(The Center Square) – Facing a $20 million shortfall, Spokane County officials are cautiously optimistic as sales tax collections trend higher than expected heading into the summer.
The Board of County Commissioners is zeroing in on budget projections for next year as the officials attempt to balance the shortfall. Jeff McMorris, senior director of the county’s Finance and Administration division, said Monday that the board’s luck seems to be turning the corner.
Retail sales taxes are the county’s largest source of general fund revenue, making up 30% of that central budget. Last year, sales tax growth fell almost completely flat after over two decades of averaging about 4% annually. After May, that 12-month rolling average sat at 1.7%.
“May collections based on March activity was surprisingly pretty good,” budget analyst Jason Metcalf told the commissioners on Monday. “We did $6.6 million; so year to date, we’re at $31.2 million, which is about 0.6% over our forecast, about 2.8% over last year’s actual year to date.”
Metcalf and McMorris expect June to follow suit as consumer confidence climbs and fears of a recession fall. An economic downturn isn’t out of mind yet, but the Consumer Confidence Index rose last month for the first time since President Donald Trump secured another term in office.
McMorris said collections are trending higher than anticipated, but the county needs to generate an extra $2 million to make up for the reserves the board borrowed to balance the 2025 budget.
Any extra revenue would help the county, especially with a $20 million deficit looming overhead.
McMorris sent a letter to all the department heads last Friday, asking them to maintain a flat budget next year on top of some expenditure reductions. He also plans to ask each of them to cut vacant positions, around 40 countywide, that have sat empty for at least the last six months.
“If all the recovery savings today were to stay in place,” he said, “the overall gap has been closed by about $5 million, and then with the department letter that went out Friday, requiring flat budgets against the expenditure reductions, that actually does close the budget pretty close.”
The county identified has about $3.37 million in salary and benefits recovery from the first five months of the year. However, since the county receives those payments after paying an employee, the figures don’t always pan out, so McMorris said that amount is likely to change.
Regardless, with a little more than $1 million cut across the rest of the budget so far, the county could close the deficit if each department can keep spending within its means. The board will meet with several department heads tomorrow to discuss their budget requests ahead of 2026.
“Conceptually, we’re getting there,” McMorris told the commissioners.
