Olympia manager proposes sales-tax and B&O changes to close 2026 gap; council to hold hearings Nov. 10

Olympia—s finance director presented the City Manager—s preliminary 2026 operating budget on Nov. 3 and said balancing the near-term budget requires a mix of one-time and ongoing changes, including proposed revenue increases and spending reductions.

Mike Givens told the council the recommendation includes a councilmanic sales-and-use tax increase of one-tenth of 1 percentage point (0.1%) designated for public safety. "We're estimating revenue from the sales tax increase in the first year 2026 at $1,500,000," Givens said; he added a full year would yield an estimated $3,000,000. The administration proposed budgeting conservatively by assuming only six months of revenue in 2026 because the tax must be submitted to a state review process before collection can begin. Givens said the city is targeting a July 1 start date if the ordinance proceeds.

In addition, the administration plans to bring an amended business-and-occupation (B&O) tax ordinance to the council on Nov. 10. Givens said the recommended structure sets most categories at a 0.002 rate, with retail at 0.0015 and a $500,000 threshold before the B&O applies. Staff told council the ordinance will be presented Nov. 10 for first reading and public comment; final action would follow council hearings later in November and December.

Budget reductions and targeted investments

Givens presented a package of recommended reductions totaling approximately $1,284,593 intended to preserve long-term sustainability. He also proposed several budget enhancements that are revenue-neutral or grant-funded. Among new investments is a four-person sidewalk repair crew funded by the Transportation Benefit District (TBD) sales tax; the administration estimated the first-year cost at about $830,000 (largely equipment purchases with lower ongoing annual costs).

The presentation also enumerated ongoing cost drivers built into the 2026 budget: jail costs (an increase of about $900,000), higher insurance and workers—compensation assumptions, and other predictable service expenses. To protect near-term operations while new taxes are being implemented, the budget proposes a one-time use of real-estate excise tax to offset 2026 revenue ($1,500,000) and relies on the new revenue streams for longer-term balance.

Process and public input

Givens noted the council would consider the two tax ordinances at the Nov. 10 meeting (first reading and public comment) and will hold a second public hearing on the operating budget on Nov. 18 before final adoption in December. Council members praised staff work but asked for clarity on performance indicators for programs such as the MFTE review and sought more detail on specific fee or project-level figures. Public commenters urged reconvening a budget advisory committee and questioned historical accounting and Initiative 747 impacts.

What—s next

- Nov. 10: First readings and public comment on the sales-and-use tax and B&O tax ordinances; additional budget update. - Nov. 18: Second hearings on the operating budget and the tax ordinances; final balancing and adoption expected in December.

No tax ordinances were adopted on Nov. 3. The administration presented revenue estimates and recommended text that will be considered during the formal hearing process beginning Nov. 10.