Tumwater staff project a slimmer 2026 revenue picture and push decision points on fees and debt

Troy, the city staff presenter, told the Tumwater City Council at a March 24 work session that updated forecasts and 2025 budget performance have pushed a projected general-fund reserve shortfall — the city's fiscal “cliff” — out to 2030 but that staff now recommends lowering some 2026 revenue expectations.

Troy proposed reducing the city’s 2026 property-tax expectation by $590,000 and sales-tax expectation by $905,000, while modestly increasing business-and-occupation and utility-tax estimates, for a net proposed revenue reduction of about $1,100,000. "If the revenue came in exactly at $46,600,000 and the department spent the entire $49,500,000 budget, we would dip into fund balance to the tune of $2,800,000," Troy said while walking council through the budget-to-actual analysis.

Why it matters: council members pressed staff for the drivers behind the changes. Peter asked whether property-tax appeals, deferred payments and elderly/low-income property-tax programs explained the variance; staff said appeals and timing of payments can affect year-to-year receipts and that county programs that reduce taxable bills for eligible residents can lower collections. Councilors also sought detail on the sales-tax increase seen in recent years and whether development and major retailers had skewed historical averages.

What staff recommended and what’s next: staff described several levers the city could pursue to reduce the fiscal risk: reintroducing fire-impact fees to shift some costs of facility debt to new development, using banked property-tax capacity (the city has untapped levy capacity it can “bank” and then use in future levies), modest adjustments to utility-related taxes or franchise fees, and—if council directs it—packaging capital projects into a debt issue. Troy presented a hypothetical $40 million debt at a 4.75% interest rate over 30 years to show how debt service (about $2.5 million annually) would move a future shortfall earlier.

Councilors asked staff to return with specific analyses: line-item backup for the 2025–26 budget-to-actual differences (page references were requested), documentation on interjurisdictional reimbursements (staff referenced an amount near $200,000 that had not yet been transferred), comparative utility and franchise-fee data from neighboring jurisdictions, and fiscal models showing the revenue impacts of potential projects (including the HCP planning assumption staff had been asked to analyze). Staff said it would produce quarterly updates and more detailed budget-workshop materials as the 2027–28 budget process begins.

What wasn’t decided: the council did not adopt any fees or taxes at the session. Staff emphasized early action and further study rather than waiting for a crisis. The matter will return to committee and future council workshops with requested clarifying detail and the specific analyses councilors asked for.