Yelm finance staff outlines revenue forecast, explains "banked" 1% property-tax capacity; public hearings set

YELM, Wash. — City finance staff presented the citywide revenue picture for fiscal 2025 and preliminary assumptions for 2026 at the Sept. 23 Yelm City Council meeting, explaining how the city’s unused 1% property-tax capacity can be “banked” for future use and announcing required public hearings on the mid-biennium budget amendment and property tax.

The presentation, given by Stephanie (staff member), included year-end estimates for sales and other routine taxes, a breakdown showing the city’s share of the overall property-tax levy, and an explanation that the city may decline the annual 1% increase and reserve that capacity for later use. Stephanie told the council the first public hearing on the property tax and mid-biennium budget amendment will be Oct. 14, a second hearing will be Nov. 12, and adoption of the ordinances is scheduled for Nov. 25.

The session matters because the city’s revenue forecasts and levy decisions determine how much money Yelm can draw from property taxation and other recurring sources to pay for services. Council members pressed staff for clarity on how levy rates move when assessed values change and how much unused levy capacity the city currently holds.

Stephanie said sales-tax receipts (excluding the public-safety sales tax) were estimated at about 3,200,000.0 for the year and that the city was “pretty much right on target” with what it levied for 2025. She explained that the public-safety sales tax, added more recently by voters countywide and earmarked for police, was “estimated about 4.25 this year” (figure reported as spoken in the meeting). She also noted the city had not yet received certified assessed values from the Thurston County assessor for 2026 and used a placeholder value of 1,900,000.0 in the presentation.

Council members asked several technical questions. Council member Hesse asked whether the city receives any revenue from cable or broadband providers; Stephanie said the city receives telephone taxes and utility taxes from Puget Sound Energy but did not list a separate state-shared revenue for broadband. Council member Erlick asked whether “banked” capacity accrues interest; Stephanie said it does not. Council member Johnstone and others sought clarification on why the city’s per-thousand levy rate fell from $1.45 to about $0.98 between 2024 and 2025; Stephanie explained that the city's levy amount held steady while assessed values increased, producing a lower per-thousand rate.

Stephanie flagged some revenue uncertainties: the business-and-occupation (B&O) tax was trending downward in 2025, in part because Rite Aid closed; the city is tracking whether new incoming businesses will offset that shortfall. She also said intergovernmental revenues and grants fluctuate and are not guaranteed.

On process, Stephanie reviewed options for cities that need additional revenue: use banked levy capacity, pursue a levy-lid lift, or, if capacity is exhausted and no lid lift is pursued, cut services. She said Yelm’s current levy is well under the $1.50 per-thousand cap that applies to cities, noting the city was “only at, like, 98¢” per thousand in the most recent levy calculation.

City staff will bring updated numbers after the county assessor transmits certified assessed values; the council will consider those numbers at the Oct. 14 hearing before discussing expenditures in more detail.

Council members and staff emphasized that the hearings are required by state law and are part of the mid-biennium budget amendment process. The council did not take a final budget or levy vote on Sept. 23; instead, the meeting set the hearing schedule and sought additional data for the upcoming sessions.

Details from the presentation and follow-up questions are available in the meeting record.