Lacey City Council members likely exhaled a deep sigh of relief Thursday after a preliminary look at next year’s budget showed that improvements in revenue had cut a projected general fund budget deficit in half.
Instead of an $805,000 hole, the council now has to address about half that amount, or $440,000, Lacey Finance Director Troy Woo said.
Woo’s budget presentation took place at River Ridge High School, the third on-the-road work session the council has had this year. It previously met at Mountain View Elementary over the summer and at Chambers Prairie Elementary in the spring. The meetings were designed to connect with residents who might not be able to attend regularly scheduled council meetings.
Several residents attended Thursday’s meeting.
More revenue is helping next year’s budget, which was largely driven higher by better than expected sales tax revenue. Driving that has been commercial and residential construction, Woo said. Key sales tax revenue-generating projects included the recently completed Lacey campus of South Puget Sound Community College.
The result has been a 7.2 percent increase in sales tax revenue, or about $562,000 more than thought, Woo said.
But combine the higher revenue with higher labor costs, retirement contributions and health insurance premiums, and it results in a budget shortfall.
“Labor is our greatest asset, but it’s also the most expensive to maintain,” Woo told the council.
The council also recently voted to end the city’s contract with the vendor of the red light camera at Pacific Avenue Southeast and Sleater-Kinney Road Southeast. Recent data showed that the camera was not deterring accidents at the intersection, so the council voted to end the contract. It expired toward the end of August, Woo said. But that also means the city loses out on $225,000 in revenue, he said.
The council is expected to use some reserves, such as pension and gambling tax reserves, to fill part of the $440,000 hole.
City Manager Scott Spence’s budget presentation is set for 7 p.m. Oct. 22.