(The Center Square) – Yakima set aside $4.8 million in reserves to cover a deficit, but halfway through 2025, it has only spent a fraction of that — even as the city asks voters to raise taxes to fill next year’s.
The Yakima City Council spent the last few months of 2024 addressing a roughly $4.8 million shortfall ahead of January. The officials voted in December to free up millions of dollars by reducing the general fund reserve policy from 16.7% of spending to 12%, but projections may have overstated the need.
While almost three-quarters of the way through, Finance Director Craig Warner presented a mid-year review on Tuesday. His numbers show that the city spent about $618,000 more than it raised through June 30, 2025, but Yakima is still roughly $4.2 million under what he budgeted for the end of the year.
Warner said he expects to spend up to $1 million or $2 million of what the council set aside in reserves last winter by the end of the year. However, the officials are also addressing a $9 million deficit ahead of 2026, which they hope to balance this time with a $6 million tax hike going out to voters this fall.
“If the year ended right now, our deficit’s not nearly as bad?” Assistant Mayor Matt Brown asked.
Warner quickly replied in the affirmative, but noted other challenges. He said sales tax collections are on pace to finish the year about $2 million short of projections. If utility tax collections and other types of revenues continue to come in higher than anticipated, it should avoid the use of further reserves.
He said sales tax collections for July and August were the first time all year that the general fund had brought in more than it did those months in 2024. Plateauing revenue growth has contributed to the city’s budget woes, so Warner hopes Yakima is turning the tide and that tax collections are stabilizing.
Even if the situation does improve in terms of tax revenue, it likely won’t be enough to cover the $9 million deficit projected for 2026. That shortfall is the result of many factors, including last year’s plan to plug the deficit with reserves, as well as state and federal relief funding that has since dried up.
Regardless, the council voted 4-3 in July to put a $6 million sales tax proposal on the November ballot.
The plan is to balance next year’s shortfall with a boost in revenues, assuming voters approve the tax hike, and by cutting about $3 million in spending. If the proposal fails, Yakima will need to make larger cuts and possibly raise utility taxes to cover the deficit, which could cost dozens of people their jobs.
The tax hike could bridge most of the budget gap, but Tuesday’s mid-year review raises concerns. The council allocated $4.8 million in reserves last winter to cover the 2025 shortfall, but has only spent a fraction of it so far. If Warner realizes next year that the tax hike wasn’t necessary, it will be too late.
“I take this commitment seriously,” Brown wrote in a news release after voting against putting the tax hike on the ballot, aligning with his promises not to raise taxes. “Unlike many politicians in Olympia or Washington, D.C., or Yakima, for that matter, I believe that keeping your word still means something.”
