Thurston Co. faces ‘catastrophic’ budget cut. Staff have a plan to lessen the blow
Thurston County services will be affected by more budget cuts over the next several years under a new plan.
The Board of County Commissioners reviewed a proposal to spread out budget cuts through 2029 during a Wednesday work session in Olympia.
The county is facing a projected $22.3 million general fund deficit for 2027, Budget Manager Summer Miller told the board. To mitigate the impact, Miller recommended the county spread out the reductions through 2029. Staff presented the plan six months after the board approved a $1 billion 2026-2027 biennial budget with $9.8 million in cuts for 2026.
Implementing a $22.3 million cut in one year would be “catastrophic” for the county, County Manager Leonard Hernandez told the board.
“The impacts that we had last year at over $9 million were very tough on departments and offices that took those cuts,” Hernandez said. “So to look at doing something that’s over double that would paralyze our critical operations.”
As adopted in December, the county’s general fund budget for 2026 is $147.8 million, Miller said. About 76% of that total is allocated to elected offices, while about 24% goes toward county departments, she added.
The general fund is the county’s primary operating purse and accounts for about 27% of all county-wide operating expenses adopted for 2026, per the presentation.
In March, the county projected a 2027 general fund deficit between $18.6 million and $30.9 million, but that projection was based on keeping a recommended two-month general fund balance, per the presentation. The $22.3 million deficit projection assumes the county makes do with only a one-month fund balance, Miller said.
The county has blamed its budget challenges on reduced state and federal funding, unfunded mandates, flattening tax revenues and rising costs, The Olympian previously reported. On Wednesday, Miller pointed to rising inflation and a downward trend in taxable real-estate activity.
“On one hand, higher prices directly boost sales tax collections,” Miller said. “On the other hand, they drive up our maintenance level costs. The price for providing existing baseline services just keeps rising for the county.”
Staff hope the economy and the county’s revenues improve in the years ahead, Hernandez said, but he cautioned that current trends are not ideal.
“The reality is that some of the forecast indications come back (showing) that things may get a little worse before they get better,” Hernandez said. “So, we’re trying to balance that. How do we weather additional budget storms but also try and preserve as much of the organization as we can in real time?”
What’s the plan?
Under the new plan, the county would rely on about $8.3 million in reversions in 2026, followed by three years of cuts, according to the presentation.
“Budget reversion is the amount of the budget appropriations that go unspent within a fiscal year,” Miller said.
For example, if the county budgeted $150 million for specific uses and only spent $140 million, $10 million would be returned to the general fund balance, she explained. This unspent amount is then carried forward into the next year.
Appropriated money can go unspent due to staff vacancies, contracts that go unspent, program needs being less than anticipated and changes in state or federal policy, according to the presentation.
“These reversion dollars are not meant to support ongoing operational costs, and relying on any of the fund balance or reverted dollars should be treated as one-time funding,” Miller said.
Given the limitations, the county has sought to avoid using reversion money in the past.
“Just right now, we’re in an environment where if we slow spending down, that enables us to reduce the impact of cuts,” Hernandez said.
The county had about $7.6 million in reversions in 2025, $5.8 million in 2024, $9 million in 2023 and $10 million in 2022, Miller shared in the presentation. When averaged out, that equates to about $8.1 million in reversions per year, a figure that informed the new proposal.
The plan calls for cutting $5.5 million in 2027, $4.5 million in 2028 and $4 million in 2029. Miller cautioned that this plan is based on point-in-time assumptions. Hernandez said the county may have to adapt within the three years.
“If things get worse from a forecast standpoint, if revenues perform poorly, or there’s an unanticipated cost that hits us, then of course, the out years will have to increase,” Hernandez said.
During the presentation, Commissioner Wayne Fournier asked if it would be fair to say these measures only buy the county more time rather than fix the problem outright.
“No, I think I would categorize it as this is mitigating the problem,” Hernandez said. “This is taking the issue and making the deficit more manageable.”
For the plan to work, Miller said offices and departments will have to slow and reduce spending this year.
“So, it would be helpful if we could all identify ways to voluntarily reduce our spending, prioritize what the mandatory programs and services are, and also work across different offices and departments to identify solutions and potential efficiencies,” Miller said.
The board ultimately directed staff to begin implementing a series of budget measures that the proposal is predicated on.
Commissioner Rachel Grant praised Miller and budget staff for a “well-thought-out proposal.” Grant expressed reservations about the budget process last year and voted against the $1 billion biennial budget in December.
“Everybody’s hoping, fingers crossed, that sales tax goes up and those revenues start to build,” Grant said. “Maybe by the time we get to 2029, we don’t have a $4 million (cut). Who knows? But, this is a good approach.”
The board did not discuss how the cuts would be specifically implemented on Wednesday. The board is expected to make final budget decisions by the end of the year.
In the months ahead, the board will review its options and ask offices and departments to take part in a budget exercise, according to the presentation. Deliberations and public hearings will follow in the fall.
