Tacoma budget deficit balloons to $40M after updated forecast
The city of Tacoma’s budget deficit for the 2027-2028 budget has increased to $40 million, up from the $27 million city officials previously believed.
City officials said the increase is the result of “new information” from insurance brokers about higher costs the city is facing for expenses like healthcare and fuel, which have increased by about $6 million and $1.5 million respectively. The city already has implemented a hiring freeze and is working on a merger of its environmental services and public works departments to mitigate the structural deficit in its $635 million general fund, .
The city also has worked to identify additional sources of revenue, like a recently-approved 0.1% sales tax to raise funds for criminal justice-related expenses. Tacoma is one of several government agencies across the region facing budget deficits, including Parks Tacoma, Tacoma Public Schools and the Franklin Pierce School District.
Teresa Green, assistant director of the city’s Office of Management and Budget, said at a City Council study session June 9 that over the next six years, the city’s revenues will increase by 2.9% as expenses will increase by 4.8%.
The city has hundreds of millions of dollars it could have spent on replacing or improving equipment, facilities and fleet that it has deferred as a result of Tacoma’s structural deficit, Green said.
“We will need to address some funding for those going into the future,” Green said.
In addition to Tacoma’s general fund, which contains the deficit, the city has a variety of additional funds. Green said while some funds like the environmental services fund are stable, others like the street maintenance and capital fund are at risk – given the expiration of the city’s existing streets levy and the failure of the replacement levy the city put on the ballot last year.
Voters in August will decide on another iteration of that ballot measure, one that if approved could raise millions for street safety.
The budget update was the latest in the city’s process of developing a budget for the 2027-2028 biennium, which city officials expect to go up for a City Council vote around November.
