Commissioners approve revised 2026'2027 budget calendar as county confronts multi-million-dollar general fund gap

Thurston County budget staff told commissioners on Aug. 13 that the county faces a structural general fund shortfall driven by weaker-than-expected revenue performance and rising expenditure pressures, and the board approved a revised budget development calendar to guide planning for the 2026'2027 biennium.

Budget presentation highlights: Summer Miller, budget and finance manager, said the county's adopted 2025 expenditure budget exceeds anticipated revenues by approximately $22 million as of Amendment 2, creating a structural deficit. The team presented a five-year fund-balance forecast and said conservative revenue assumptions and several known expenditure drivers are worsening the outlook for 2026 and 2027.

Specific drivers cited by staff included lower-than-projected property- and sales-tax receipts, one-time revenues in prior years that are no longer available (including certain other revenues and ARPA-related transfers), ratified collective bargaining agreements with multi-year cost implications, updated internal service rate estimates and the potential costs tied to implementing the public defense caseload standards described earlier in the meeting.

Fund balance and scenarios: Staff presented three year-end 2025 fund-balance scenarios: optimistic about $15.8 million, a realistic estimate near $13.0 million and a pessimistic estimate around $10.6 million. Staff said the county's monthly operating cushion is roughly $12 million now and could be nearer $13 million in 2026 depending on year-end results. The budget team warned that without corrective action the county would deplete reserves over time.

Reduction targets and next steps: Staff calculated that targeted reductions in the 2025 operating budget could range from roughly 3% (reflecting typical reversions) to as much as 9% depending on revenue outcomes. They also presented a scenario in which a larger one-time reversion (about 25% of 2026 operating expenses in the county's model) would reduce the projected 2026 expenditures but still leave sizable reductions necessary in 2027. The budget team said they will return with department-level reduction scenarios and requested authority to move the budget calendar forward and to permit limited manager-level adjustments to the calendar as needed.

Board action: The board voted to approve a revised 2026-2027 budget development calendar that incorporates amendments related to the 2025 fiscal year and delegated authority to the county manager to accept further calendar revisions if necessary. The motion passed with three ayes and one abstention (Commissioner Rachel Grant abstained because she said she had not had sufficient time to review the updated calendar materials). The transcript recorded the outcome but did not identify the motion maker or seconder by name.

Why it matters: Staff emphasized that the county cannot rely indefinitely on fund balance to cover ongoing expenditures and that revenue growth assumptions must be reconciled with spending plans. Commissioners asked for line-item breakout detail of projected cost increases (COLAs, contracts and other drivers) to inform possible revenue options and spending-containment measures.

Ending note: Budget staff said they would follow up with department-level impact analyses, publish the detailed calendar and return to the board quickly with options for reductions and more granular line-item detail.