(The Center Square) – New budget projections suggest Spokane Valley may have already eliminated a $1.1 million deficit before 2026, but staff warned Tuesday that spending could still wind up in the red.
Finance Director Chelsie Walls ran the Spokane Valley City Council through updated revenue estimates on Tuesday after forecasting a $2.5 million deficit last month. About $1.1 million of that was solely due to recurring general fund spending exceeding recurring revenues, which the council sought to address.
The council knows that some one-time expenses will exceed recurring revenues, but it has more than $42.6 million in reserves to address that. Their priority is closing the gap between recurring revenues and recurring expenses. Walls said her estimates currently show a $121,547 surplus between the two.
That difference hinges on two assumptions that must hold, but even then, recurring and nonrecurring expenditures will surpass total general fund revenues by $1.25 million, according to the presentation.
“The first is a city lodging tax application for $257,000 in operations and maintenance of The Course Spokane Valley,” Walls told the city council. “The other assumption in here is potential adjustments to the city’s permitting fees that could be up to $403,000, depending on the extent of those changes.”
The council awards tourism grants every year, funded by lodging tax revenues from overnight stays in town. The cross-country course is still getting up and running, so it isn’t charging fees yet to offset its ongoing operations and maintenance. Walls said the first assumption should cover that if successful.
She said both assumptions are dependent on future action by the Lodging Tax Advisory Committee and the council. If either falls through, the Valley will face another deficit due to recurring expenses exceeding recurring revenues in the general fund that the council must balance ahead of next year.
The estimates do not include the 1% increase in property taxes allowed by state law, which the council has rejected since 2009, or any banked capacity from those tax hikes that the officials could still levy.
Approving a 1% property tax increase for next year and utilizing that banked capacity could generate $1.4 million, but it would come at the price of raising the cost of living. Voters just approved the first general sales tax increase in city history last month, but all of that revenue will fund new police hires.
Walls said she anticipates further council action over the city’s permitting fees in the coming weeks.
“It’s still a slimmer margin than I like,” she told the council, “but at least we’re positive.”
