(The Center Square) – Spokane officials provided a budget update on Thursday, noting that the anticipated deficit heading into next year is now down to about $8 million.
Chief Financial Officer Matt Boston ran the city council through projections showing the general fund deficit currently at $7.9 million for 2025. However, due to ongoing discrepancies between revenues and expenditures, he said the projections show a deficit of $10.4 million in 2026.
When combined, according to the city’s preliminary budget, the general fund will have an estimated deficit of over $18.3 million by the end of 2026 under these current projections.
The deficit was almost $25 million when Mayor Lisa Brown took office earlier this year, and reserves were depleted by another $21 million. The mayor will propose her official budget for the next biennium on Nov. 1, which state law requires to balance the rest of the deficit.
“The updated projections are based on our 2024 utility numbers being better than anticipated, user fees [and] our expenditure reductions that have been taken by the administration that were either a part of the 10% exercise or prior,” Boston said.
He ran through projections with Brown last month that took the deficit from $14 million in July down to $10.9 million; with the hole now at $7.9 million that translates into the total being but by nearly 70%. That doesn’t include the additional $10.4 million deficit projected for 2026.
Boston said all these projections through 2026 don’t account for Brown’s proposed sales tax.
Less than a week after Brown unveils her budget proposal next month, voters will decide whether to adopt her 0.1% Community Safety Sales Tax. While her administration painted it as a way to fund “new investments,” many were previously suspended due to the financial turmoil.
Several business owners, developers, real estate brokers and others have said they want to see the city clean up downtown before committing to the tax increase. Many have criticized Brown and the Spokane Police Department over the issue amid a 106% increase in homelessness since 2016.
“NO ENFORCEMENT vote NO SALES TAX,” wrote Sheldon Jackson, founder and chief executive officer of Selkirk Development, in his email thread of more than 300 community members.
Around $1.6 million in savings from the administration’s reductions arose from a voluntary SPD retirement program that contributed to a loss of up to 25 officers with decades of experience. The city intends to fill the vacancies, but at a cheaper price point, it could mean less experience.
According to the preliminary budget, another $2.6 million in additional revenue will help alleviate the deficit through a temporary increase to the city’s utility tax rate. Most of the other savings came from cutting vacancies and certain departmental expenses.
A few “budget assumptions” also help alleviate the deficit, such as the assessed value of new construction and existing properties increasing by 1%. Boston said that growth means more revenue for the city, and with wages following inflation, sales tax should follow suit.
Boston has continually said his projections are conservative to avoid perpetuating the issue further. Other budget assumptions included increased engineering revenue and other tax revenue from private utility companies.
“Next, we’re going to be meeting in November,” he said. “Obviously, we’ll have the proposed budget by then, so we’ll have a lot more to talk about.”
This article was originally published at www.thecentersquare.com
