Washington County may be looking at a deficit during the spring budget season, with one local elected official calling it the worst situation the county has faced for many years.
During a board of supervisors meeting last week, the county finance team said the county could face a $1.7 million deficit while looking at the next fiscal year’s budget, which covers July 2027 through June 2028. Revenues are not expected to increase to match some rising expenses when it comes to schools and cost-of-living wage increases, according to Kendall Williams, the deputy finance director.
“There’s still many things we don’t know,” Williams said during the meeting. “But I’m afraid we have a challenging budget season ahead.”
The county would not typically review its forecasted budget until early 2027, but this kind of imbalance needs to be addressed early, she said. The county is currently operating with a $206 million budget this fiscal year.
‘This is the worst’
There will likely be an additional $1 million needed for the school system, Williams said, based on what’s required of the county to match state funding. Any additional changes to the school funding the county may receive from the state are up in the air, Williams said, but could amount to over $1 million more in losses. That will make up the bulk of the expenses expected to put the county over its budget.
Cost-of-living raises for county employees will cost an extra $400,000, and operations for a new emergency medical services station in Glade Spring add another $400,000 in new expenses. The county also needs to pay out $250,000 worth of economic incentive grants in the next fiscal year.
A grant placing one additional school resource officer in each high school also ran out during the last fiscal year and was funded through extra rollover money this fiscal year. Now, the county must find $356,000 if it wants to continue to fund those four officers, Williams said.
After factoring in freed-up money now that a school construction bond has been paid off, all of those added expenses will still make up a deficit — and that’s before considering what departments will request in additional funds next year, she said.
The finance team is operating under the assumption that county revenues will not show significant growth, she said. About half of county revenues come from state money, and a quarter come from property taxes, according to the current fiscal year budget.
“At this time, I’m not seeing any major increases,” Williams said. “For once, I hope I’m wrong.”
According to the presentation, the county has three options to address the deficit: find ways to bring in more money, make cuts or dip into its reserve fund to make up the difference.
Previous budget cycles have already gone through major cuts, Williams said, and further reductions could hurt county operations.
“All the years I’ve been on the board, this early, this serious — yeah, this is the worst,” Supervisor Saul Hernandez said during the meeting, referring to the county’s financial situation.
The board directed County Administrator Jason Berry to start looking at options for new revenue streams and to also look at the most feasible cuts to bring back to the supervisors. Some suggested different ways of saving enough this fiscal year to roll over more money to the next, like freezing department discretionary spending — flexible pools of money typically allocated to events, community grants and other initiatives.
“That would probably only be temporary Band-Aids to fix some of these increases in expenditures,” Berry said during the meeting.
Courthouse repairs
For the first time in 20 years, the county will likely be unable to add money to its reserve funds, Berry said during the meeting. The primary reason for that is unexpected costs for mold remediation at the county courthouse.
The courthouse closed in late August for three weeks following air quality tests that revealed high amounts of black mold and other fungus in courtrooms, judges’ offices, jury rooms and lobbies. The county contracted with Bristol-based restoration company BELFOR to fog and clean the building, and it reopened Sept. 14 with air quality tests showing mold levels had dropped.
Still, Chief Judge Deanis Simmons wrote to Berry in mid-September emails obtained by Cardinal News that humidity levels remained high, calling conditions “unacceptable” and “miserable.”
Berry said during the meeting that the county found a leak in the courthouse roof, and he asked the board to approve emergency expenses to fix it. He also asked the board to approve buying three new HVAC units to replace old ones in the courthouse.
The leak combined with an especially humid and rainy year likely caused the mold, Berry said by phone after the meeting. The old HVAC units are in working order, but they’re not as efficient as they could be, Berry said, and to prevent another expensive courthouse closing due to environmental factors, they should be replaced, he said.
“It’s just time,” he said.
The courthouse underwent a three-year renovation and expansion that wrapped up in mid-2025, costing about $28 million. It added new courtrooms and was meant to improve the security of the building and improve disability access. One HVAC unit was replaced as part of the project, Berry said.
The original courthouse building was constructed in the late 1860s and is part of the Abingdon Historic District, which is on the National Register of Historic Places.
So far, BELFOR has invoiced the county for $425,000 for the mold cleanup. The HVAC units and the roof replacement will cost about $220,400. A sidewalk replacement due to damage from a waterline break also adds about $20,000.
Berry is expecting another, final invoice from BELFOR for 72 dehumidifiers in the building that are costing about $175 a day, plus expenses from sending courthouse records to Texas for cleaning.
All told, it will put costs north of $1 million, he said. The board approved about $2.7 million for the courthouse specifically, across both a contingency fund and a facilities improvement fund. He is waiting to see what the final cost will be, and if there are leftover funds, he’ll bring those back to the board so it can decide what to do with them, Berry said by phone.
“If the mold issues at the courthouse and all this remediation didn’t occur, the board would likely be able to put away money in reserve funds,” he said. “Now, I’m not saying they can’t do it in the future. It all depends on how much we have to pay. But it’s trending to where it’s very likely they may not put any money in the reserve fund.”
The reserves operate as a rainy day savings fund, sometimes used for emergency expenses, major construction and repairs, or a buffer against big drops in revenue. Typically, county governments try to add extra savings to the fund every fiscal year.
Bond rating agencies also look at whether the county is adding to its reserves each year, Supervisor Dwayne Ball said during the meeting. Ball is currently the board chair.
“That’s where it’s really going to hurt us,” Ball said. “That’s where it’s really troubling.”
Washington County currently maintains an AA+ issuer default rating from Fitch.
