Thurston County staff warn of multi‑year shortfalls; ask commissioners to consider pausing new general‑fund additions

Thurston County staff warned the Board of County Commissioners on Sept. 3 that projected revenue growth is not keeping pace with expenditures and asked the board to consider a motion next week to suspend new general‑fund additions for fiscal year 2025 while departments prepare reduction plans.

The request — presented at a commissioners check‑in by county staff including the planning manager and budget team — follows a forecast showing modest property‑tax growth, slow sales‑tax recovery and a one‑time jump in 2024 driven largely by interest earnings on bond proceeds. The package presented to the board estimates the county’s general fund at about $146–147 million, all other funds at about $530 million, and a combined total near $677 million.

County staff said the proposed motion would be similar to past biennial actions and would direct that no new positions, reclassifications or other additions that increase general‑fund expenditures be added to the 2025 budget unless already budgeted. "We'd like the board to consider a motion to suspend fiscal year 2025 request[s] from general fund additions, positions, or reclasses that have an additional general fund expenditure impact that have not already been budgeted for," the planning manager told commissioners.

Why it matters: staff said the county’s fund balance has declined and the budget office projects tight monthly cash positions in 2026. Staff flagged a March cash low that would fall "just above $1,000,000" under current projections before revenues rise later in the year. The board’s existing budget policy sets a goal of a two‑month operating reserve; staff noted the county is currently below that target and the policy requires a balanced budget if the reserve target is not met.

Key points from the presentation

• Forecasting approach: Budget staff described the inputs used for the forecast, including historical actuals, year‑over‑year trends, program‑level revenue assumptions, and state economic publications from the Economic and Revenue Forecast Council and the Washington Office of Financial Management.

• Revenue outlook: Property‑tax growth was described as averaging about 3% when excluding outliers; sales tax is projected to grow by no more than about 1.5% over the next two years unless economic conditions improve. Staff noted a roughly $8 million 2024 increase tied to interest on bond proceeds that is not expected to recur.

• "All other" revenues: That category (gambling tax, criminal justice/public safety revenues, leasehold excise tax, permits, intergovernmental revenues, fees, fines and investment earnings) was described as volatile; staff expect a correction in 2025 after stronger 2024 interest earnings and projected stabilization near 2% in 2026–27 once one‑time items are stripped out.

• Department and fund detail requests: Commissioners asked staff for more granular data. Commissioner Grant requested Excel tables showing specific line items now aggregated under "all other" (examples cited: criminal justice/public safety, timber excise tax, license and permit fees). Chair Ty Mentzer and others asked for department‑level totals that combine general fund and other funds so the board can see which departments receive the largest shares of county funding.

• Annexation analysis: Commissioner Grant asked staff to include potential impacts from a proposed annexation by the City of Lacey (and a possible Yelm effect) in the revenue assumptions; staff said annexation would likely affect sales tax more than property tax and that the county will work with Lacey and the assessor to analyze impacts, possibly with consultant support.

• Reduction planning and schedule: Targets were distributed to departments; staff requested reduction proposals be returned to the budget office by end of day Sept. 10. The biannual budget review schedule presented to the board included a first review Oct. 1, second review Oct. 15, a public hearing Dec. 2, final deliberations Dec. 3 and budget adoption on Dec. 16. Staff told commissioners they plan to meet individually with departments to quantify service loss and impacts from potential reductions.

• Requests on hiring and commissioner office budget: One commissioner asked for consideration next week of pausing hiring in the commissioners’ office and asked the county manager to bring a proposal outlining that office’s budget and any planned vacancies.

What staff did not decide: No formal motion was made or voted on Sept. 3. Staff requested the board’s consideration next week of the suspension motion but did not record a board vote during the check‑in.

Quotes

"We'd like the board to consider a motion to suspend fiscal year 2025 request[s] from general fund additions, positions, or reclasses that have an additional general fund expenditure impact that have not already been budgeted for," Planning manager said during the presentation.

Chair Ty Mentzer summarized the county’s existing policy context: "We set that upper line, which is a 2‑month operating reserve," noting the policy was established as a best practice and that current projections have triggered the policy’s requirement to balance the budget if the reserve target is not met.

Next steps and outlook

Staff will collect reduction proposals by Sept. 10, schedule department‑level briefings with the board (tentatively around Sept. 17), and return with recommended actions during October through December budget reviews. Commissioners asked for more detailed, tabular data (Excel) breaking out the "all other" revenue components and department‑level totals across all funds. No formal policy or hiring freeze was adopted at the Sept. 3 check‑in; action is expected to be considered at a future meeting.