City manager outlines preliminary 2026 budget assumptions; ARPA wind-down and police reconciliation are key drivers

The Newcastle City Manager presented preliminary assumptions for the 2026 budget at the Sept. 7 council meeting and highlighted several major drivers the council should expect as staff prepares the preliminary budget later this month.

Key points: The city expects to present a balanced general-fund forecast for 2026 with a modest surplus or shortfall in the $80,000–$90,000 range; federal ARPA funds must be spent by Dec. 31, 2026, and staff plans a final transfer from reserves; 2026 will be the first full year of the city’s admissions tax revenue; and the city anticipates reconciliation payments from King County for police staffing shortfalls.

Why it matters: Those items materially affect the general fund and multi-year forecasts. ARPA (American Rescue Plan Act) carryover, changes to PERS employer rates, and payments tied to the contract policing reconciliation will change operating balances over the next several budget years.

Details from the presentation: The city manager told council that 2026 will be the final year city staff can obligate ARPA funds and that the city will transfer ARPA money from the cumulative reserve fund into the general fund for one-time uses. The…