Island County is facing an additional $1 million budget shortfall, even after cutting 31 jobs to plug a $2 million hole during difficult budget sessions late last year.

More layoffs are nearly inevitable, county Budget Director Elaine Marlow said.

“The board is going to have to reduce the budget somehow, the question is to what level,” she said in an interview Tuesday.

Marlow invited department heads to attend a special staff session with county commissioners Tuesday afternoon. The news was grim. The county’s revenue from interest on investments will be $1 million less than what was estimated in the 2009 budget.

County Treasurer Linda Riffe is charged with investing county funds and estimating interest revenue. Making the projection was very difficult because of the volatility of the market.

Riffe said she keeps as much as $63 million invested at one time. She estimated $1.8 million in interest revenue for 2009, but she said current rates have dropped to a mere 0.3 percent.

“I gotta tell you, I have a huge know in my stomach right now,” she told the crowd of county officials.

Sales tax will also be below projections, Marlow said, but she’s unsure of the numbers so early in the year. And there’s a likelihood that the state’s budget cuts will “trickle down” to Island County, she added.

Last year, commissioner had to trim $2 million, or nearly 10 percent, of the general fund budget because of the projected drop in sales tax and interest on investments. A total of 31 jobs were cut, though many were through attrition.

Tuesday, Prosecutor Greg Banks urged the county commissioners to act quickly to either make cuts or make the decision to spend reserves.

“I am very concerned,” he said. “The longer we wait, the more people we have to layoff or the more we have to dip into the fund balance.”

Marlow suggested that as many as 20 positions may have to be cut this time around.

“If you let it go until June, that’s 40 positions,” Banks countered.

Yet Marlow suggested that the new board of commissioners should take time to meet with all department heads to explain what their departments do, as well as their priorities and mandates, before diving into specifics about budget cutting. She pointed out that state lawmakers won’t finish their budget for two or three more months, so the county won’t know the full extent of the budget hole until then.

“When you start talking about money, the conversation changes,” she said.

Human Resources Director Larry Larson thanked the commissioners for including other officials in the budgeting process. He said some people were upset last year when the commissioners made decisions about budget cuts “in a vacuum.”

Several officials referred to the situation as a “crisis.” The commissioners urged officials to share any ideas for saving money.

Commissioner Angie Homola said the board may have to consider creating or increasing fees, but she said it’s important that the citizens are educated about how wisely the county uses its resources.

“Philosophically we have to be prepared for a totally different county at the end of the year…” Island County Commissioner John Dean said. “As Americans, we are not prepared for something like this.”

Commissioner Helen Price Johnson warned that the recession at the heart of the budget trouble will have a long-lasting impact.

“The trouble is too deep,” she said. “We have to be ready to create a system that can endure at this level.”

Marlow said the county has a fund balance — the money left over from the previous year — but she won’t know how big it is until the auditor does the books later in the year. The county also has a $2.2 million reserve for emergencies.