Olympia proposes staff cuts, organizational changes to address the 2025 budget deficit 

Olympia City Manager Jay Burney unveiled a multi-pronged plan to shrink its 2025 operating budget deficit. Among the recommendations include staff reductions, organizational changes, and the exploration of new revenue sources.

At yesterday's council work session, Burney discussed the proposals to reduce the budget deficit by $11.8 million to $3.9 million. His last budget update in September showed that the deficit was reduced to $6.7 million, about 6% of the total general fund.  

Some steps the city has taken to reduce the deficit include moving the Clean Team from the general fund to be covered by Waste Resources rates, saving $900,000.  

Burney said they also updated early revenue projections, which provided an additional $2.5 million in adjustments.  

Personnel reduction 

One measure Burney proposes is reducing personnel, which represents 71% of the general fund expense. He recommended permanently reducing positions, including those for the director of Strategic Planning and Performance, Performance Management analyst, assistant city manager, and Visual Design and Production manager.  

Burney mentioned that they are delaying hiring community service officers, crime analysts, outreach specialists for OPD, finance directors, some IT positions, and senior human resources. 

Organizational Changes:  

• Elimination of the Director of Strategic Planning and Performance position 
• Elimination of one Assistant City Manager position 
• Stacey Ray will move into the Assistant City Manager role, while Debbie Sullivan will take on a special project role 

IT and HR Positions:  

• Elimination of a couple of IT positions (one vacant, one resulting in an employee being at risk) 
• Elimination of a human resource analyst position 

Police Department:  

• Elimination of two program assistant positions 
• One position offered to the police department, one to the city manager's office 

Public Works:  

• Elimination of an administrative specialist position 
• Elimination of an engineering project engineer position 
• Elimination of a traffic operations supervisor position 
• Elimination of two seasonal positions 

Community Planning and Development:  

• Elimination of a principal planner position (through retirement) 
• Creation of a hybrid building inspector-code enforcement position 
• Elimination of an associate planner position 
• Elimination of a customer service position due to reduced lobby hours 

Burney explained that for the "at risk" positions, the employees have been notified that their current position is at risk, but they have been offered a new position. These employees have until the end of February to either accept the new position or remain at risk.  

Burney stated that the proposed reductions include about 26.75 positions eliminated across all funds - 18 from the general fund, 4.75 from CPD, one from Parks, and three seasonal employees - totaling about $3.6 million in savings. 

He acknowledged that these staffing changes will impact staff morale and internal operations and potentially cause delays in services and workflows.  

Besides the positions and staffing reductions, Burney proposes organizational changes, such as moving the parking division from the Community Planning and Development department to Public Works and restructuring customer service and permit functions.

The city is also exploring a shift in its approach to cultural events, transitioning from a partnership to a sponsorship model. This change aims to make the events more sustainable and independent from city staff support. 

Fund balance 

If the proposed reductions and adjustments are implemented, Burney said the city's balancing position would be reduced to $3.9 million.  

He recommended that the city use the fund balance to address this remaining deficit. "If we utilize $3.9 million of fund balance to balance for 2025, it will leave you with the total fund balance of about 14.7 million, which is 13%. Your goal is to have a fund balance between 10% and 25%." 

Burney noted that this would be a reduction from the previous year when the city balanced the 2024 budget using $4.7 million in fund balance. 

Revenue options 

The city manager discussed other potential revenue options for the city to consider.  

The Finance Committee was updated on Monday on the proposed utility increases, which total 4.74% in the bimonthly utility bill, including drinking water, wastewater, stormwater, and waste. 

Burney indicated that for every 1% increase in the municipal utility tax, the city could generate an additional $650,000 in revenue. He noted that if the council wanted to pursue this option, it would need to discuss it early on with the Utility Advisory Committee (UAC). 

Levy lid lift 

Although not making any recommendations, Burney discussed the possibility of a levy lid lift, which would require voter approval.  

He said Olympia could ask for $1.25 per $1,000 of assessed property value, which could potentially raise $12 million for the general fund.  

Burney added that it could support Tiny Home Villages, which is currently funded by the state and could disappear in the future. It could also provide funding for the city's climate initiatives and fire equipment needs.  

The city council will hold public hearings on the 2025 operating budget at the city council meetings on Tuesdays, Oct. 29 and Nov. 12.