City Manager John Holman presented the Spokane Valley preliminary 2026 budget to the City Council on Oct. 14, describing a plan that holds recurring revenues slightly above recurring expenditures, preserves a healthy fund balance and channels most new recurring spending to public safety.

Holman said the city’s total projected revenues for 2026 are about $129 million and total expenditures about $134 million, with the gap covered largely by planned drawdowns from reserves for one-time capital projects. “As the preliminary budget shows right now, our general fund recurring revenues exceed our recurring expenditures by about $121,000,” Holman said.

Holman emphasized fiscal policies the council has followed for years: maintain a minimum general fund ending balance of roughly 50% of recurring expenditures and minimize long-term debt. He told the council the city’s ending general fund balance is currently estimated at roughly 60%, and the administration plans to transfer excess to the capital reserve fund for one-time projects.

Public safety is the largest driver of new spending. Holman said dedicated police staffing has increased more than 20% since 2024, producing substantial budgetary effects. The manager listed recent and planned public-safety investments — officer hiring, precinct renovations, vehicle purchases and license-plate readers — and said total police-related costs have grown sharply in recent years. “From 2021 to 2026… when you look at how the police costs have increased, that’s $16,000,000 annually,” Holman said.

Holman said the preliminary budget contains no proposal to use the state-authorized 1% property-tax increase and that the council is not recommending taking that optional increase. He also noted the budget assumes continued leveraging of state and federal grants: staff estimate roughly 70% of capital projects are grant-funded. Holman highlighted major transportation projects included in the CIP, including the Pines Road grade separation (groundbreaking scheduled later this week), the Sullivan/Trent interchange and Barker I-90 corridor work.

On revenue sources, Holman reminded the public that the city receives only about 8% of total property-tax bills and less than 1% of statewide sales-tax collections, emphasizing the limits of local discretion. He also warned of challenges: dependence on sales tax, regional cooperation disruptions (notably emergency communications), higher construction costs from state climate and energy rules, and rising public-safety-related system costs (courts, detention and prosecutions).

Staff proposals include modest fee adjustments for building and engineering permits to improve cost recovery, and continuation of contracted service models for some specialized public works equipment. Holman said staffing levels remain unchanged in the preliminary budget at 118.25 FTEs and that the city will continue to evaluate staffing needs across future budget cycles.

Council members asked clarifying questions at the end of the presentation and were reminded that the budget will return for additional readings; Holman said there are multiple future opportunities for comment and formal budget adoption steps this fall and winter.

Ending: Holman told the council the budget maintains strong reserves and is positioned to fund capital priorities while absorbing the significant, ongoing costs of expanded public-safety operations. Council will consider the first reading and more detailed line items in subsequent meetings.