Lacey staff present $224.6 million 2026 budget balanced with just over $3 million from reserves

City of Lacey staff on Monday presented a proposed 2026 budget of $224,608,566 to the City Council and said the plan is balanced by using just over $3,000,000 in reserves while preserving existing services and funding planned capital projects.

The proposal, which staff described as the second consecutive budget balanced using reserves, funds about 342.5 full‑time equivalents and would continue operations for a community the presentation said has an estimated 2025 population of about 60,380. Staff recommended continued public hearings and workshops before the council takes final action on the budget at its Dec. 16 regular meeting.

Staff said the budget was developed amid flattening sales tax receipts, slowing development activity and national inflationary pressures. To address those pressures, staff outlined a three‑pronged strategy: explore targeted revenue options authorized by state law, invest in long‑term economic development to expand the tax base, and pursue expenditure reductions and prioritization ahead of the 2027 budget.

Key numbers and context - Total proposed budget: $224,608,566. Staff said the proposal is balanced using just over $3,000,000 from reserves. - General fund: $74,344,285 (staff said this is about $14.5 million lower than 2025, largely because of timing of capital project transfers). - City workforce: about 342.5 FTEs overall; general fund supports about 276 FTEs. - Population and built environment: staff said Lacey serves roughly 60,380 people, about 26,000 housing units, 1,200 acres of parks and 185 street centerline miles; the city has roughly 1,500 businesses and about 15,700,000 square feet of commercial/industrial space.

Revenue pressures and development pipeline Staff showed month‑over‑month declines in retail sales tax for most of 2024 and into early 2025, then modest improvement in spring 2025. That flattening of sales…