City reports biennium revenue gains, notes 2024 sales-tax dip; 2025 collections monitored

Troy, representing the city's finance department, gave the Budget and Finance Committee a year-in-review for the 2023–24 biennium and an update on 2025 year-to-date numbers on March 28.

Troy said overall general fund revenue for 2023 exceeded budget by about 11% and 2024 exceeded budget by about 10%, figures he attributed to conservative budgeting in 2022 when a recession had been anticipated. "Overall, we were up, budget to actual for 2023, almost 11%," he said. The staff presentation split revenues into major categories and also noted that many smaller revenue line items are aggregated into a miscellaneous category for presentation purposes.

The finance update also compared actual 2023 to actual 2024 and showed sales tax collections fell nearly $1 million from 2023 to 2024, though Troy noted the city had begun receiving a new public safety sales tax in 2024 that is tracked in a separate special revenue fund. "What's not shown on here is in 2024, we started, receiving the public safety sales tax revenue," he said, referring to the Proposition 1 measure in Thurston County; that revenue appears in fund 104 and is not counted in the general-fund sales-tax comparison.

Troy provided a recent remittance snapshot from the State Treasurer: the March remittance was $769,000 (noted as likely representing February business activity). He also warned that reporting lags (state remittance processing) mean monthly figures can lag 30–60 days. For the early 2025 year-to-date figures, he said the city had collected roughly 22.42% of the budgeted sales tax by the end of March, versus 25% of the year elapsed; he described that as not immediately alarming given seasonality (January and February tend to be weak), but said staff would keep watching the trend.

Troy reviewed long-term historical trends for major taxes going back to 2006, highlighting the 2020 spike during the COVID period and the more recent leveling in 2024. He said property tax showed stable growth (helped by new construction), building-permit revenue varies substantially with construction, and miscellaneous revenue saw large spikes during 2020–22 tied to CARES and ARPA federal funding.

Possible responses if revenues weaken: Troy and staff outlined nonexclusive options the city could consider if tax and fee receipts deteriorate, including hiring freezes, delaying projects, cutting positions, or other spending reductions. He said staff will provide monthly reporting and will monitor revenue indicators.

Next steps: Finance staff will present a biannual recap to the full council at a work session in two weeks and will continue monthly updates. Staff declined to characterize the current early-2025 sales-tax shortfall as a crisis, but said they will monitor monthly remittances and report to the committee and council if conditions change.