The Spokane Valley City Council on Oct. 28 advanced the proposed 2026 city budget to a second reading after a staff presentation that reviewed operating assumptions, reserves and major capital items.

Finance staff described the 2026 proposal as $148.4 million in total appropriations across 31 funds, including $47.9 million in capital projects. The general fund portion of the 2026 budget is proposed at $70.6 million and recurring revenues were estimated at $68.6 million, with recurring expenditures at $68.5 million — a narrow recurring surplus of about $119,000 under the draft. Projected total recurring and nonrecurring expenditures exceed revenues by $1.5 million in the draft, driven by planned nonrecurring spend-downs of about $2.1 million, staff said.

Finance Director Chelsea Walls reviewed the city's reserve policy and cash-flow rationale. She said the city's goals include maintaining recurring revenues at or above recurring expenditures and keeping a minimum ending fund balance of at least 50% of recurring expenditures; the proposed 2026 budget projects an ending general fund balance equal to 61.56% of recurring expenditures. Walls said the city uses a two-year lookback before allocating excess fund balance to capital reserves, and that much of the city's current excess is explained by stronger-than-projected sales-tax, permit and investment revenues in recent years.

"These goals have been adopted as part of our budget book in its entirety since 2013," Walls said, describing the finance office's cash-flow analysis and reserve calculations. She said staff plans to bring more detailed ARPA contract breakout and program-level costs at later discussions when council requested those figures.

Councilmember Merkel moved an amendment that would have shifted roughly $2.5 million in recurring charges into nonrecurring categories to free recurring revenue for hiring 10 additional police officers. Merkel summarized the two-page amendment but did not obtain a second; the proposed amendment died for lack of a second.

After discussion, council voted to advance ordinance number 25-017 (the 2026 budget ordinance) to a second reading. The second reading and possible final adoption were scheduled for Dec. 9.

The packet shows the 2026 budget assumes 118.25 full-time-equivalent positions citywide and anticipates $34.1 million in grant proceeds supporting capital projects. Staff said operating funds (general fund, street fund and stormwater fund) are budgeted with recurring revenues equal to or exceeding recurring expenditures. Walls said detailed fee and program-level presentations will continue in subsequent meetings.