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Tenino officials warn of tight budget, disclose $30,000 IRS penalty and auditing updates
Summary
City leaders told the council the 2025 budget is tighter than anticipated after an overestimated starting balance and an IRS penalty tied to 2020–2023 filings; staff said they will pursue appeal options and may use sewer/water funds short-term.
Tenino — City officials told the Tenino City Council on March 25 that the city’s 2025 finances are tighter than expected and disclosed an interest-and-penalty notice from the Internal Revenue Service.
Mayor Rhonda said the 2025 budget had been prepared using an estimated beginning balance of roughly $750,000, but final close-out of prior years shows the actual starting balance was closer to $300,000. She reported 2025 expenses recorded so far of $583,273.74 and revenue of about $267,000, leaving a current general fund around $43,123 until additional revenue is collected.
Rhonda also told the council the city received a notice related to Form 941 payroll filings covering 2020–2023 that carried interest and penalties “about $30,000.” She said the city has asked the IRS for forgiveness and will consult a tax professional (Dale Hedden was named as a suggested contact) to explore appeal options.
Why it matters: The council discussed that the shortfall constrains hiring and operations and that state law prohibits the city from running a negative fund balance. Mayor Rhonda said the council previously authorized up to $500,000 from the sewer-and-water fund as an interim option if necessary; staff noted quarterly budget adjustments will likely be required.
What’s next: Staff will continue audit closeout work, bring final 2024 numbers to the council in the coming weeks, and return with proposed quarterly adjustments and any recommended short-term financing arrangements.
