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Thurston County managers outline biennial budget shortfall; board directs department targets and revenue options
Summary
County managers told commissioners the general fund faces roughly a $36 million shortfall driven by a projected $160 million in expenditures versus approximately $124 million in revenue; the board has identified $17.2 million in revenue/capacity options and additional expense reductions to balance the 2026 preliminary budget, with further work on
Olympia, Wash. — Thurston County managers briefed the Board of County Commissioners at the Oct. 1 work session on progress toward closing a projected general-fund shortfall and the next steps for building a balanced biennial budget for 2026–27.
County Manager Leonard Hernandez told commissioners, "we started with acknowledging the deficit of 36,000,000 based on ... the forecast and the expenditures," and outlined the board’s multi-part approach to close the gap: across-the-board reductions, targeted restorations, and revenue and capacity measures.
Why it matters: The county’s projected budget shortfall affects departmental services and staffing across county government. The board’s decisions will influence spending levels, service delivery and potential future requests to the electorate or the state.
Scope of the gap and board strategy: County staff presented a maintenance-level expenditures estimate of roughly $160 million and projected general-fund revenues near $124 million, producing a gap of about $36 million. To address that shortfall, commissioners and staff pursued a combination of measures rather than a single revenue increase.
Key elements described in the briefing included: - An initial across-the-board reduction exercise that equated to a 26% set of adjustments applied in staff modeling. - A package of revenue and capacity options and other actions totaling approximately $17.2 million (described by staff as a "win list"). - Additional expense cuts under review totaling about $2.3 million. - A board proposal to spread $10 million of identified options across offices and departments to reduce the across-the-board burden, bringing the effective reduction closer to an 18% target across departments after adjustments. - A targeted restoration proposal (the chair’s proposal) of approximately $9.7 million to partially reinstate some reductions; staff said the combination of the measures produced a preliminary balanced general-fund budget near $125 million for 2026.
Staff and commissioners cautioned that many items remain in draft form and the budget is a moving target. Budget staff (identified in the transcript as Summer) said staff are continuing to verify revenue realizations and expense adjustments and will present a detailed breakout of the $17.2 million and other line-item changes at the board’s next meeting.
Future-year risk: Staff additionally warned of a continuing structural challenge into 2027. Summer said the projected shortfall in 2027 was still about 9% — roughly $13.5 million — and that the county would continue to pursue revenue improvements and targeted reductions to manage the later-year gap.
Commissioner questions and next steps: Commissioners asked for a detailed rollup of the items that make up the $17.2 million and the additional $2.3 million in expense reductions so each member could update personal calculations. Staff said they will return to the board on Tuesday or Wednesday of the following week with updated targets and a more detailed breakout.
Ending: The board did not take final budget votes at the Oct. 1 work session; staff will return with updated, itemized figures and recommended targets for departments next week to support preparation of the preliminary budget for 2026–27.
