2027 spending plan weighs in at $245.5 million for City of Lacey

Lacey residents and business owners who review the proposed spending plan for 2027 are going to find a slimmed down budget when compared with 2026.

That's because the fiscal blueprint weighs in at $245.5 million, which is down 10.6 percent from the amended budget for 2026.

Despite the financial haircut, rising expenses and slower revenue growth have prompted the city to propose another withdrawal from its reserves for 2027.

The city published a legal notice on Oct. 22, that states the budget is available for public review.  

The city will hold public hearings on the budget on Nov. 2, Nov. 17 and Dec. 1. The Lacey City Council is expected to adopt the budget in December.

Financial pressures 

The proposed budget would use $3,312,882 from the Budget Policy Implementation Reserve to close a deficit in the General Fund. If approved, the withdrawal would make 2027 the third consecutive year Lacey has used reserves to balance its budget. 

In his budget message, City Manager Rick Walk said population growth and development activity have plateaued.

He also said Lacey has seen moderate commercial retail expansion since 2008, while residents face tax weariness. The city plans to develop a service-level and cost-reduction strategy ahead of the 2028 budget cycle.

“We will need to reevaluate what services the city provides and at what levels,” wrote Walk in his budget message. “The multi-year budget deficit the (city) is experiencing is not only a revenue issue, but also an expenditure issue.” 

The proposed spending plan includes the following major allocations: 

• General Fund: $80.9 million for police protection, parks, street maintenance, community development and general government services. 

• Utilities: $121.3 million for water, wastewater and stormwater services. 

• Capital projects: $30.4 million for transportation improvements, parks and public facilities. 

• Internal service funds: $9.6 million for information technology, city vehicles and equipment maintenance. 

• Debt: $2.2 million for general obligation and local improvement district debt. 

• Special revenue funds: $1.04 million for lodging tax activities and the Hicks Lake Management District. 

Compared with the amended 2026 budget, the water utility sees the largest drop in funding, a projected decrease of 20.75 percent. 

The General Fund is also projected to decrease by 5.25 percent. However, salaries and benefits are expected to rise by $1.48 million, or 3.26 percent.

Public safety accounts for $27.1 million, or 33.5 percent of General Fund expenditures, including $22.77 million for the Lacey Police Department. 

Public investments 

Key capital allocations include the following, with the first three designated for project design: 

• Regional Athletic Complex improvements design: $10.9 million. 

• College Street and 16th Avenue roundabout design: $2.06 million. 

• College Street and 29th Avenue roundabout design: $840,000. 

• College Street and Seventh Avenue roundabout: $720,000. 

For parks, the city plans to prioritize maintenance of existing facilities over new capital projects. Meanwhile, utility customers could face higher monthly bills. Proposed rate adjustments include 5.25 percent for water, and 9.5 percent for both wastewater and stormwater. 

For water, the proposed increase would amount to $2.12 per month, based on 700 cubic feet of water usage.

Wastewater bills would increase by $3.45 per month with stormwater bills up $1.46. LOTT Clean Water Alliance, the regional wastewater treatment provider, also anticipates a $1.47 monthly increase. 

Walk warned city reserves are shrinking. He said sound fiscal management has allowed Lacey to accumulate savings, but using the money to cover budget gaps cannot continue long term.  

“Many in the community are experiencing difficult times with the effects of inflation, economic uncertainty and affordability of basic needs. The city is no different," wrote Walk in his budget message.

"It is important in navigating these times to work within our means and stabilize our budget to be prepared for opportunities in the future."

The full proposed budget is available on the City of Lacey website, and physical copies are available at Lacey City Hall.