According to data projections made by Tumwater's Finance Director, Troy Niemeyer, Tumwater’s fund balance is predicted to fall below the minimum required balance by 2027.
The 2027 balance is expected to close at $3,327,624, which is three million short of the then required balance of $6,331,000.
Further, the city’s expenditures are predicted to exceed revenues in 2025, with expenditures at $34,368,000 and revenues at $34,357,000. The trend sees the gap increasing within the following years.
The city staff has been presenting these data projections to the city council during the 2023-2024 budget workshops. The actual data was shared with The JOLT at an interview on September 28.
According to City Administrator John Doan, the minimum fund balance is equal to two months' worth of reserve or 16% of the general fund. He said that this amount is necessary to “properly manage the city and to be in good financial health.”
Doan said that they had identified several means to avert the trend. This includes changing the level of services, acquiring other sources of revenue and increasing taxes or fees.
“It would be easy to [say] ‘well that's 2027’… The problem is the city's finances are a little like a supertanker — you can't make a 90-degree turn. You’ve got to turn the wheel, and you make really slow changes,” Doan said.
On top of their list of priorities to accomplish such changes is the implementation of the Regional Fire Authority [RFA], which would merge Tumwater’s and Olympia’s fire departments and spin them outside of city government into a new entity.
“The RFA is essential both to provide better service for emergency medical and fire to our community, but to also reduce the rate of growth of city expenditures,” Doan said during a city council meeting on September 27.
Fire and emergency services have historically been the most significant expenditure in Tumwater, with the city proposing to spend $20,399,539 for these services in 2023-24. Creating an RFA would likely also create a ”Fire Benefit Charge, which is a fee the cities say is based on the anticipated cost of the fire-response needs of a structure.
Another priority is to renew and review the structure of the Transportation Benefit District, which was formed in 2014 to replace the city’s transportation funding. In 2015, Tumwater residents agreed to implement a sales tax increase of 0.2% for ten years to fund street maintenance projects within the city.
In Washington state, yearly increases in property tax collections from existing properties are limited to one percent. Doan said that this also needs to be modified but doing so requires it to be done at the state level.
He said that other things that need to happen to include a review of the staffing needs and funding for the police department, which is the city's second biggest source of expenditures. The city must also make smart infrastructure investments while providing real economic development. Doan said this means creating jobs, growing the tax base, and adding value to the community.