(The Center Square) – Facing a $3.8 million shortfall ahead of 2026, budget officials told the Spokane City Council on Thursday that if the city doesn’t course correct, the deficit may surpass $137 million by 2030.
Last week, Matt Boston, the city’s chief financial officer, told the council that revenue growth was falling short of projections. Sales tax collections for the first two months of the year came in 2% below last year’s goal, raising concerns about a mounting deficit as consumer confidence falls.
Spokane balanced a $25 million deficit last December, hoping the 2025-2026 budget would end their anxiety, but now cuts are back on the table. The $3.8 million deficit outlined Thursday relies on a 3% historical average for revenue growth, meaning the deficit will grow if the city falls short.
“Where this places us is with a $137 million cumulative deficit between 2025 and 2030,” Budget Analyst Jacob Miller said Thursday. “With over $37 million of that being in 2030 alone.”
According to his projections, the $3.8 million deficit for 2025 will reach $12.6 million next year if left unaddressed. President Donald Trump’s tariffs are playing a part, but Miller said several other factors are also at play. One of the most significant being sustainable personnel costs, rising at 9.2% annually.
His numbers show revenues growing at 3%, but Boston only projected a 2% increase in sales tax revenue for 2025. Sales tax collections make up one of the city’s largest funding sources, so Boston said last week that if he lowers the estimate, the city will need to cut spending next year.
Delayed union negotiations that have depleted the city’s reserves and its apparent reliance on one-time fund transfers also contributed to the deficit. Boston acknowledged on Thursday that low consumer confidence could impact sales tax collections and, ultimately, the deficit at hand.
“Economists are projecting a recession to happen in 2025 at a probability of 50% or higher,” he told the council.
Jessica Stratton, director of management and budget, presented data showing enough in the general fund’s unappropriated reserves to cover a shortfall this year but not much else. The cash balance has dropped from around $20 million or more in 2020 to less than $10 million today.
Boston will meet with Mayor Lisa Brown and the council on July 10 to provide another budget update. He said the budget team will finalize its six-year projections soon, but “we obviously need to make some pretty immediate shifts based on the dramatic shift that we’ve seen.”
“I’ll just boil it down,” Brown said. “If our revenue projections, even despite bumpiness, stay at the historical 3%, then our expenses have to come in line with that, or we have to come up with a new strategy because the math of that, ultimately, opens up another structural deficit.”
