Thurston Co. faces more than $20 million deficit in 2027, county manager warns
Thurston County is facing a 2027 budget deficit in excess of $20 million, County Manager Leonard Hernandez said Wednesday.
Hernandez shared the estimate with the Board of County Commissioners during a work session at The Atrium in Olympia.
“It started at the $20 million,” Hernandez said. “One-time decisions have increased that. I don’t want to say for certain what that number is because we’re still working all those details through, but it is in excess of $20 million at this point.”
Last year, the board narrowed down a projected $36 million structural deficit in its 2026 general fund budget to about $9.8 million. To address the remaining gap, the board ultimately approved a budget in December with targeted cuts to various offices and departments.
The topic of the 2027 deficit came about during a discussion about how the county may restore funding cut from the 2026 budget.
In the summer and fall, some internal stakeholders questioned the accuracy of budget data and revenue projections that Hernandez and budget staff shared with the board, The Olympian reported. That included commissioners Rachel Grant and Emily Clouse.
Some argued the projections overstated the negative impacts, creating a “doom and gloom” perspective, Hernandez said.
“Where we sit here in January 2026 is that the projections that were provided to the board are not draconian,” Hernandez said. “They’re not overstated.”
Washington state’s tax revenue forecast has only gotten worse with time, Hernandez said. Meanwhile, county budget staff are seeing property tax revenue coming back “much softer than anticipated,” he added.
During budget deliberations last year, Hernandez said he would present the board with a “grow back plan” if the county happened to receive more revenue than expected.
“The punch line is, at this time, we don’t see a significant amount of additional revenue available to the board to then plug back in,” Hernandez said.
Commissioner Wayne Fournier supported Hernandez, saying his projections were not given the credence they deserved. He said that was “frustrating” to him.
“I feel like it’s everyone that’s not in this room that needs this conversation, just to be painfully honest, whether it’s elected officials or other offices,” Fournier said. “The budget battle of 2025 was difficult.”
At the time Fournier made that remark, the only elected officials physically present at the table included him and Commissioner Tye Menser. Commissioner Carolina Mejia was present virtually on Zoom.
All three voted in favor of the 2026-2027 biennium budget in December. Commissioners Rachel Grant and Emily Clouse voted against the budget, citing process and data concerns, The Olympian previously reported.
Grant joined the Wednesday work session meeting late and Clouse did not attend due to scheduling conflicts. Mejia joined in-person during a later portion of the meeting.
The board ultimately directed Hernandez to report back at the end of the first quarter to discuss next steps for the grow back plan.
“At that point, we can engage, if it’s the board’s desire, with departments and offices on how the first quarter of reductions are impacting them,” Hernandez said.
County staff may send out a template to gather that information from offices and departments. Should the county have more revenue at its disposal, the board may then use that information to inform the grow back plan.
What’s going on with TC Connect?
Hernandez acknowledged that the ongoing implementation of TC Connect complicated the budget process.
TC Connect is a comprehensive financial and human resources system. The county began implementing the system in 2023 and officially launched it in 2024, according to county spokesperson Susan Melnyk.
“Thurston County had the added challenge of the economy turning the way it did in the midst of its needed and appropriate legacy system transition from its old systems to TC Connect,” Hernandez said.
Hernandez said the system caused delays for budget staff, preventing them from generating reports as quickly or easily as was possible under the previous system.
Hernandez said it was normal for a large organization to see delays when it transitions to a new system like TC Connect.
“We’re going to get through this,” Hernandez said. “We’re going to make progress in 2026.”
As of December, Thurston County has spent about $6.5 million on implementing TC Connect, Melnyk shared in an emailed statement.
The initial projected cost for the project was about $7.9 million and the county expects to spend about $1.4 million more to meet that projection, she said.
“The implementation is ongoing,” Melnyk said last month. “By April 2026, there should be significant progress made on some of the key issues we are facing. From there, we will continue working on the implementation.”
