Tacoma budget officer: $21 million reappropriation planned as 2024 gains driven by one‑time transfers

Interim Budget Officer Reed Bennion told the Tacoma City Council Committee of the Whole on May 6 that year‑end 2024 general‑fund revenues exceeded budget by nearly $20 million but that much of the gain came from one‑time transfers that will not recur. Bennion said council will see a budget‑modification ordinance on May 13 to reappropriate money and to carry forward obligations into the 2025–26 biennium.

Bennion said the general fund ended 2024 with revenues of about $333 million and expenses of about $325 million, producing an approximately $7.5 million contribution to fund balance before reappropriation. He said the single largest positive variance was “miscellaneous revenues,” driven largely by a transfer from the American Rescue Plan Act fund and by the closeout of a Union Station bond fund after the city sold Union Station to the federal government in 2022. “ARPA is done and so that money will not be showing up in the general fund anymore,” Bennion said.

The reappropriation package Bennion described would increase general‑fund appropriations in 2025–26 by about $21 million. He laid out the major components: roughly $2.8 million of budget cleanup items left over from January; about $9.2 million to cover higher‑than‑expected third‑party liability payouts tied to police and public‑works claims; and just over $10 million tied to delays and obligations that need to be carried forward and budgeted in 2025–26. Bennion singled out Neighborhood and Community Services (NCS) for about $4.2 million in contract invoicing delays that will be reappropriated.

Bennion also summarized other year‑end and first‑quarter signals: interest revenue was about $2.7 million higher than budgeted because the general fund earned more interest on cash balances; a roughly $2 million property sale on the Foss Waterway (sites 9 and 10) contributed to miscellaneous revenue; and transfers from a closed Union Station bond fund were a one‑time boost. On recurring lines, he said utility taxes were about $450,000 above expectations on average and business taxes were roughly $2 million favorable overall (driven by a $4.6 million increase in service B&O receipts, partially offset by declines in cable and natural‑gas taxes).

At the same time, Bennion flagged weaknesses. Sales tax collections were down versus budgeted projections even after mid‑biennium adjustments; the decline was amplified by a fall in an obscure “natural‑gas use tax,” which he said fell sharply after a business that paid those taxes left the Port in late 2023. He cautioned that sales tax and B&O tax are trailing indicators and could show larger declines by the July second‑quarter report. He also noted that the permit fund — which the city uses for building and development permits — finished 2024 up about $3.7 million, but that first‑quarter 2025 permit revenue was down about 16% versus budget (roughly $1 million) and down 23% ($1.6 million) versus the first quarter of 2024. Bennion said PDS staff expect permit activity to be lower in 2025 than in 2024 but that the reasons appear mixed (developers waiting on interest‑rate changes, tariff/market issues and project timing).

Bennion described reappropriation activity outside the general fund as well: transfers of Real Estate Excise Tax (REET) budget authority to carry capital projects forward (Water Ditch Trail, sidewalk capital, Links to Opportunity continuation, East 60–64th St. Phase 2); Sound Transit projects the city manages on Sound Transit’s behalf (about $24.5 million); East Roosevelt and Portland Avenue improvements; and several grants awarded after the budget was adopted (including a $1.0 million port security grant to fund a new police boat, a surface‑water ecology grant for streamflow restoration, a Department of Commerce revision increasing a small‑business grant program from $4.0 million to $4.7 million, and a Street Medicine grant of about $900,000 for NCS).

Bennion recommended council approve a reappropriation/budget modification ordinance on May 13 to: (a) carry forward obligations and delayed capital/project expenses; (b) correct a few cross‑fund posting errors; and (c) increase appropriations to cover higher liability payouts and known obligations. He emphasized several items are one‑time and should not be interpreted as recurring revenue improvements, saying the notable 2024 revenue outperformance was “largely built on that miscellaneous revenue category.”

Council members asked follow‑up questions about overtime trends in public‑safety budgets (fire overtime was called out as a driver of expense overruns; police overtime was discussed and had been closely examined during budget development), the permit fund decline, and whether the ARPA and Union Station transfers mask the underlying strength of Tacoma’s local economy. Bennion said staff will continue monthly monitoring, will provide a detailed list of grant eliminations or reductions if requested, and will return at mid‑biennium modification with a proposed budget modification ordinance for council consideration.

The Committee did not vote on the reappropriation on May 6; Bennion said the ordinance will be presented to council on May 13, 2025.