Title
Discussion of the 2026 Operating Budget
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Receive an update on the 2026 Operating Budget and discuss strategies for budget balancing.
Report
Issue:
Whether to receive an update on the 2026 Operating Budget and discuss strategies for budget balancing.
Staff Contact:
Joan Lutz, Senior Budget and Finance Manager, 360.753.8760
Presenter(s):
Jay Burney, City Manager
Michael Githens, Finance Director
Background and Analysis:
The 2026 preliminary budget process has been underway since June 2025.
On September 30th, the City Manager updated the City Council with budget assumptions and dedicated general fund revenues. The balancing position, at that time, was $6.5 million. During this meeting, Council directed staff to move forward with the Councilmanic increase of Public Safety Sales Tax by 0.1% authorized by the Legislature in 2025 through HB2015. Council also directed staff to move forward with the Councilmanic increase to Business and Occupation Tax with the request for the City Manager to present additional scenarios regarding the threshold and rate increases for their consideration
This study session will continue the conversation regarding the 2026 operating budget deficit, including the requested Business and Occupation Tax scenarios, enhancement requests, and expenditure reductions.
Climate Analysis:
Overall, there are no anticipated climate impacts from the 2026 operating budget discussion.
Equity Analysis:
One of the goals of the City’s budget process is to ensure that city services are provided equitably to our residents and business communities, as well as the greater Olympia community. This agenda item is not expected to further impact known disparities in our community.
Neighborhood/Community Interests (if known):
Members of the community may have an interest in this agenda item as it deals with City finances and fiscal governance.
Financial Impact:
This item is for discussion only and will provide the City Manager with direction as he develops the 2026 Operating Budget for Council’s consideration.
Options:
Discussion only.
Attachments:
Comparable Cities Presentation
Long Term Financial Strategies
Business & Occupation Tax Scenarios