

Var: +/(-) Budget vs Actual ($31,932,548) $31,629,649 “balance to go”

*Expenditures estimated @ 96% of budget (4% return). *Revenues estimated @ +1.5% over amended budget. *Net result: use of reserves lower than estimated at time budget was adopted.

Summary of General Fund Revenues: YTD Revenue Source Property Taxes/Fines & Penalties Sales Taxes State Grants & Shared Revenues Security Persons/Property Charges for Service Timber Harvest Interest Earnings Fines & Forfeits Licenses & Permits Direct Federal Grants Intergvt’l Service Revenues All Other Total

1st Qtr Actual Revenues $1,328,974 $1,150,477 $607,404 $728,742 $646,766 $260,963 $298,741 $383,976 $12,731 $197,041 $418,885 $253,975 $6,288,675

Anticipated Revenues $15,789,295 $5,354,748 $3,847,716 $2,826,627 $2,485,586 $807,260 $1,642,790 $1,549,194 $66,524 $560,506 $2,053,337 $934,751 $37,918,334

Percentage Collected 8.4% 21.5% 15.8% 25.8% 26.0% 32.3% 18.2% 24.8% 19.1% 35.2% 20.4% 27.2% 16.6%

Summary of General Fund Revenue By Month: 2002 – YTD 2008 7,000,000 6,000,000 5,000,000 4,000,000

2002 2003 2004

3,000,000

2005 2006

2,000,000

2007 2008

1,000,000 0

Jan

Feb

M ar

A pr

975,655

1,674,820

1,557,237

5,304,075

3,276,951 1,990,432

2003

1,163,485

1,621,955

1,493,538

5,414,785

3,584,691 2,542,528

1,481,855

1,285,062

1,589,609

2004

1,325,982

1,771,572

1,815,349

5,366,202

3,680,121 2,660,707

1,477,558

1,480,929

2,010,580

2005

1,436,584

1,935,457

2,382,341

5,201,996

4,572,780

2,535,555

1,531,467

1,950,407

2,551,366

5,119,789

3,309,888 1,920,662

2006

1,600,583

2,306,192

2,101,357

5,953,460

4,129,485

2,861,253

1,779,146

2,253,361 2,541,549

5,443,481 3,001,858

2,225,826

2007

1,677,111

2,365,923

2,771,876

6,463,617 4,428,931

3,311,127

1,829,874

2,511,035

6,196,145

2,314,438

2,003,971 2,108,403

2,176,123

2002

2008

M ay

Jun

3

Jul

A ug

1,400,169

1,422,588

Sep

Oct

Nov

Dec

2,716,231

1,715,759

4,712,576

2,638,010

1,876,995

4,172,070

3,350,264

1,594,727

2,046,326 4,860,420

2,710,505

3,169,873

Summary of General Fund Expenditures: YTD Expended % of Total Budget As Amended YTD 03/31/2008 58.8% $27,298,563 $6,480,424 3.7% 1,700,435 329,148 15.4% 7,151,392 1,352,433 5.0% 2,325,945 613,922 6.8% 3,153,182 1,170,096 0.5% 249,054 0 $41,878,571 $9,946,023 9.8% 4,539,783 $46,418,354 23.7%

Expense Category Personnel Services Supplies Other Services & Charges Interfund Charges/Misc Transfers Capital Outlay Total Expenditures Ending Fund Balance Total Budget

Unexpended $20,818,139 1,371,287 5,798,959 1,712,023 1,983,086 249,054 $31,932,548 76.3%

Summary of Expenditures By Month: 2002 – YTD 2008

6,000,000 5,000,000 2002

4,000,000

2003 2004

3,000,000

2005 2006

2,000,000

2007 2008

1,000,000 0

Jan

Feb

M ar

A pr

M ay

Jun

Jul

A ug

Sep

Oct

No v

Dec

2002 2,368,461 2,384,467 2,214,039 3,234,066 2,819,568 2,091,616 2,338,469 2,320,416 1,974,583 2,626,879 2,174,286 1,942,494 2003 2,589,348 2,777,295 2,882,413 2,235,351 2,330,836 2,208,098 2,603,073 2,219,240 2,068,010 2,229,231 2,207,276 2,059,074 2004 3,354,274 3,373,942 2,237,479 2,642,280 2,786,711 2,334,583 2,460,952 2,667,663 2,290,217 2,813,646 2,225,673 2,171,593 2005 2,718,426 2,094,154 3,140,210 2,458,679 2,883,788 2,282,075 2,868,256 2,379,133 2,561,273 2,727,547 2,461,691 2,309,846 2006 2,895,533 2,963,945 2,830,911 3,465,561 2,908,949 2,792,518 3,541,484 3,065,425 2,631,664 2,801,676 2,652,157 2,625,346 2007 3,862,718 2,574,396 3,430,503 3,173,013 2,791,691 2,756,524 3,025,599 3,955,183 3,467,382 4,994,025 3,466,302 3,446,109 2008 3,741,260 2,900,331 3,114,413

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Why the Need For Cash Reserves? Cash Flow! Difference Between Monthly Receipts & Monthly Expenditures General Fund 2002 – Present

4,500,000 3,500,000 2,500,000

2002 2003

1,500,000

2004 2005

500,000

2006 2007

(500,000)

2008

(1,500,000) (2,500,000) (3,500,000)

“ Breakeven” Rev = Exp Jan

Feb

M ar

Apr

2002 (1,392,806 (709,647) (656,802) 2,070,008

M ay

Jun

457,382

(101,183)

Jul

Aug

(938,300) (897,828)

Sep

Oct

Nov

Dec

71,743

2,233,541

541,945

(226,736) (182,080)

2003

(1,425,863 (1,155,340) (1,388,875) 3,179,434

1,253,855

334,431

(1,121,218) (934,178) (478,400) 2,483,345 430,734

2004

(2,028,29 (1,602,369 (422,130) 2,723,922

893,410

326,124

(983,394) (1,186,734) (279,637) 1,358,424

1,124,591 (576,867)

2005 (1,281,842) (158,697)

(757,869) 2,743,317 1,688,992

253,480

(1,336,789 (428,726)

(9,907)

2,392,242

848,197

(389,184)

(1,294,950 (657,753)

(729,554) 2,487,899 1,220,536

68,735

(1,762,339 (812,065)

(90,115)

2,641,805

349,700

(399,520)

2007 (2,185,607) (208,473) (658,627) 3,290,604 1,637,241

554,603

(1,195,725) (1,444,148) (756,876) 1,202,120

2006

(296,429) (1,131,671)

2008 (1,737,289) (791,928) (938,289)

Average monthly income:

2007 2006 2005

$3.3 million $3.0 million $2.9 million

Average monthly expenditures: 2007 2006 2005

$3.6 million $2.9 million $2.6 million

Shortfall average annual monthly income vs expenditures: 2007 ($300,000) 2006 +$100,000 2005 +$300,000 Summary of General Fund Ending Unreserved Fund Balances 9,000,000

Year 2007 2006 2005 2004 2003 2002

8,000,000

EndingFundBalance

7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 General Fund 2002

2003

2004

2005

2006

Ending Fund Balance $7,360,942 $8,538,470 $7,380,226 $3,842,838 $5,086,502 $3,823,839

2007

The following pages provide comprehensive detail for the General Fund, as well as other County funds. If we can provide additional information or clarify anything in this report, please let us know. 5

I. GENERAL FUND. Activity in the General Fund revenues and expenditures is summarized below.

Year 2000 2001 2002* 2003 2004** 2005 2006 2007 2008 Budget/Forecast

Table 1 Ten Year Historical Comparison General Fund: Revenues and Expenditures General Fund: Revenues Anticipated Actual Variance: Revenues Revenues +/(-) $27,064,895 $27,273,825 $208,930 $27,655,310 $27,880,356 $225,046 $28,554,193 $28,945,642 $391,449 $28,592,190 $29,458,268 $866,078 $30,764,343 $30,666,761 ($97,582) $31,211,884 $34,447,783 $3,235,899 $33,357,160 $36,193,276 $2,836,116 $39,633,062 $39,751,481 $118,419

Percentage 100.8% 100.8% 101.4% 103.0% 99.7% 110.4% 108.5% 100.3%

$37,918,354

$38,351,001

$432,647

100.1%

$38,938,575

$39,366,899

$428,324

100.1%

2009 Budget/Forecast

*2002 four funds added to the General Fund: Parks, Hoffstadt Bluffs, County Line Park, Drug Court Grant. Actual revenues include one-time cash transfer of $454,568. ** 2004 a Special Revenue Fund Law & Justice was closed and merged into the General Fund.

Year 2000 2001 2002* 2003 2004** 2005 2006 2007 2008 Budget/Forecast

Budgeted Expenditures $28,209,509 $29,159,410 $29,880,918 $30,017,904 $32,980,998 $32,372,631 $36,272,561 $43,708,983

General Fund: Expenditures Actual Variance: Expenditures +/(-) $27,347,948 ($ 861,561) $28,373,401 ($ 786,009) $28,522,118 ($1,358,800) $28,628,714 ($1,389,190) $31,625,985 ($1,355,013) $30,850,468 ($1,522,163) $35,035,429 ($1,237,132) $40,923,365 ($2,785,618)

Percentage Unexpended (3.1%) (2.7%) (4.5%) (4.6%) (4.1%) (4.7%) (3.4%) (6.4%)

$41,878,571

$40,203,428

($1,675,143)

(4.0%)

$43,335,847

$41,602,413

($1,733,434)

(4.0%)

2009 Budget/Forecast

*2002 four funds added to the General Fund: Parks, Hoffstadt Bluffs, County Line Park, Drug Court Grant Fund. **2004 Law & Justice Fund added to the General Fund.

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Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 Budget/Forecast

General Fund Shortfall/Surplus Current Revenues vs. Current Expenditures Annual Expenditures Annual Revenues (Shortfall)/Surplus $27,347,948 $27,273,825 ($74,123) $28,373,401 $27,880,356 ($493,045) $28,522,118 $28,945,642 $423,524 $28,628,714 $29,458,268 $829,554 $31,625,985 $30,666,761 ($959,224) $30,850,468 $34,447,783 $3,597,315 $35,035,429 $36,193,276 $1,157,847 $40,923,365 $39,751,481 ($1,171,884) $40,203,428

$38,351,001

($1,852,427)

$41,602,413

$39,366,899

($2,235,514)

$31,413,429

$31,827,174

$413,745

2009 Budget/Forecast

8 year Avg

2000-2007 Note: In anticipation of reduced state revenues, significant budget reductions were made in 2002 and 2003. The anticipated budget savings were $1.2 million; actual savings achieved were $1,195,182.

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A. REVENUES. Following is a brief narrative of major revenue sources in the General Fund. 1) Sales tax revenues represent 14.1% of total General Fund anticipated revenues. Construction activity and retail sales in Cowlitz County were strong in 2007 with a good bit of activity continuing in the first quarter of 2008. Receipts are estimated at $5.35 million equal to 2007 receipts of $5.3 million but significantly more than 2006 receipt of $4.67 million and 2005 receipts of $4.64 million. Total receipts through the first quarter were $1.15 million. Current forecast indicates annual receipts will fall short of estimates by $162,600. Notes: It will be important to continue to monitor this revenue source closely given the general economic forecast for the region and the local conditions in particular. Taxable sales in the county fluctuate, averaging 5.1% growth over the last 12 years. During the 2007 legislative session, the Washington State Legislature passed Substitute Senate Bill 5089, Chapter 6, Laws of 2007 known as the Streamlined Sales Tax Bill. The effective date of this legislation is July 1, 2008. States that adopt the Streamlined Sales Tax Agreement (SSTA) receive payments from firms that voluntarily collect and remit sales taxes on mail-order taxes and internet sales. Additionally, the bill requires that sales taxes be allocated on the basis of the destination of the sale rather than pointof-sale. Destination-based sales tax will apply only to businesses that ship or deliver goods they sell to locations within Washington State. There is no change for deliveries outside the state or for over-thecounter sales where customers take goods home from the store. There is also no change in sales tax collections for retail services, or on the sale of motor vehicle, trailers semi-trailers, aircraft, watercraft, modular homes, manufactured and mobile homes. (The Courthouse Journal, Issue No. 17, June 26, 2008; http://www.wacounties.org) The change in application of sales tax collection is anticipated to result in additional sales tax collections for Cowlitz County. The first distributions of the additional sales tax receipts are expected in late September 2008. However, the overall net increase or decrease in total sales tax collections will depend on the level and location of retail and construction activity taken as a whole. The following table summarizes total taxes collected countywide (all five cities and the rural areas) and for Cowlitz County government specifically for the period 1996 through 2007.

Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

County & Cities Sales Tax Receipts $ 9,776,758 $10,290,750 $11,138,009 $11,133,289 $11,579,589 $11,864,353 $12,418,266 $12,898,927 $12,331,205 $14,372,504 $15,281,273 $16,659,039

Table 2 Sales Tax Receipts Percentage Unincorporated County Growth Total Sales Tax* $1,755,463 5% *$2,498,076 8% $3,011,457 0% $2,864,404 4% $3,197,254 2% $3,502,726 5% $3,433,646 4% $3,713,204 (4%) $3,700,902 17% $4,638,430 6% $4,667,197 9% $5,309,807

*County imposed local option sales tax, effective 4/1/97; distributions began 6/1/97 Source: Washington State Department of Revenue

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Percentage Growth 42.3% 20.6% -4.9% 11.6% 9.6% (2.0%) 8.1% (0.3%) 25.3% 0.6% 13.8%

2) General Fund property tax collections, including interest and penalties for 2008 are anticipated to be $15.8 million. Actual receipts in 2007 were $14.9 million; in 2006 $14.6 million, and in 2005 $15.2 million. The increase in revenue estimates are a result of several factors including: additional taxes on the value of new construction and a statutorily allowed increase. Cowlitz County experienced a growth in overall assessed valuation of over $749,000,000 in 2008. It must be noted that although there was an increase in assessed valuation, the maximum statutory rate per $1,000 of assessed valuation has dropped. Generally, property tax revenues are limited to the lesser of $1.80 per $1,000 of assessed value or an overall increase of the Implicit Price Deflator or one-per cent (1%) over the prior year tax collections, plus taxes on the value of new construction. (RCW 84.55.005) Rate per $1,000/assessed valuation: 2006 $1.80 2007 $1.68 2008 $1.55 Property tax receipts represent 42% of General Fund anticipated revenues. Property taxes include general levies, amounts diverted from the County Road Fund tax for law enforcement activities, interest and penalties on delinquent taxes. This revenue category also includes amounts raised by “shifting” levy capacity from the Road Fund to the General Fund. (See discussion following.) Real and personal property taxes and diverted road fund taxes raised $13,959,145 in 2007 compared to 2006 actual receipts of $13,444,806. Interest and penalties on real and personal property collected in 2007 were $949,485 compared to 2006 actual receipts of $1,135,873. On December 11, 2007, the Board of Commissioners approved a “shift” of unused Road Fund levy capacity to the General Fund in an approximate amount of $.0684/$1,000 of assessed value. This resulted in the sum $578,130 in additional general tax revenues available to the General Fund. If the shift had not occurred, the General Fund property tax receipts for 2008 would have increased compared to 2007 by only $56,035. A levy shift is authorized by R.C.W. 84.52.043 provided that: ♦the levy rate for the General Fund does not to exceed $2.475/$1,000 of assessed value; and ♦the total levy rate for both the County and the Road District within the County do not exceed $4.05/$1,000 of assessed value; and ♦no other district has its levy capacity reduced as the result of the shift; and ♦the aggregate of levy rates for all junior and senior taxing districts, other than the state, does not exceed $5.90/$1,000 of assessed value; and ♦the aggregate of all tax levies on real and personal property by the state and all taxing districts, does not exceed the constitutional limit of 1% of the true and fair value of property in money. The General Fund levy rate as authorized by the Board of Commissioners meets all of these requirements.

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According to the Treasurer’s Office, tax collections for the County General Fund were 97% of assessments in 2007. This is typical compared to historical collections during the past 12 years:

Year 1995 1996 1997 1998 1999 2000 Avg:

Table 3 Property Tax Collection Rates Collection Collection Collection Rate Year Rate Year Rate 97.9% 2001 95.9% 2007 96.5% 97.4% 2002 95.9% 2008 TBD 96.3% 2003 94.0% 96.8% 2004 95.2% 96.1% 2005 96.9% 95.9% 2006 97.0% 96.3%

Explanatory Note: RCW 84.52.018 provides a procedure for calculation of tax levy rates when the assessment of highly valued property is in dispute. Whenever the value in dispute is greater than onequarter of one percent of the total county assessed valuation, the disputed value must be removed from the tax rolls pending resolution of the appeal or lawsuit. Only the portion of valuation not in dispute is used for purposes of computing levy rates. In calendar year 2007, there are no such issues pending. In 2007 the Board of Equalization (BOE) received 48 petitions concerning residential, commercial and light industrial properties with values in dispute of slightly below $278 million. Eight petitions were withdrawn; four petitions are now pending with the State Tax Board of Appeals; one petition is pending with Cowlitz County Superior Court; values on 27 petitions were stipulated and the BOE issued decisions for values on eleven parcels resulting in a reduction of slightly over $11 million. The reduced values resulted in minimal property tax loss to the General Fund. The number of petitions for 2008 is not yet known. The deadline for filing appeals for 2008 for residential and commercial properties is July 1 or 30 days following mailing of the notice of revaluation, whichever is later. Re-valuation notices are expected to be mailed August 7.

Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Table 4 Property Tax Receipts Property Tax Growth $ 9,725,634 $10,179,912 4.7% $10,916,832 7.2% $10,430,343 (4.5%) $10,928,019 4.8% $11,456,302 4.8% $11,565,738 0.095% $11,871,153 2.6% $11,944,376 .6% $12,930,699 8.3% $12,729,649 (1.6%) $13,226,101 3.9%

Figures in this table include only real & personal property taxes paid; diverted road tax, interest and penalties on delinquent taxes are discussed elsewhere in this report. The percentage growth figures include the value of new construction and changes in the value of state-assessed property. 1999 receipts reflect the results of an appeal by Longview Aluminum.

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3) Road tax collections diverted to the General Fund and Law and Justice Fund for traffic policing and law enforcement activities were follows: General Fund:

2008 2007 2006 2005 2004

$797,437 ($0.179274/$1,000 assessed value) $733,044 ($0.175059/$1,000 assessed value) $715,157 ($0.187291/$1,000 assessed value) $702,112 ($0.189769/$1,000 assessed value) $671,070 ($0.179540/$1,000 assessed value)

(2004: includes amounts previously diverted to Law & Justice Fund

Law & Justice Fund:

2003 2002 2001 2000

$413,166 ($0.11200/$1,000 assessed value) $493,136 ($0.13973/$1,000 assessed value) $210,968 ($0.05812/$1,000 assessed value) $204,283 ($0.05743/$1,000 assessed value)

2003 2002 2001 2000

$213,137 ($0.05778/$1,000 assessed value) $213,137 ($0.06039/$1,000 assessed value) $208,728 ($0.05751/$1,000 assessed value) $207,493 ($0.05833/$1,000 assessed value)

4) Motor vehicle license fees. Revenue from motor vehicle licensing is shown in the following table. Activity for the County in this area is generally stable and therefore revenue for 2008 is expected to be at or nearly equivalent to revenue received in the prior year. The number of transactions and fees, including subagent activity, is as follows: Table 5 Motor Vehicle License Transactions Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual 2000 (Transactions) 40,911 40,723 38,001 29,619 149,254 2000 (Fees) $152,726 $158,094 $148,091 $111,799 $570,710 2001 (Transactions) 2001 (Fees)

34,003 $128,537

42,379 $157,782

38,556 $148,387

30,567 $115,675

145,505 $550,381

2002 (Transactions) 2002 (Fees)

35,767 $133,742

44,691 $163,992

39,401 $145,267

29,853 $111,626

149,712 $554,627

2003 (Transactions) 2003 (Fees)

37,048 $133,839

43,142 $157,191

40,588 $151,382

30,290 $112,733

151,068 $555,145

2004 (Transactions) 2004 (Fees)

36,406 $134,342

44,669 $156,206

40,182 $148,961

31,545 $110,683

152,805 $550,192

2005 (Transactions) 2005 (Fees)

35,514 $128,624

46,091 $162,782

42,861 $156,132

31,970 $111,220

156,436 $558,758

2006 (Transactions) 2006 (Fees)

37,938 $136,763

45,740 $166,597

43,652 $159,352

32,580 $116,310

159,910 $579,022

2007 (Transactions)* 2007 (Fees) 2008(Transactions) 2008(Fees)

22,933 $129,609 39,026 $130,303

28,574 $162,250

29,659 $159,124

31,643 $115,973

112,809 $566,956

Source: Cowlitz County Auditor’s Office *2007: Transition to State Computer Program has caused some data to be lost. Transaction statistics for March, April and August are not available.

11

Explanatory Note: In February 2003, the King County Superior Court declared Initiative 776, passed by the voters in November 2002, unconstitutional and unenforceable. The initiative purportedly violated the single subject rule and impaired existing contracts. In October 2003, The Washington State Supreme Court issued its decision that the initiative is not unconstitutional. The law reduced license fees on light trucks to a flat $30 and repealed surcharges for processing licensing transactions. This resulted in a significant decrease in revenues generated for the State of Washington. Based on the Washington State Supreme Court decision, on July 21, 2004, the King County Superior Court issued an order clearing the way for the Department of Licensing (DOL) to issue refunds to citizens who paid vehicle fees based on gross vehicle weight or the additional $15 per vehicle fee imposed by certain counties. It is estimated that DOL issued over 2.3 million refund checks totaling approximately $38 million. 5) Timber harvest revenue from both state and federal forestlands for 2008 is estimated to be $807,000. First quarter 2008 receipts were $261,000 – 32%. Actual receipts in 2007 were $888,130 and in 2006 $1.1 million. The State of Washington imposes an excise tax on timber harvested on privately or publicly-owned lands. The tax is equal to the stumpage value multiplied by five (5) percent. Department of Natural Resources (DNR) revenues from state trust lands (public timber harvest) for 2008 were forecast slightly lower than 2007 harvest levels and well below 2006 and 2005 levels. The primary drivers for harvest plans are market conditions, both domestic and foreign, and contract and regulatory requirements. Revenue estimates for state trust lands are derived from quarterly reports furnished by DNR. Estimates are adjusted each quarter as updated information is received. Revenue estimated to be received from DNR for 2008 is approximately $195,000; 2007 harvest was $166,674 down significantly from 2006 receipts of $355,593 and 2005 receipts of $804,782. Timber assessed value (TAV) (private timber harvest) for 2008 is forecast somewhat below last year actual receipts. Revenue from this source is derived from a county levied excise tax based on the stumpage value of timber harvested on privately owned lands. Timber assessed value is derived from estimates furnished by the Special Programs Division, Forest Tax Section, of the Department of Revenue. TAV revenues for 2008 are estimated to be $612,000; 2007 receipts were $721,456 whereas 2006 receipts which were $729,793. 6) PUD Privilege Tax is an excise tax in lieu of property tax levied against entities operating facilities generating and distributing electrical energy. In Cowlitz County that entity is the Cowlitz Public Utility District (PUD). The basic rate is 2% of gross revenue from the sale or distribution of power, plus .02% per kilowatt-hour of the wholesale value of self-generated energy for resale or distribution. The revenue is distributed to cities and the county according to a formula set out in state law that is based on gross revenues derived by the PUD from the sale of power within each jurisdiction. It has recently come to the attention of the County that gross revenue calculations made by the PUD were incorrectly computed. It is believed that the decrease in revenue between 2003 and 2004 results from a re-evaluation by the PUD of its computation method. This is a significant source of revenue for the General Fund: 2000 Actual Receipts $ 613,704 2001 Actual Receipts $ 669,304 2002 Actual Receipts $ 754,632 2003 Actual Receipts $1,061,056 2004 Actual Receipts $ 945,317 2005 Actual Receipts $ 933,674 2006 Actual Receipts $ 951,726 2007 Actual Receipts $1,125,656 2008 Estimated Receipts $1,130,000 12

7) Interest earnings from all sources in the General Fund for 2008 is estimated to be $1,642,790 down slightly from actual receipts in the last two years. First Quarter projections indicate total collections for 2008 may fall short of budget estimates by approximately $37,000. Interest rates began to decline in October 2007 and have continued to fall in early 2008. Whereas interest rates one year ago were 5.2%, at the end of the first quarter 2008, rates were 3.1%. Total interest earnings in 2007 were $1,873,639 compared to actual receipts of $1,729,121 in 2006, $815,617 in 2005, $430,368 in 2004, $468,997 in 2003, $632,880 in 2002, $1.14 million in 2001 and $1.41 million in 2000. The average month-end cash and investments through first quarter 2008 were $6.7 million. The average cash and investment balance during 2007 was $10.2 million, compared to $9.1 million in 2006, $6.6 million in 2005, $4.7 million in 2006, $3.1 million in 2003, $3.2 million in 2002 and $3.5 million in 2001. Interest rates on investments rose from an average low of 1.2% in 2003 to an average of 5.1% in 2007. Historical rates for the period January 2000 to present are shown in the following table. Table 6 Six-Year Investment Interest Rate History Month January February March April May June July August September October November December Annual Average

2000 5.5% 5.6% 5.8% 5.9% 6.1% 5.4% 6.5% 6.4% 6.5% 6.4% 6.5% 6.5% 6.1%

2001 6.2% 5.7% 5.2% 4.9% 4.5% 4.3% 4.0% 3.8% 3.6% 3.2% 2.6% 2.3% 4.2%

2002 2.1% 1.9% 1.7% 1.9% 1.9% 1.9% 1.8% 1.7% 1.7% 1.7% 1.5% 1.5% 1.8%

2003 1.3% 1.3% 1.3% 1.2% 1.2% 1.2% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.2%

2004 1.1% 1.1% 1.0% 1.0% 1.0% 1.0% 1.2% 1.3% 1.5% 1.7% 1.9% 2.1% 1.3%

2005 2.2% 2.4% 2.6% 2.8% 3.0% 3.0% 3.2% 3.4% 3.6% 3.8% 4.0% 4.2% 3.2%

2006 4.2% 4.4% 4.5% 4.7% 4.9% 5.0% 5.2% 5.2% 5.2% 5.2% 5.5% 5.2% 4.9%

2007 5.2% 5.3% 5.2% 5.2% 5.2% 5.2% 5.2% 5.2% 5.1% 4.9% 4.7% 4.6% 5.1%

2008 4.4% 3.8% 3.1%

3.8%

Source: Cowlitz County Treasurer’s Office

Cautionary Note: As noted above, though interest rates rose in early to mid-2007, they have not yet recovered to match those of 2000 and began falling again in early 2008. Initial interest earning estimates for 2008 were projected assuming an average monthly cash balance of $3.0 million and interest earnings at 4.5%. 8) District Court revenues collected through the first quarter total $463,412 (23% of anticipated receipts for the year). Expected receipts for each individual revenue account are very nearly on target with anticipated amounts except revenues from contracts with the cities for Municipal Court work and traffic infractions, which are currently slightly ahead of budget estimates. 9) Superior Court Clerk revenues through the first quarter total $225,048 (28% of anticipated receipts for the year). Most individual revenue accounts were forecast correctly. A few are slightly ahead of projections. 10) Community Long Range Planning revenues for calendar year 2008 were budgeted to be approximately $438,000. Year to date revenues and prior years collections are shown in the table below. 13

Due to decreased activity, Department revenues are not expected to meet budget estimates. The anticipated shortfall at the end of the first quarter is $101,000. Effective January 1, 2008, financial activity for environmental health, permitting, building and code enforcement is shown in a Special Revenue Fund. Historical information on fees and other revenues for the period January 2000 to present are shown in the following table. Table 7 Building & Planning Department Revenue 2000-2007 Includes Revenues From All Divisions Community Long Range Planning Calendar Year 2000 2001 2002 2003 2004 2005 2006 2007 Average:

Anticipated Revenues 2008

Actual Revenues YTD 03/31/2008

Percentage Collected

$437,784

$112,047

25.6%

Anticipated Revenues $1,443,592 $1,417,776 $1,770,972 $1,461,800 $1,486,947 $2,108,884 $2,452,738 $3,108,668 $1,906,422

Actual Annual Revenues $1,543,215 $1,189,822 $1,542,405 $1,503,922 $1,966,011 $2,503,583 $3,239,121 $3,368,895 $2,107,122

Percentage Collected 106.9% 83.9% 87.1% 102.9% 132.2% 118.7% 132.1% 108.4% 110.5%

11) Corrections (Jail, Probation, Offender Services & Inmate Concessions) revenues for the year were estimated at $4.2 million. Actual revenues collected through the First Quarter were $1 million (24.1%). Total revenues collected in prior years were as follows: 2001: $2.6 million 2002: $2.3 million 2003: $2.3 million 2004: $2.1 million 2005: $2.2 million 2006: $2.4 million 2007 $4.2 million (DOC contract; Annex opened; booking restrictions lifted) The following table itemizes anticipated revenues for each division of the Corrections Department as well as total revenues through the same period last year.

Division Probation Services Jail Offender Services Jail Concessions Total

Table 8 Cowlitz County Corrections Department Revenue Anticipated Actual Revenues Percentage Revenues YTD 03/31/2008 Collected $541,700 $154,152 28.5% $2,919,500 $646,123 22.1% $521,700 $156,054 29.9% $180,000 $ 47,956 26.6% $4,162,900 $1,004,285 24.1%

14

Actual Revenues Thru 03/31/2007 $142,459 $557,275 $195,470 $ 36,670 $931,874

Chart 1 Comparison of Revenues: 2004 – YTD 2008 2008 Budget Estimates & Actual Revenues 8,000,000 7,000,000 Dollars

6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0

Licenses & Permits

Intergovt'l Services

Charges for Service

2004 Actuals

1,220,703

4,048,152

4,498,952

1,134,608

2005 Actuals

1,463,301

3,915,470

5,013,157

1,169,214

2006 Actuals

1,913,186

4,613,994

5,497,760

1,300,639

2,106,380

2007 Actuals

Fines & Forfeits M isc Revenues

Non Revenues

Other

766,825

30,000

615,115

1,164,297

73,000

41,026

30,000

365,831

1,890,537

5,987,701

6,438,004

1,564,611

2,309,901

33,104

167,674

2008 Budgeted Revenues

66,524

6,532,059

5,312,213

1,549,194

2,042,141

30,000

255,865

2008 Forecast: 12 months

72,423

6,878,546

5,515,212

1,581,186

2,099,954

30,000

255,865

2008 Actuals: thru 1st Qtr

12,731

1,242,081

1,375,507

383,976

457,597

0

33,953

% Received: thru 1st Qtr

19.1%

19.0%

25.9%

24.8%

22.4%

0.0%

13.3%

Revenue Type

Note: Revenue categories not included in charts above: sales tax, property tax and fund transfer; see prior discussion above.

Chart 2 General Fund Revenues: 2008 Anticipated Revenues (Budget Estimate – As Amended)

Direct Federal Grants 2.1%

Licenses & Permits 3.3%

Intergvt'l Service Rev 1.6%

All Other 2.5%

Fines & Forfeits 4.1%

Property Taxes 41.6%

Property Taxes

Interest Earnings 4.3%

Sales Taxes State Grants & Shared Rev

Timber Harvest 2.1%

Security Persons/Prop Charges for Service Timber Harvest

Charges for Service 6.6%

Interest Earnings Fines & Forfeits Licenses & Permits

Security Persons & Property 8.0%

Direct Federal Grants Intergvt'l Service Rev

State Grants & Shared Rev 7.9%

All Other Sales Taxes 14.1%

15

Chart 3 General Fund Revenues: 2008 Actual Receipts Through 1st Quarter Intergvt'l Service Rev 1%

All Other 4.0%

Direct Federal Grants 2% Licenses & Permits 3% Fines & Forfeits 6.1%

Property Taxes 21.1%

Property Taxes Sales Taxes State Grants & Shared Rev

Interest Earnings 4.8%

Sales Taxes 18.3%

Security Persons/Prop Charges for Service Timber Harvest

Timber Harvest 4.1%

Interest Earnings Fines & Forfeits Licenses & Permits

Charges for Service 10.3%

State Grants & Shared Rev 10%

Security Persons & Property 7%

Direct Federal Grants Intergvt'l Service Rev All Other

Table 9 General Fund Revenues (By Source): 2008 Anticipated Revenues & Actual Receipts Through 1st Quarter Revenue Source Property Taxes/Fines & Penalties Sales Taxes State Grants & Shared Revenues Security Persons/Property Charges for Service Timber Harvest Interest Earnings Fines & Forfeits Licenses & Permits Direct Federal Grants Intergvt’l Service Revenues All Other Total

Anticipated Revenues $15,789,295 $5,354,748 $3,847,716 $2,826,627 $2,485,586 $807,260 $1,642,790 $1,549,194 $66,524 $560,506 $2,053,337 $934,751 $37,918,334

16

1st Qtr Actual Revenues $1,328,974 $1,150,477 $607,404 $728,742 $646,766 $260,963 $298,741 $383,976 $12,731 $197,041 $418,885 $253,975 $6,288,675

Percentage Collected 8.4% 21.5% 15.8% 25.8% 26.0% 32.3% 18.2% 24.8% 19.1% 35.2% 20.4% 27.2% 16.6%

Table 10 General Fund Revenues (By Department): 2008 Anticipated Revenues & Actual Receipts Through 1st Quarter Anticipated Actual Revenues $$ Over / % Department Revenues Collected (Under) Collected Boundary Review Board $400 $100 ($ 300) 25.0% Commissioners $2,950 $2,738 ($ 212) 92.8% Board of Equalization $0 $0 $ 0 Treasurer $17,576,128 $1,842,849 ($15,733,279) 10.5% Auditor $7,772,930 $1,436,298 ($6,336,632) 18.5% Assessor $3,500 $5,360 $1,860 153.1% Administrative Services $129,850 $110,918 ($18,932) 85.4% Civil Service Commission $1,000 $0 ($1,000) 0.0% Facilities Maintenance $326,980 $78,830 ($248,150) 24.1% Family Court $79,080 $13,698 ($65,382) 17.3% Sheriff $1,721,864 $350,404 ($1,371,460) 20.4% CCCD-Probation Services $541,700 $154,152 ($387,548) 28.5% CCCD-Jail $2,919,500 $646,123 ($2,273,377) 22.1% CCCD-Offender Services $521,700 $156,054 ($365,646) 29.9% CCCD-Jail Concessions $180,000 $47,956 ($132,044) 26.6% Juvenile Detention $154,000 $68,704 ($85,296) 44.6% Juvenile Probation $982,806 $247,398 ($735,408) 25.2% Prosecuting Attorney $193,288 $45,709 ($147,579) 23.6% Child Support Services $568,870 $132,298 ($436,572) 23.3% Superior Court $172,175 $44,072 ($128,103) 25.6% District Court $2,000,700 $463,412 ($1,537,288) 23.2% Clerk $808,957 $225,048 ($583,909) 27.8% P.A. Diversion Program $5,000 $1,075 ($3,925) 21.5% Courthouse Facilitator Prog $44,360 $11,195 ($33,165) 25.2% Office of Public Defense $173,407 $8,833 ($164,574) 5.1% Coroner $16,350 $11,927 ($4,423) 72.9% WSU Extension $925 $103 ($ 822) 11.1% Museum $0 $0 $ 0 Non-Departmental $209,400 $43,903 ($165,497) 21.0% St. Helens Recovery $200,000 $0 ($200,000) 0.0% Community Long Range Plan $437,784 $112,047 ($325,737) 25.6% Park & Recreation $109,700 $16,670 ($93,030) 15.2% Drug Court Grant Program $63,050 $10,801 ($52,249) 17.1% Grand Total $37,918,354 $6,288,675 ($31,629,679) 16.6% Notes: (a) Not all departments receive income distributed equally throughout the year; therefore the percentage collected through the end of the quarter may not necessarily reflect the amount of revenue that might be expected by year end. In other words, it is not necessarily reasonable to expect that 25% of anticipated revenues would be received at the end of the 1st quarter; 50% of anticipated revenues would be received by the end of the 2nd quarter; 75% of anticipated revenues would be received by the end of the 3rd quarter and 100% of anticipated revenues would be received by the end of the 4th quarter. (b) The statistic representing “percentage collected” may be more an indication of the accuracy of the initial estimate of anticipated revenue than it is a measure of future revenue expectations.

17

Revenue Source 2000 Actual Property Taxes $12,018,188 Sales Taxes 3,197,269 St Grants/Shared Rev 2,073,264 Sec of Persons/Prop 2,109,765 Charges for Service 2,018,411 Timber Harvest 930,556 Interest Earnings 1,412,843 Fines & Forfeits 1,087,052 Licenses & Permits 986,926 Direct Federal Grants 455,934 Intergovt’l Revenue 396,611 All Other 587,006 Total $27,273,825 Percentage Inc/(Dec)

Table 11 General Fund Revenues 2000 - 2004 Comparison 2001 Actual 2002 Actual 2003 Actual $12,681,664 $13,135,458 $13,600,190 3,502,749 3,433,646 3,713,241 1,883,593 2,190,240 2,624,881 2,360,805 2,093,939 2,344,810 1,920,653 2,125,173 2,131,947 1,034,114 1,266,028 844,423 1,143,096 632,880 468,997 1,060,805 1,059,455 1,121,364 783,439 901,941 937,859 542,092 529,937 567,736 327,494 355,725 416,670 639,853 1,221,220 686,151 $27,880,356 $28,945,642 $29,458,268 +2.2% +3.8% +1.8%

2004 Actual $13,822,500 3,700,901 3,009,731 2,154,963 2,343,482 540,899 430,368 1,134,608 1,220,703 545,931 416,943 1,345,732 $30,666,255 +4.1%

2002 revenues include four funds previously classified as Special Revenue Funds. 2004 revenues include the Law & Justice Fund previously classified as a Special Revenue Fund.

Table 12 General Fund Revenues 2005 – 2009 Comparison Revenue Source Property Taxes Sales Taxes St Grants/Shared Rev Sec of Persons/Prop Charges for Service Timber Harvest Interest Earnings Fines & Forfeits Licenses & Permits Direct Federal Grants Intergovt’l Revenue All Other Total Percentage Inc/(Dec) vs. Prior Year

2005 Actual $15,151,245 4,638,448 2,893,551 2,268,142 2,745,015 1,467,971 815,617 1,169,214 1,463,301 589,401 379,443 866,435 $34,447,783

2006 Actual $14,580,680 4,667,241 3,221,947 2,349,592 3,148,167 1,085,386 1,729,121 1,300,639 1,913,186 656,186 676,780 864,351 $36,193,276

2007 Actual $14,908,630 5,309,807 3,586,462 3,016,966 3,421,038 888,130 1,873,639 1,564,611 1,890,537 533,221 1,736,500 1,021,940 $39,751,481

2008 Budget $15,788,855 5,354,768 3,908,716 2,826,627 2,485,586 807,260 1,642,790 1,549,194 66,524 560,506 2,053,337 874,191 $37,918,354

2009 Budget $16,527,798 5,647,966 3,989,550 2,828,627 2,520,636 812,395 1,686,790 1,554,455 68,427 563,003 1,864,337 874,591 $38,938,575

+12.4%

+13.1%

+9.8%

(4.6%)

2.7%

2008: Special Revenue Fund established for Building & Planning Fund; decrease in licenses& permits & charges for service revenues reflect this change.

18

Chart 4 Cowlitz County General Fund Revenue By Month 2002 – YTD 2008 7,000,000 6,000,000 5,000,000 4,000,000

2002 2003 2004

3,000,000

2005 2006

2,000,000

2007 2008

1,000,000 0

Jan

Feb

M ar

975,655

1,674,820

1,557,237

2003

1,163,485

1,621,955

1,493,538

5,414,785

3,584,691 2,542,528

2004

1,325,982

1,771,572

1,815,349

5,366,202 3,680,121 2,660,707

2005

1,436,584

1,935,457 2,382,341 5,201,996

2006

1,600,583 2,306,192

2002

2007 2008

Apr

M ay

4,572,780

2,101,357

5,953,460

2,365,923

2,771,876

6,463,617 4,428,931

2,003,971 2,108,403

2,176,123

1,677,111

Jun

5,304,075 3,276,951 1,990,432

2,535,555

4,129,485 2,861,253 3,311,127

19

Jul 1,400,169

Aug

Sep

Oct

Nov

Dec

1,422,588 2,046,326 4,860,420 2,716,231

1,715,759

1,481,855

1,285,062

1,589,609

4,712,576

2,638,010

1,876,995

1,477,558

1,480,929

2,010,580

4,172,070

3,350,264

1,594,727

1,531,467

1,950,407

2,551,366

5,119,789

3,309,888 1,920,662

1,779,146

2,253,361 2,541,549

5,443,481 3,001,858 2,225,826

1,829,874

2,511,035

6,196,145

2,710,505

3,169,873 2,314,438

B. GENERAL FUND EXPENDITURES The General Fund budget, as amended, has been approved in the amount of $46,418,354, including an estimated ending unreserved and reserved fund balance of $4,539,783. This compares to a budget in 2007 of $48,282,112 including an estimated ending fund balance of $4,573,129. The decrease in 2008 is largely the result of establishing a Special Revenue Fund for the Department of Building and Planning thereby reducing General Fund expenditures as well as a reduction in capital expenditures. Expenditures, by major expense category, are as follows:

Expense Category Personnel Services Supplies Other Services & Charges Interfund Charges/Misc Transfers Capital Outlay Total Expenditures Ending Fund Balance Total Budget

Table 13 General Fund Expenditures: 2008 Expended % of Total Budget As Adopted YTD 03/31/2008 58.8% $27,298,563 $6,480,424 3.7% 1,700,435 329,148 15.4% 7,151,392 1,352,433 5.0% 2,325,945 613,922 6.8% 3,153,182 1,170,096 0.5% 249,054 0 $41,878,571 $9,946,033 9.8% 4,539,783 $46,418,354 23.7%

Unexpended $20,818,139 1,371,287 5,798,959 1,712,023 1,983,086 249,054 $31,932,548 76.3%

Chart 5 Cowlitz County General Fund (As Amended) Budgeted Expenditures: 2008

Interfund Charges 5.1% Other M iscellaneous 1.9%

Capital Outlay 0.6% Transfers 7.5%

Other Agency Support 0.3%

Direct Labor Extra Help

M iscellaneous 0.1%

Repairs & M aintenance 0.7%

Other Pay Personnel Benefits

Utilities 2.2%

Supplies Direct Labor 43.6%

Insurance 1.4%

Operating Rentals/Leases 0.1%

Contracts Communications

Advertising 0.2%

Travel Advertising

Travel 0.7%

Operating Rentals/Leases Insurance Utilities

Communications 1.3%

Repairs & M aintenance Other M iscellaneous

Contracts 8.6%

Interfund Charges

Supplies 4.1%

Extra Help 1.7% Personnel Benefits 17.3%

Other Pay 2.6%

20

Capital Outlay Transfers Other Agency Support M iscellaneous

Chart 6 Cowlitz County General Fund (As Amended) Actual Expenditures: Through 1st Quarter 2008

Capital Outlay 0.0% Interfund Charges 5.7%

Transfers 11.8%

Other Agency Support 0.4%

Direct Labor

M iscellaneous 0.0%

Extra Help Other Pay Personnel Benefits

Other M iscellaneous 2.9%

Supplies Direct Labor 44.2%

Repairs & M aintenance 0.3% Utilities Insurance 2.0% 0.0%

Contracts Communications Travel

Operating Rentals/Leases 0.0%

Advertising Operating Rentals/Leases

Advertising 0.1% Travel 0.4%

Insurance Utilities Repairs & M aintenance

Communications 1.1%

Other M iscellaneous Interfund Charges

Contracts 6.8%

Extra Help 1.6%

Supplies 3.3%

Capital Outlay Transfers

Personnel Benefits 17.1%

Other Pay 2.3%

Other Agency Support M iscellaneous

Table 14 General Fund Expenditures Detail Through 1st Quarter 2008 Expense Category Budget (Amended) Expended Unexpended Direct Labor $18,238,200 $4,400,113 $13,838,087 Extra Help 722,661 156,205 566,456 Other Pay 1,078,551 224,451 854,100 Personnel Benefits 7,259,151 1,699,656 5,559,495 Supplies 1,700,435 329,148 1,371,287 Contracts 3,608,353 674,783 2,933,570 Communications 552,460 110,948 441,512 Travel 286,601 40,516 246,085 Advertising 80,756 9,835 70,921 Op Rentals/Leases 21,707 2,961 18,746 Insurance 576,376 0 576,376 Utilities 917,481 198,162 719,319 Repairs/Maintenance 312,453 30,475 281,978 Other 795,205 284,753 510,452 Interfund Charges 2,146,007 570,887 1,575,120 Capital Outlay 249,054 0 249,054 Transfers 3,153,182 1,170,096 1,983,086 Agency Support 143,474 41,612 101,862 Miscellaneous 36,464 1,423 35,041 Grand Total $41,878,571 $9,946,024 $31,932,547 21

% Expended

24.1% 21.6%

20.8% 23.4% 19.4% 18.7% 20.1% 14.1% 12.2% 13.6% 0.0% 21.6% 9.8% 35.8% 26.6% 0.0% 37.1% 29.0% 3.9% 23.7%

Expense Category Direct Labor Extra Help Other Pay Personnel Benefits Supplies Contracts Communications Travel Advertising Op Rentals/Leases Insurance Utilities Repairs/Maintenance Other Interfund Charges Capital Outlay Transfers Agency Support Miscellaneous Grand Total Percentage Inc/(Dec)

Table 15 General Fund Expenditures 2005 - 2007 Comparison 2005 Actual 2006 Actual 2007 Actual Expenditures Expenditures Expenditures $14,592,691 $15,098,810 $17,181,603 496,877 665,280 689,012 825,508 1,042,892 1,126,596 4,551,395 5,241,704 6,580,479 1,075,192 1,299,412 1,519,037 2,747,619 3,069,004 3,455,743 409,115 453,179 489,303 110,071 159,312 209,247 49,193 85,569 73,036 1,347 896 9,943 498,427 650,897 626,170 595,517 673,618 732,732 137,214 190,415 227,435 595,299 588,403 748,322 1,770,939 1,807,529 2,192,544 53,970 115,689 126,077 2,148,665 3,734,680 4,735,111 132,317 111,736 144,602 59,112 46,404 56,373 $30,850,468 $35,035,429 $40,923,365 13.6% 16.8%

2008 Budgeted Expenditures $18,238,200 722,661 1,078,551 7,259,151 1,700,435 3,608,353 552,460 286,601 80,756 21,707 576,376 917,481 312,453 795,205 2,146,007 249,054 3,153,182 143,474 36,464 $41,878,571

2008: Special Revenue Fund for Building & Planning established; Community Long Range Planning remains in General Fund.

22

Expense Category Direct Labor Extra Help Other Pay Personnel Benefits Supplies Contracts Communications Travel Advertising Op Rentals/Leases Insurance Utilities Repairs/Maintenance Other Interfund Charges Capital Outlay Transfers Agency Support Miscellaneous Grand Total Percentage Inc/(Dec)

Table 16 General Fund Expenditures 2001 - 2004 Comparison 2001 Actual 2002 Actual 2003 Actual Expenditures Expenditures Expenditures $13,986,479 $14,015,092 $13,581,931 351,238 334,058 391,443 653,663 747,928 830,951 4,096,257 3,979,330 3,952,388 1,138,126 881,330 948,488 2,191,413 2,650,827 2,717,709 247,886 253,914 274,589 119,472 92,873 95,549 46,013 44,591 44,877 2,627 34,410 44,433 281,809 404,909 651,214 447,226 580,717 616,072 155,329 153,972 132,403 460,946 535,159 455,644 1,212,450 1,417,270 1,453,259 14,580 37,967 5,301 2,798,723 2,181,128 2,204,507 136,677 145,631 152,013 32,487 31,012 75,944 $28,373,401 $28,522,118 $28,628,715 +.52% +.37%

2004 Actual Expenditures $14,504,238 461,460 909,803 4,420,508 1,011,009 2,665,170 404,551 108,107 53,926 56,003 480,931 649,404 151,701 544,727 1,713,350 0 3,020,781 138,354 331,963 $31,625,986 +10.5%

Note: in 2004 expenditures from the Law & Justice Fund were incorporated into the General Fund adding expenditures of approximately $1.2 million. Previously this fund was classified as a Special Revenue Fund (separate from the General Fund.)

23

Chart 7 General Fund Expenditures: Comparison: 2001– 2008 4,000,000 3,500,000 3,000,000

Dollars

2,500,000 2,000,000 1,500,000 1,000,000 500,000 2001

0

2003

Ot h

Ex tra

H

elp er Pa Su y pp li C o es Co nt ra m ct m s un ic ati on s Op Tr er a ve Ad ati l ng ve r Re tis in nt g als /L ea s In es su ra Re nc pa e ir s U & til iti M Ot es h e ain t en rM an is ce In cell an ter e fu n d ou s Ch ar Ca ge pi s tal Ou Ot tl he Tr ay rA a ns ge fe nc rs yS M upp o isc ell rt an eo us

2002 2004 2005 2006 2007

Expenditures

2008 Budget

Note: Chart above excludes Direct Labor & Employee Benefit costs See Chart 5b below. See also Table 10d.

Chart 8 General Fund Expenditures: Comparison: 2001 - 2008

15,000,000

5,000,000

14,500,000

4,500,000

14,000,000 D o lla r s

D o lla r s

4,000,000

13,500,000

3,500,000

13,000,000 12,500,000

3,000,000

12,000,000

2,500,000

2001

2002

2003

2004

2005

2006

2007

2008 Budget

2001

Actual Direct Labor (Personnel) Costs

2002

2003

2004

2005

2006

2007

Actual Personnel Benefit Costs

Note: In 2004 the Law & Justice Fund was incorporated into the General Fund, adding approximately $1.2 million in total expenditures 87% of which were staff costs for a total increase in salary and benefits of approximately $950,000.

24

2008 Budget

Table 17 General Fund (2008 As Amended) Department-Level Expenditure Summary Expenditures Department Amended Budget Through 1st Qtr Boundary Review Board $20,880 $2,665 Commissioners 624,534 125,270 Board of Equalization 4,978 522 Treasurer 712,310 183,347 Auditor 1,023,138 230,435 Assessor 1,507,530 347,074 Administrative Services 712,891 159,485 Civil Service Commission 17,230 1,965 Facilities Maintenance 2,077,664 478,305 Family Court 310,239 71,924 Sheriff 5,594,453 1,447,001 Sheriff’s Extradition 25,125 2,347 CCCD-Probation Services 581,515 132,246 CCCD-Jail 7,737,829 1,661,735 CCCD-Offender Services 1,222,401 297,438 CCCD-Jail Concessions 222,253 27,206 Juvenile Detention 1,811,619 397,574 Juvenile Probation 1,904,317 435,003 Prosecuting Attorney 2,013,431 476,032 Child Support Services 568,820 133,541 Superior Court 906,997 188,589 District Court 1,627,203 369,445 Clerk 1,171,636 245,977 P.A. Diversion Program 15,030 1,482 Courthouse Facilitator Program 54,283 13,056 Office of Public Defense 2,283,422 513,974 Coroner 389,904 95,348 WSU Extension 148,003 19,888 Museum 114,630 21,791 Non-Departmental 4,474,486 1,467,934 St. Helens Recovery 200,000 737 Community Long Range Planning 1,143,592 256,957 Park & Recreation 517,279 110,567 Drug Court Grant Program 138,949 29,165 Grand Total $41,878,571 $9,946,025

25

% Expended 12.8% 20.1% 10.5% 25.7% 22.5% 23.0% 22.4% 11.4% 23.0% 23.2% 25.9% 9.3% 22.7% 21.5% 24.3% 12.2% 21.9% 22.8% 23.6% 23.5% 20.8% 22.7% 21.0% 9.9% 24.1% 22.5% 24.5% 13.4% 19.0% 32.8% 0.4% 22.5% 21.4% 21.0% 23.7%

Chart 9 Cowlitz County General Fund Expenditures by Month 2002 – YTD 2008

6,000,000 5,000,000 4,000,000 2002

3,000,000

2003 2004

2,000,000

2005 2006

1,000,000

2007 2008

0

Jan

Feb

M ar

Apr

M ay

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2002

2,368,461 2,384,467 2,214,039 3,234,066 2,819,568

2003

2,589,348 2,777,295 2,882,413 2,235,351 2,330,836 2,208,098 2,603,073 2,219,240 2,068,010 2,229,231 2,207,276 2,059,074

2,091,616 2,338,469 2,320,416 1,974,583 2,626,879 2,174,286 1,942,494

2004

3,354,274 3,373,942 2,237,479 2,642,280 2,786,711 2,334,583 2,460,952 2,667,663 2,290,217 2,813,646 2,225,673

2005

2,718,426 2,094,154

2006 2007 2008

3,741,260 2,900,331 3,114,413

3,140,210 2,458,679 2,883,788 2,282,075 2,868,256 2,379,133

2,171,593

2,727,547

2,461,691 2,309,846

2,895,533 2,963,945 2,830,911 3,465,561 2,908,949 2,792,518

3,541,484 3,065,425 2,631,664 2,801,676

2,652,157 2,625,346

3,862,718 2,574,396 3,430,503 3,173,013

3,025,599 3,955,183 3,467,382 4,994,025 3,466,302 3,446,109

2,791,691 2,756,524

2,561,273

Chart 10 Cowlitz County General Fund Difference Between Monthly Receipts and Monthly Expenditures 2002 – YTD 2008 4,500,000 3,500,000 2,500,000

2002 2003

1,500,000

2004 2005

500,000

2006 2007

(500,000)

2008

(1,500,000) (2,500,000) (3,500,000)

“ Breakeven” Rev = Exp M ay

Jun

2002

(1,392,806 (709,647) (656,802) 2,070,008

Jan

Feb

M ar

A pr

457,382

(101,183)

Jul

A ug

2003

(1,425,863 (1,155,340) (1,388,875) 3,179,434

1,253,855

334,431

(1,121,218) (934,178)

2004

(2,028,29 (1,602,369 (422,130) 2,723,922

893,410

326,124

(983,394) (1,186,734) (279,637) 1,358,424

2005

(1,281,842) (158,697)

(757,869) 2,743,317

1,688,992

253,480

(1,336,789 (428,726)

(9,907)

2,392,242

848,197

(389,184)

2006

(1,294,950 (657,753)

(729,554) 2,487,899 1,220,536

68,735

(1,762,339 (812,065)

(90,115)

2,641,805

349,700

(399,520)

2007

(2,185,607) (208,473)

(658,627) 3,290,604 1,637,241

554,603

2008

(1,737,289) (791,928)

(938,289)

(938,300) (897,828)

Sep

Oct

Nov

Dec

71,743

2,233,541

541,945

(226,736)

(478,400) 2,483,345

(1,195,725) (1,444,148 ) (756,876)

26

1,202,120

430,734

(182,080)

1,124,591

(576,867)

(296,429) (1,131,671)

C. FUND BALANCE Pursuant to RCW 36.40.090, the County cannot maintain an unbudgeted (unrestricted) cash balance in excess of a sum equal to $1.25/$1,000 of the assessed valuation of the county. The maximum unbudgeted cash the County could maintain in 2008 is $10,589,863. The county is below the maximum allowed by law. The estimated unreserved beginning fund balance on January 1, 2008 was $8,500,000. Actual adjusted cash balance was $7,360,942; cash balance as of March 31, 2008 was $5,800,950. The adjusted beginning fund balance of $8.5 million accounts for 2007 “13th month” expenditures. Cowlitz County financial statements are based on a modified accrual system. Treasurer’s cash is reported in the month/year received, while expenditures are recognized in the year the obligation is incurred. Therefore, an adjusted cash balance is obtained by deducting from the cash on deposit with the Treasurer on December 31, expenditures paid in January and February but chargeable to the prior year budget. The ending fund balance on December 31, 2008 is budgeted to be $4,539,783. Actual ending cash balances are typically higher than budgeted due to unexpended budget and revenue received greater than forecast (see discussion in this report for additional detail.) Audited financial statements for 2007 are not yet available.

Year 2000 2001 2002 2003 2004 2005 2006 2007 8 year Avg

Table 18 Eight-Year Historical Comparison General Fund Shortfall/Surplus Current Revenues vs. Current Expenditures Annual Expenditures Annual Revenues (Shortfall)/Surplus $27,347,948 $27,273,825 ($ 74,123) $28,373,401 $27,880,356 ($493,045) $28,522,118 $28,945,642 $ 423,524 $28,628,714 $29,458,268 $829,554 $31,625,985 $30,666,761 ($959,224) $30,850,468 $34,685,611 $3,835,143 $35,035,429 $36,193,276 $1,157,847 $40,923,365 $39,751,481 ($1,171,884) $31,413,429

$31,827,174

$413,746

2000-2007

Note: In anticipation of reduced state revenues, significant budget reductions were made in 2002 and 2003. The anticipated budget savings were $1.2 million; actual savings achieved were $1.25 million.

As stated in the County’s Financial Management Policies, sufficient fund balances and reserve levels are a critical component for sound financial management and a key factor in the measurement of the County’s financial strategies for external financing. Maintenance of an adequate fund balance ensures sufficient resources for cash flow and mitigates revenue shortages or emergencies. A minimum fund balance necessary can be attained and maintained through prudent management of expenditures and revenues. The County strives to maintain reserves required by law, resolution and/or bond covenants to ensure service levels, stability and protect against economic downturns and emergencies. The County’s financial management policies require maintenance of reserves in the General Fund of no less than 8.3% of projected expenses in order to provide sufficient cash flow. This is approximately one-month operating capital. Under the current policy, the minimum cash reserve for 2008 should have been $3,475,921. The minimum fund balance was maintained.

27

Summary of Adjusted Actual Beginning Cash Balances Chart 11 General Fund: 2001- 2008 Beginning Actual Adjusted Cash Balances 9,000,000 8,000,000

Beginning Fund Balance

7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 General Fund 2001

2002

2003

2004

2005

2006

2007

2008

Chart 12 Comparison of Fund Balances – All Fund Types Beginning Adjusted Fund Balances – 2008 Trust/Agency Funds 1.7% General Fund 11.6% Internal Service 12.5% Special Revenue 17.1%

General Fund Special Revenue Capital Projects Enterprise Funds

Enterprise Funds 40.1%

Internal Service Capital Projects 16.1%

28

Trust/Agency Funds

Chart 13 Cowlitz County General Fund Cash & Investment Activity 2002 – YTD 2008 14,000,000 12,000,000 10,000,000

2002 2003

8,000,000

2004 2005

6,000,000

2006 2007

4,000,000

2008

2,000,000 0

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2002

3,848,975

3,278,377

2,583,066

4,602,307

5,059,564

4,964,794

4,126,451

3,133,572

3,200,796

5,546,268

6,054,198

5,793,532

2003

4,371,820

3,216,107

1,827,756

5,016,451

6,328,681

6,662,279

5,541,437

4,614,125

4,024,108

6,510,065

6,940,999

6,723,817

2004

4,673,818

3,073,146

2,605,548

5,329,030

6,221,288

5,958,598

4,976,611

3,792,194

3,524,211

4,882,391

6,020,180

5,452,268

2005

4,165,073

4,011,321

3,252,249

5,993,157

7,682,345

7,936,905

6,613,407

6,270,608

6,242,316

8,621,777

9,460,680

2006

7,764,631

7,099,979

6,792,181

9,280,645

10,507,720

10,571,479

8,812,800

7,999,097

7,908,880

10,532,038 10,895,661

2007

8,315,788

8,095,448

7,434,788

10,733,299 12,382,238

12,939,731

11,743,851 10,273,000

9,514,518

10,718,427

2008

7,541,312

6,750,769

5,800,950

9,055,831

10,404,099

10,494,139 9,272,187

Chart 14 Cowlitz County General Fund Trend of Actual Revenues, Expenditures & Cash Balance Adjusted for Inflation 1990-2007 Cowlitz County Ge ne ral Fund Actual Re ve nue s, Expe nditure s & Cash Balance Adjuste d for Inflation: 1990-2007

45,000,000 40,000,000

Dollars

35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Revenues

25,019,657

26,002,031

22,864,803

24,678,837

26,086,450

28,889,917

29,378,667

29,346,428

31,398,894

32,927,190

31,936,563

31,754,392

32,450,271

32,265,354

32,728,667

35,795,264

36,193,276

38,933,870

Expenditur es

22,694,269

24,252,491

25,253,089

25,369,990

26,949,767

27,347,485

28,130,037

28,957,930

31,938,276

32,155,586

32,023,358

32,315,946

31,975,469

31,356,751

33,752,385

31,837,428

35,035,429

40,081,650

7,270,777

6,851,847

6,159,376

5,113,607

5,338,119

5,805,055

4,260,077

5,135,897

5,116,265

4,302,413

4,828,612

5,259,590

4,305,115

4,686,097

5,428,497

3,965,777

7,325,778

8,362,850

Adjus ted Cas h Balance

Year

29

Dollars from 1990-present are act uals convert ed to 2006 equivalencies.

Chart 15 Cowlitz County General Fund Trend of Per Capita Actual Revenues versus Per Capita Actual Expenditures (Adjusted for Inflation) 1990 - 2007 $425 $400

Dollars

$375 $350 $325 $300 $275 $250

1990

1991 1992

1993

1994

1995

1996

1997

1998

1999 2000 2001 2002 2003 2004 2005 2006 2007

P e r C a pita R e ve nue s

$ 305 $ 310 $ 273 $ 302 $ 304 $ 331 $ 332 $ 328 $ 347 $ 359 $ 344 $ 338 $ 344 $ 340 $ 343 $ 373 $ 374 $ 398

P e r C a pita Expe nditure s

$ 276 $ 289 $ 301 $ 310 $ 314

Diffe re nc e P e r C a pita R e v/Exp

$ 28

$ 21 $ (28) $ (8)

$ (10)

$ 314 $ 318 $ 323 $ 353 $ 350 $ 345 $ 344 $ 339 $ 330 $ 354 $ 332 $ 362 $ 410 $ 18

$ 14

$4

$ (6)

$8

Ye ar

30

$ (1)

$ (6)

$5

$ 10

$ (11)

$ 41

$ 12

Dollars from 1990-present are actuals converted to 2006 equivalencies.

$ (12)

II. CAPITAL PROJECTS The General Government Capital Projects Fund accounts for expenditures for the following projects: •

Equipment & Furniture Purchases: Funds are budgeted for maintenance costs for the county-wide telephone system and for ergonomic furniture.

•

Property Maintenance/Acquisition: Funds are budgeted for expenses that might be incurred for maintenance of the County’s rental properties as well as a contribution to the maintenance of Silver Lake Dam.

•

Grants: Cowlitz County is the recipient of two Community Development Block Grants, (a) as sponsor for the Longview Housing Authority for a project known as the “Phoenix House” and (b) a shorelines restoration project pertaining to Abernathy Creek. The County has been awarded a grant from the Recreation and Conservation Office (formerly Interagency for Outdoor Recreation) for an easement acquisition program pertaining to Abernathy Creek. The County applied for a CDBG Planning Only grant to conduct a feasibility study for a Detox Center, however the County has been notified the project was not funded.

•

Health Department: No projects are planned in 2008.

•

Jail (Hall of Justice): Funds are budgeted for retainage and contract balances on repairs made on the third floor of the Hall of Justice in 2007.

•

Hall of Justice: Funds are budgeted for remodel of courtrooms, well replacement, retainage for the 2007 Prosecutor’s Office remodel and front entry project, an uninterrupted power supply system for the Communications Center, air conditioning for the computer room and for miscellaneous repairs.

•

Administration Building: Funds are budgeted for retainage for projects completed in 2007, remodel of various areas for G.I.S., Building and Planning, Public Works, Personnel, Print Shop and Council of Government, and to pay for miscellaneous repairs.

•

Annex: No projects are planned in 2008.

•

Juvenile Center: Funds are budgeted for Heating, Ventilation and Air Conditioning (HVAC) and lobby remodel related to improving security.

•

Morgue: This project is temporarily on hold pending a county-wide facility study.

•

Museum: No projects are planned in 2008.

•

Expo Center: Funds are budgeted for gas line replacement and a storm water management project.

•

Parks: Funds are budgeted for retainage of projects completed in 2007 at Hoffstadt Bluffs including siding, roof, gutters and doors, and for shelters and a storage facility at Riverside Park.

31

Table 19 General Government Capital Projects Fund 2008 Revenues Capital Projects Anticipated Actual Variance General Government Revenue Revenue +/(-) YTD 03/31/2008 YTD 03/31/2008 Adjusted Beg Fund Balance $4,210,118 $4,522,021 $311,903 REET – Excise Tax 875,000 349,978 892,924 Abernathy Creek - Restoration 135,000 0 (135,000) CDBG – Planning Only 24,000 0 (24,000) Detox Center Feasibility Study

CDBG – Phoenix House City of Kelso - Spillman Interest Earnings Misc – Sale of Park Property Misc – Contract Proceeds

200,000 10,836 180,000 40,250 40,011

0 0 37,448 0 0

($200,000) 19,965 ($21,109) (13,368) ($40,011)

197,182

0

31,072

500,000 0 $6,412,397

0 28,959 $4,938,406 77.0%

($500,000) 28,959 ($1,281,037)

Croy Street Sale

Other/Transfers In: Hoffstadt Concessions, Cumulative Reserve, etc

Transfer from General Fund: Construction Reserves

Misc – Other/Prior Yr Grants Total Revenues: % of Anticipated Revenue

Table 20 General Government Capital Projects Fund 2008 Expenditures Capital Projects Approved Expended General Government Expenditures YTD 03/31/2008 Ending Fund Balance $3,101,658 $0 Equipment/Furniture Purchases 10,000 0 Telephone Lease/Maintenance 51,423 0 Debt Service 0 0 Property Maint/Acquisition 5,500 3,079 Grants 394,933 924 Health Department 0 0 rd Jail – H/J 3 Floor 29,406 0 Hall of Justice 983,081 1,396 Administration Building 1,350,396 57,042 Annex 0 0 Juvenile Center 0 0 Morgue 0 0 Museum 0 0 Expo Center 230,000 0 Parks 156,000 953 Public Defender Space 0 447 Unallocated Funds 100,000 0 Transfers Out 0 0 Total Expended: $6,412,397 $63,841 Percent of Project Expenses: 1.0% 32

Unexpended $3,101,658 10,000 51,423 0 2,421 394,009 0 29,406 981,685 1,293,354 0 0 0 0 230,000 155,047 ( 447) 100,000 0 $6,348,556 99.0%

Table 21 All Other Capital Projects Fund Expenditures: 2008 Results for other Capital Expenditure Funds are summarized in the following table:

Fund Name Federal Forest Payments Recreational Capital Imp General Capital Construction Rural County Facilities Road Improvement District

Project Description Various Projects Various Recreation Projects Jail Annex/Construction Reserve Various Projects Port of Longview road improvements

Local Improvement District

Port of Longview sewer/water line improvements

Lexington Bridge Replacement & Capital Acquisition

Design, construction, acquisitions

Grand Totals

33

Status On-going On-going Construction On-going Construction Complete; Accting Costs Construction Complete; Accting Costs On-going

Budget $138,081 $555,093 $1,846,527 $2,398,858

Expended YTD 1st Qtr $1,817 0 9,844 400,579

$11,335

0

$1,065

0

$2,410,000 $7,360,959

0 $412,240

III. DEBT SERVICE FUNDS/INTERFUND LOANS & OTHER DEBT Cowlitz County currently has eight outstanding general long-term bonded debt obligations. There are sufficient funds on hand or anticipated to be received to make all debt service payments on time. Sufficient reserves are on hand or will accumulate prior to the due dates of the next payments. The County has pledged the full faith, credit and resources of the County for prompt payment of the Limited General Obligation debt, however for all issues, there are other funds dedicated for repayment of the debt (i.e. system fees, customer assessments, and sales tax rebates). 1) Limited General Obligation Bonds (1993) were sold to provide funds for the relocation of water lines along Spirit Lake Highway. 2) Limited General Obligation Bonds (1994) were sold to provide funds for design and construction of plant improvements at the Beacon Hill Sewer Plant. Funds for repayment of this debt come from assessments from system customers. The bonds were refunded in July 2003 and partially redeemed in December 2003. 3) Limited General Obligation Bond Fund (1998) was established to provide for the payment of principal and interest on a $2,060,000 bond issue. The bond proceeds were passed through to the Port of Woodland and used for the design and construction of a railroad spur. Funds to pay debt service come from state sales tax, rebated to Cowlitz County. The sales tax credit is designated for public infrastructure to facilitate economic development in rural counties. The bonds were partially refunded in August 2005. 4) Limited General Obligation Bond Fund (1999) was established to provide for the payment of principal and interest on a $50,200,000 bond issue. A portion of the bond proceeds ($1,910,000) were used as follows: a) City of Longview: design and construct street improvements; b) Port of Kalama: bridge for industrial park; c) Port of Woodland: restrooms; and d) County Exposition Center: improvements to commercial building. Funds to pay debt service come from state sales tax, rebated to Cowlitz County. The sales tax credit is designated for infrastructure to facilitate economic development in rural counties. The bonds were partially refunded in August 2005. The sum of $8,020,000 funded the following projects: e) Drainage District #1: conveyance and pumping system; f) Lexington Flood Control District: pump and emergency generator; g) Port of Longview: road and sewer improvements; h) Consolidated Diking District #2: pump station. The entities benefiting from the bond proceeds, have agreed to make assessments of customers of the facilities sufficient to meet the debt service. Bond proceeds in the amount of $40,270,000 funded plant expansion and upgrades at the Sewer Treatment Plant operated by the Three Rivers Regional Wastewater Authority. This portion of the General Obligation Bond was refunded in August 2002. In May 2006, the general obligation bonds were converted to revenue bonds that are now the sole responsibility of the Three Rivers Regional Wastewater Authority. 5) Limited General Obligation Bond Fund (2002) was established to provide for the payment of principal and interest on a $5,695,000 bond issue. The bond proceeds were used as follows: a) City of Castle Rock: sewer improvements; b) City of Kalama: sewer improvements; c) City of Longview: water system improvements; d) Port of Longview, rail expansion; e) Port of Woodland for anchor building; f) Port of Kalama for buildings and a berth; and g) Cowlitz County for building improvements. Funds to pay debt service come from state sales tax, rebated to Cowlitz County. The sales tax credit is designated for public infrastructure to facilitate economic development in rural counties. 6) Limited General Obligation Bond Fund (2003) was established to provide for the payment of principal and interest on a $6,565,000 bond issue. The bond proceeds were passed through to the Cowlitz County Public Facilities District in accordance with an Interlocal Agreement. Proceeds were used to construct a conference center on the Exposition Center grounds in Longview. Funds to pay debt service come from state sales tax, rebated to the Cowlitz County Public Facilities District dedicated to acquisition, financing, design, construction, operation and maintenance of a regional center and related parking facilities as defined by RCW 34

35.57.020. Such sales tax rebate must be matched with an amount from other public or private sources equal to thirty-three percent (33%) of the amount collected by the Public Facilities District. 7) Limited General Obligation Bond Refunding Bond Fund (1998 & 1999) was established to provide for the payment of principal and interest on a $8,565,000 bond issue. The bond proceeds were used to partially refund Limited General Obligation Bonds issued by the County in 1998 and 1999 (see descriptions above). 8) 2006 Special Sewer Revenue Bond Fund was established to provide for the payment of principal and interest on a $13,760,000 bond issue. The bond proceeds were used to pay for construction of improvements to the Wastewater Treatment Facilities owned and operated by the Three Rivers Regional Wastewater Authority and to refund the 1999 Limited General Obligation Bonds.

Bond 1993 Ltd G.O.* 1994 Ltd G.O.*

Table 22 Non-Voted General Obligation Bonded Debt Principal Balance Original Issue Due Date Due 01/2008 $ 235,000 2008 $20,000 $ 1,610,000 2010 $380,000

Principal Balance Owing 03/31/2008 $20,000 $380,000

Partial refunding in 2003

1998 Ltd G.O.*

$ 2,060,000

2018

$100,000

$100,000

Partial refunding in 2005 1999 Ltd G.O.* Rural Development; system charges & user fees; Partial refunding in 2005

$ 9,930,000

2019

$810,000

$810,000

$5,695,000

2024

$4,840,000

$4,840,000

2002 Ltd G.O.** Rural Development

2003 Ltd G.O.** Public Facilities District

$6,565,000

2027

$5,785,000

$5,785,000

2005 Ltd G.O.* Refunding ’98 & ‘99 Subtotal LTGO:

$8,565,000 $34,660,000

2023

$8,305,000 $20,240,000

$8,305,000 $20,240,000

2006 Special Sewer Revenue Bonds*** Totals

$13,760,000 $48,420,000

2025

$13,290,000 $33,530,000

$12,800,000 $33,070,000

*Payments on the bonded debt obligations are made in May (interest only) and November (principal and interest) each year. ** Payments on the bonded debt obligations are made in April (interest only) and October (principal and interest) each year. ***Payments on the bonded debt obligations are made in March (principal and interest) and September (interest only) each year.

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Table 23 Interfund and Other Loans Project Hoffstadt Bluffs

Origination Date 1992 – 1996

Due Date Open

2005-2007 Various

11/30/2020 Various

Loan Principal $3,138,659

Principal Balance Owing 03/31/2008 $1,236,161

$633,000 $ $3,771,659

$633,000 $ $1,869,161

(Capital Improvements)

911 System Upgrade Public Works Trust Fund Totals:

Excludes lease purchase agreements for the telephone system, voting machines, copiers, computers, electronic monitoring equipment, 911 Communications Recording Equipment, etc. 2006 obligation was approximately $___________.

Table 24 Accounts Receivable Account Receivables Fish Recovery Board

Original Receivable $25,000

Principal Balance Owing 03/31/2008 $22,000

Origination Date 04/30/1998

Due Date Open

Various

Various

$

$

Various

Various

$ $25,000

$ $22,000

(account receivable)

District Court Superior Court Clerk Totals:

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Long Term Debt Capacity. Washington State law provides a maximum debt limit for general obligations. Cowlitz County’s debt obligations are well within the statutory limits for debt capacity. There are three types of statutory limits on general debt capacity. The first is a limit on the amount of general obligation that can be incurred without a vote of the people. For this type of debt, a county is limited to 1.5% of its assessed value. In 2007, this limit is $115,544,791. The second statutory limit is the amount of general obligation debt a county may incur for general governmental purposes with a vote of the people. This limit is 2.5% of the assessed value. In 2007, this limit is $192,574,652. The third limit allows a County to incur general obligation debt of up to an additional 2.5% of its assessed value for bond issues approved by the voters for the purpose of utility improvements, parks, or open space development. The two - 2.5% limits provide the County an overall limit of 5%, or $385,149,304.

How Authorized/Uses Non-voted (General Governmental purposes)

Table 25 Long Term Debt Capacity % of Assessed Valuation $$ Limit

LTGO Capacity Used

1.5%

$126,784,114

$20,240,000

2.5%

$211,306,857

$0

2.5%

$211,306,857

$0

Voted (General Governmental purposes)

Voted (restricted uses – utility, parks, etc)

Chart 16 Cowlitz County Non-Voted General Obligation Debt Capacity Debt Capacity Used 17.5%

Debt Capacity Unused 82.5%

The chart above graphically represents the non-voted general obligation debt capacity, both used and unused. The numbers and chart presented above assume bonded debt at 100% of capacity. Note, however, that bond rating agencies and insurers generally recommend utilizing 75% - 80% of capacity. This means that of the $126.8 million which is statutorily available, a debt limit of not greater than $101.4 million is recommended. Utilizing these figures, Cowlitz County has current obligations amounting to 20.0% of its recommended capacity.

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IV. OTHER FUNDS – SUMMARY OF 1st QUARTER ACTIVITY A. Special Revenue Funds Table 26 Special Revenue Funds (By Department) Department Level Expenditure Summary: 1st Quarter 2008 Department Budget Expenditures % Expended Affordable Housing $316,794 150,905 47.6% Auditor’s O&M 470,600 72,978 15.5% Benefits Administration 1,066,937 42,063 3.9% Boat Safety 67,785 3,600 5.3% Building & Planning 2,499,125 340,811 13.6% Community Mental Health 10,736,706 2,101,204 19.6% County Drug Fund 89,073 0 0.0% Cumulative Reserve 195,452 0 0.0% Drug Task Force 1,134,366 127,141 11.2% Geographic Information Services 556,803 78,068 14.0% G.I.S. Operation & Maintenance 41,800 0 0.0% Health Department 3,096,745 561,171 18.1% Human Services 1,218,726 204,438 16.8% Law & Justice 1,076,861 253,450 23.5% Low Income Housing & O&M 796,039 3,351 0.4% Noxious Weed Program 289,900 1,150 0.4% P.A. Victim Witness 333,605 25,811 7.7% Paths & Trails Reserve 226,881 0 0.0% Road Fund 25,226,669 3,099,698 12.3% Stadium/Convention Center 34,066 0 0.0% Storm Water Fund 350,500 18,088 5.2% Superior Court Law Library 165,786 12,345 7.4% Tourism, Facilities, Dev & Marketing 258,619 45,062 17.4% Veteran’s Relief Fund 349,399 9,080 2.6% Grand Total $50,599,237 $7,150,414 14.1%

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Table 27 Special Revenue Funds (By Department) Anticipated Revenues & Actual Receipts: 1st Quarter 2008 Anticipated Actual Department Revenues1 Revenues Affordable Housing $169,500 33,332 Auditor’s O&M 200,600 19,704 Benefits Administration 248,000 206,974 Boat Safety 53,432 0 Building & Planning 2,499,125 832,344 Community Mental Health 9,998,099 2,624,591 County Drug Fund 12,600 3,603 Cumulative Reserve 151,000 26,323 Drug Task Force 635,318 201,548 Geographic Information Services 378,290 3,228 G.I.S. Operation & Maintenance 5,800 658 Health Department 2,775,382 771,195 Human Services 944,691 182,138 Law & Justice 820,000 185,295 Low Income Housing & O&M 400,225 147,208 Noxious Weed Program 151,900 17,405 P.A. Victim Witness 133,030 27,859 Paths & Trails Reserve 66,881 15,046 Road Fund 22,876,669 2,120,287 Stadium/Convention Center 28,000 3,687 Storm Water Fund 338,500 399 Superior Court Law Library 55,630 14,737 Tourism, Facilities, Dev & Marketing 240,587 27,010 Veteran’s Relief Fund 110,230 10,578 Grand Total 1

$43,293,489

Excludes Beginning Fund Balance (reserved & unreserved)

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$7,475,149

% Collected 19.7% 9.8% 83.5% 0.0% 33.3% 26.3% 28.6% 17.4% 31.7% 0.9% 11.3% 27.8% 19.3% 22.6% 36.8% 11.5% 20.9% 22.5% 9.3% 13.2% 0.1% 26.5% 11.2% 9.6% 17.3%

B. Enterprise Funds Table 28 Enterprise Funds (By Department) Department Level Expenditure Summary: 1st Quarter 2008 Department Budget Expenditures 911 Communications $2,830,570 $597,086 911 Communications Claims Reserve 174,365 4,890 911 Communications – Equipment Reserves 1,030,464 0 911 Communications - Radio Replc Project 466,669 45,751 Conference Center 868,603 252,552 Emergency Management 379,095 61,209 Emergency Management Special Projects 43,267 83 Expo Center 539,792 63,257 Expo Reserve – Pigeon/Horses 19,164 0 Law Enforcement Records 1,302,871 264,251 Law Enforcement Equipment Reserve 129,622 0 Solid Waste Post Closure Unlined Landfill 875,585 15,085 Solid Waste Equipment, Land, Facility 16,633,454 20,481 Solid Waste Landfill Closure 4,313,259 0 Solid Waste Maintenance 5,049,950 447,969 Solid Waste Post Closure Lined Landfill 4,863,158 0 Water Sewer Maintenance 1,443,365 206,048 Water Sewer C.I.P. 1,429,296 39,644 Grand Total

$42,392,549

40

$2,018,306

% Expended 21.1% 2.8% 0.0% 9.8% 29.1% 16.1% 0.2% 11.7% 0.0% 20.3% 0.0% 1.7% 0.1% 0.0% 8.9% 0.0% 14.3% 2.8% 4.8%

Table 29 Enterprise Funds (By Department) Anticipated Revenues & Actual Receipts: 1st Quarter 2008 Anticipated Actual Department Revenues1 Revenues 911 Communications $2,630,570 $597,086 911 Communications Claims Reserve 43,357 4,890 911 Communications Equipment Reserve 111,778 0 911 Communications - Radio Replc Project 313,796 45,751 Conference Center 847,450 252,675 Emergency Management 286,210 61,325 Emergency Management Special Projects 6,600 83 Expo Center 501,048 63,257 Expo Reserve – Pigeon/Horses 816 0 Law Enforcement Records 1,028,082 264,251 Law Enforcement Records Equipment Reserve 44,112 0 Solid Waste Post Closure Unlined Landfill 138,585 15,085 Solid Waste Equipment, Land, Facility 2,883,454 20,481 Solid Waste Landfill Closure 499,759 0 Solid Waste Maintenance 4,949,950 447,969 Solid Waste Post Closure Lined Landfill 448,158 0 Water Sewer Maintenance 1,308,065 205,013 Water Sewer Reserve C.I.P. 609,296 39,644 Grand Total $16,651,086 $2,017,510 1

Excludes Beginning Fund Balance (reserved & unreserved)

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% Collected 22.7% 11.3% 0.0% 14.6% 29.8% 21.4% 1.3% 12.6% 0.0% 25.7% 0.0% 10.9% 0.7% 0.0% 9.0% 0.0% 15.7% 6.5% 12.1%

C. Internal Service Funds Table 30 Internal Service Funds (By Department) Department Level Expenditure Summary: 1st Quarter 2008 Department Budget Expenditures Central Services $3,500,595 $309,159 Election Capital Reserve 232,258 0 Election Reserve 709,684 129,644 Equipment Rental & Revolving 4,938,875 916,860 Industrial Accident Insurance 533,708 96,009 Motor Pool 3,735,250 359,637 Purchasing Services 600,493 121,275 Risk Management 2,225,828 84,845 Unemployment Compensation 392,861 0 Grand Total

$16,869,552

$2,017,429

Table 31 Internal Service Funds (By Department) Anticipated Revenues & Actual Receipts: 1st Quarter 2008 Anticipated Actual Department Revenues1 Revenues Central Services $1,912,073 $193,822 Election Capital Reserve 46,258 13,408 Election Reserve 619,684 123,761 Equipment Rental & Revolving 2,308,875 486,891 Industrial Accident Insurance 412,404 400,487 Motor Pool 1,735,250 502,125 Purchasing Services 507,400 169,880 Risk Management 1,125,555 11,111 Unemployment Compensation 59,804 2,702 Grand Total $8,727,303 $1,904,187 1

Excludes Beginning Fund Balance (reserved & unreserved)

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% Expended 8.8% 0.0% 18.3% 18.6% 18.0% 9.6% 20.2% 3.8% 0.0% 12.0%

% Collected 10.1% 29.0% 20.0% 21.1% 97.1% 28.9% 33.5% 1.0% 4.5% 21.8%

D. Trust/Agency Funds Table 32 Trust/Agency Funds (By Department) Department Level Expenditure Summary: 1st Quarter 2008 Department Budget Expenditures Lexington Flood Control $1,099,984 $18,561 Lexington Flood Control – Bond Debt Service 49,900 24,902 Drain # 1 Maintenance 695,286 83,182 Grand Total

$1,845,170

$126,645

Table 33 Trust/Agency Funds (By Department) Anticipated Revenues & Actual Receipts: 1st Quarter 2008 Anticipated Actual 1 Department Revenues Revenues1 Lexington Flood Control $489,984 $34,679 Lexington Flood Control – Bond Debt Service 49,900 0 Drain # 1 Maintenance 273,619 23,938 Grand Total $813,503 $58,617 1

Excludes Beginning Fund Balance (reserved & unreserved)

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% Expended 1.7% 49.9% 12.0% 6.9%

% Collected 7.1% 0.0% 8.7% 7.2%

Appendix A Explanation of Revenue Categories

Taxes

Miscellaneous Revenues Interest Earnings Coffee Shop Concessions Park Fees Private Donations Miscellaneous

Real & Personal Property Taxes Diverted County Road Taxes Timber Harvest Sales & Use Tax Leasehold Excise Tax Gambling Tax Licenses & Permits Landfill Fees Land Use Permits Building Permits Special Use Permits Marriage Licenses

Non-Revenues Transfers from other Funds

Intergovernmental Services Federal Reimbursements & Grants State Reimbursements & Grants Local Agency Fees

Other Financing Sources Timber Sales - DNR Sale of Capital Equipment

Charges for Services Filing Fees Recording Fees Xerox Charges Offender Services Probation Fees Deferred Prosecution Fees Drug Court Participant Fees Board/Room Prisoners – cities, state, INS Plan Checking Fees Fines & Forfeits Civil Penalties Criminal Fines Juvenile Fines Traffic Fines Parking Fines

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Appendix B Explanation of Expenditure Categories

Direct Labor Salaries for full-time employees

Repairs & Maintenance Cost of repairs & maintenance agreements

Extra Help Wages for other than full-time employees

Other Miscellaneous Copies, dues & subscriptions, printing, fire protection, jury & witness fees

Other Pay Pay such as overtime, holiday, differential

Interfund Charges Technology & Motor Pool charges

Personnel Benefits Medical Insurance, retirement and social security

Capital Outlay Furniture & equipment with a cost greater than $5,000; building improvements, construction

Supplies Office supplies, food, drugs, software, small tools

Transfers Agency contributions such as DEM, Records, 911, Central Services, Drug Task Force, Human Services, Health Department, Expo, Elections, GIS

Contracts Professional services, including attorneys

Other Agency Support Outside Agency contributions such as COG, EDC, Airport, Soil Conservation, DNR, charges for fire protection

Communications Telephone, pagers, etc.

Miscellaneous Advance for premium expense for the Expo, other miscellaneous expenses

Travel Meals, lodging, mileage, tuition, registration, Airfare, etc. Advertising Public notices and advertisements Operating Rentals/Leases Rents and equipment leases Insurance Liability, automobile and property insurance costs Utilities PUD, city utilities and natural gas

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