(The Center Square) – Spokane County closed a $20 million deficit on Monday by cutting 120 jobs and projecting sales tax growth to pick up speed again next year, avoiding any tax hikes in the meantime.
The county saw sales tax revenues increase by an average of 3.9% from 2000 to 2024. Things slowed down as the pandemic began, with that rolling average spiking in 2021 before falling to a 1.3% annual increase in 2024. The plateau required the Board of County Commissioners to readjust last December.
The officials cut general fund spending by around 8% heading into 2025 after it jumped nearly 20% in 2024. However, rather than budget flat or reduce spending further, general fund expenditures will rise to $282 million next year under Monday’s 2026 budget, only about $2 million shy of that back in 2024.
“We had some small increases at the very, very, very end of our decision-making process,” said Tessa Sheldon, the county’s budget and financial operations manager, citing increased consumer confidence. “We felt confident in increasing our sales tax estimates by an additional two-tenths of a percent.”
Sheldon said a new licensing fee the state passed last spring will add $15.7 million to help balance the general fund, with help from $266 million in other revenues. Sales taxes are the largest chunk of that and are projected to reach $83.1 million, up nearly 5% from the adopted 2025 budget’s $79.2 million.
After the sales tax projections fell flat in 2024, the county budgeted 0% growth for 2025, but raised it to 2% earlier this year as consumer spending increased. The 2026 budget raised that by another 2% to 3%, but represents a nearly 5% jump from the 2025 adopted budget approved last December.
If those estimates don’t hold up, the county could face an even larger deficit than the $17 million that Jeff McMorris, senior director of finance and administration, presented in a five-year forecast on Monday.
In addition to the recent uptick in sales tax activity, the commissioners attributed the rise in revenues to $1.4 billion in new construction that will soon expand the local tax base. The officials also asked the departments to cut spending by 7% and to eliminate vacancies, resulting in 120 positions being cut.
Salaries and benefits account for the vast majority of spending, so residents may face greater impacts in 2027 due to the lack of vacancies available to cut in the next cycle. The 1,875 full-time equivalents budgeted for 2026 puts the county’s headcount at its lowest since 2019, when it funded 1993.6 FTEs.
“We’re down to pre-COVID numbers, about 120 fewer FTEs than the beginning of the year when we started,” McMorris said, noting that the decision to cut vacancies was to reduce service level impacts.
While the officials closed a $20 million general fund gap in the new budget on Monday, they also relied on $11.7 million from reserves to finance a one-time purchase of new revenue management software.
The countywide 2026 budget totals $982.7 million, spending nearly $118 million more than the 2025 adopted budget, attributable to one-time expenses and funding future capital projects through bonds.
Notably, the commissioners did not balance the general fund deficit with tax hikes. The officials voted against a 1% property tax increase allowed by state law last month; however, they did raise garbage collection rates by 4% and yard waste by 10%, with a new $30 fee for disposing of certain appliances.
The Spokane City Council just balanced a $13 million general fund deficit last week after closing a $25 million hole last winter, but unlike the county, the city officials largely relied on tax hikes to fill the gap.
Like the commissioners, the council already anticipates grappling with another deficit ahead of 2027.
The Spokane Valley City Council is also considering filling a $1.5 million deficit with reserves after its voters approved a tax increase for public safety last month, and the state faces a $2 billion shortfall.
“I just really want to make this point for the audience that this dramatic climb and expenses is not a result of bad decisions being made by the Board of County Commissioners,” Commissioner Al French said Monday. “It’s bad decisions, quite frankly, being made at the state level and the Supreme Court.”
