Thurston County budget team warns of widening general‑fund shortfall; commissioners discuss cuts and levy options

Thurston County budget staff on Aug. 27 told commissioners the county faces a structural shortfall that requires both expenditure reductions and new revenue options to reach a balanced 2026–27 biennial budget.

Summer Miller, agent and finance manager in the commissioners’ office, presented five‑year projections that show revenues flattening while expenditures rise. Miller cited key drivers including collective bargaining increases, internal service rate adjustments, new public‑defense caseload standards and inflationary pressures. She said the county’s previous fund‑balance “blip” after the pandemic was driven in part by ARPA lost‑revenue calculations but that projections now show a growing deficit.

Miller said the county has adopted $36 million of reductions for 2027 as part of the planning model but that, on current assumptions, an estimated 25% reduction is required for 2026 to reach balance. She also told the board about vacancy savings (roughly $6 million available in current vacancies) and urged departments to conserve discretionary spending for the remainder of 2025 so the county can finish the year with adequate operating reserves.

The briefing summarized two revenue options the board asked staff to analyze: a levy lid‑lift and the local sales‑and‑use tax option authorized by House Bill 2015. Staff described the difference between a one‑time (temporary) lid lift, a single‑year permanent reset and a multiyear permanent measure and noted timing constraints: approval steps, assessor calculations and statutory deadlines mean any levy plan requires several months of planning before a ballot.

Staff presented illustrative scenarios using current assessed valuations: the county’s current net levy rate was described as roughly $0.82 per $1,000 of assessed value (after road levy shifts and earmarks). Under staff estimates a $1.27 rate would generate roughly $31–33 million in additional annual revenue and a $1.80 rate would generate roughly $67 million; staff showed the corresponding tax impact on a $500,000 home.

Miller recommended that, if the county pursues the House Bill 2015 sales tax option, the board consider directing proceeds to the public‑defense caseload standard unless the state or courts provide funding. She said CJTC guidance and an application process exist but are not yet open and that administrative details remain to be confirmed.

Commissioners debated operational approaches. Commissioner Wayne Fournier moved a staff‑recommended package intended to pause new budget requests that would increase general‑fund obligations through the end of 2025, impose a hiring freeze and restrict nonessential travel and training; Fournier later withdrew the motion after discussion and asked staff to refine the proposal in response to questions about definitions and process. Commissioners raised points about the effect of grant‑funded positions, how to treat departments that bring revenue in non‑enterprise funds and the need to consult elected offices before adopting blanket hiring freezes or program suspensions.

Miller said the budget team will deliver targets to departments and begin a focused exercise to quantify operational impacts; staff recommended quarterly reporting of actual spending and monthly analyst‑to‑program check‑ins for the remainder of the year. County Manager Leonard Hernandez and commissioners stressed that the exercise is intended to preserve operating cash through year‑end and to provide specific impact analyses before any final policy decisions.

No final board action to adopt a hiring freeze or cut package was taken on Aug. 27; commissioners asked staff to return with refined proposals and additional detail on other‑fund revenues, position funding mixes and assessor scenarios for levy options.