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Thurston County warned of multi‑year structural deficit; commissioners order contract review and freeze on new general‑fund additions
Summary
Budget staff told the board that an inherited structural general fund deficit remains—with a $2026 adopted deficit of about $11.9 million and a projected 2026 year‑end fund balance well below the board's two‑month policy—prompting motions to draft a total cost‑recovery policy, inventory contracts for full cost recovery, and prohibit new general‑fund additions for 2026.
Thurston County’s budget office presented a year‑end closeout for fiscal 2025 and an overview of the adopted 2026 general fund budget, stressing that the county faces a continued structural deficit despite prior mitigation steps.
Summer Miller, the county’s budget and finance manager, told the board the county certified property tax at $53 million for 2025 (about $2.3 million of which is earmarked for veterans and mental‑health/developmental‑disability funds). She reported estimated 2025 year‑end property tax collections at $49.8 million and sales tax collections close to projections. Miller said the county’s forecasting process—started in mid‑2024—produced four point‑in‑time forecasts during 2025 that averaged about $17.05 million for year‑end fund balance; the current estimated 2025 year‑end fund balance is $17.4 million.
On the adopted 2026 budget, Miller told commissioners the county adopted an expenditure budget roughly $147.8 million and an adopted revenue budget of about $135.9 million—leaving an adopted general fund deficit of roughly $11.9 million. By the county’s fiscal policy (resolution cited in the briefing), the two‑month fund balance target for 2026 is about $25 million; current projections put the 2026 year‑end fund balance at roughly $5.6 million if no additional actions are taken.
Commissioners discussed the drivers of the deficit—mandated programs without full state funding, wage and COLA pressures, insurance and liability costs—and the limits of cutting alone. The board moved and discussed two related actions to shore up finances:
• A direction to the county manager to develop a formal total cost‑recovery policy (to ensure county contracts and agreements recover the full cost of services where appropriate). The board debated a path (ordinance, resolution or administrative policy) and discussed applying a consistent approach across contracts.
• A direction to the county manager to inventory and review contracts with outside jurisdictions and partners for potential full cost recovery, and to return with findings and suggested next steps.
Budget staff also proposed, and the board adopted unanimously, a prohibition on fiscal‑year 2026 requests for general‑fund additions (positions, reclassifications or other requests with additional general‑fund expenditure impact) unless they demonstrably do not affect the general fund.
Board members discussed year‑end reversion (unspent budget that becomes fund balance), vacant positions and position‑control practices. Miller noted the current 2026 estimates do not assume reversion and that previous practices built estimated reversion into budgets; commissioners asked for more transparency about actual year‑end unspent amounts per office and recommended an inventory approach to prioritize further actions.
Several commissioners emphasized that cutting alone will not solve the problem: they called for an economic development strategy and, if pursued, a unified board message before asking voters for new revenue (levy‑lift or bond measures). Miller said the budget office will return with monthly/quarterly updates and that the next formal budget update is scheduled for April 2026.
"We are not alone in this problem," Miller told the board, referencing a statewide WASAC fiscal‑health survey showing similar pressure on other counties. "But we do face a major deficit issue that we need to address."
