Utility rates could soon increase as Tacoma faces $24M gap in proposed 2025-26 budget

Tacoma's leaders have faced a tricky task when it comes to crafting the next two-year budget: closing a $24 million gap.

During the Oct. 1 study session, City Manager Elizabeth Pauli presented the $4.7 billion proposed biennial budget. She detailed a number of ways Tacoma could balance its books, such as putting a hold on hiring more community service officers (CSOs) and increasing utility rates.

The 2025-26 budget's theme, according to Pauli? Building transparency and public trust.

"We hope that this budget will allow us to advance the trust of the community by showing our concern for community issues and needs," Pauli said.

This summer, 905 participants completed a community survey aimed partly at informing the budget-formulation process, The News Tribune previously reported. Residents' top three concerns , per the survey: addressing homelessness, housing affordability and community safety.

Some $641 million of the city's 2025-26 budget rests in the general fund. Under the proposed budget, housing and homelessness would see $93.8 million in total funding with a general-fund expenditure of $16.6 million, Pauli said. Community safety would receive $442.3 million in total funding with $404.7 million from the general.

The general fund's projected $24 million gap is a result of expenses growing at a higher rate than revenues: about 4.3% versus 2.6%, Pauli said.

"Despite the impacts of rising inflation and a contracting economy, the $4.7 billion proposed budget prioritizes building and strengthening belief and trust with residents while maintaining essential services," the city wrote in an Oct. 1 news release.

Tacoma has tackled such shortfalls before. In November 2022, the City Council plugged a nearly $24 million hole when it approved its $4.3 billion two-year budget, The News Tribune reported at the time.

The city also isn't alone in dealing with a budget deficit. Seattle, for instance, is seeking to fix its own $250 million shortfall .

What changes could be coming to Tacoma in 2025-26?

Community-safety efforts — such as fire suppression, 911 dispatch and patrol services — represent the bulk of the general fund's budget : 63%, Pauli said during the Oct. 1 presentation.

The 2025-26 budget would include a $3 million boost to the general fund to help support police overtime, she said. However, overtime needs might end up exceeding the allotted amount, so the city might seek more mid-biennium.

Pauli presented revenue proposals geared at closing the $24 million gap. One such method: a new excise tax for food-and-beverage sellers at city-owned indoor venues, such as the Tacoma Dome and Convention Center, she said.

Expense reductions are featured in the budget proposal as well, including a delay in hiring the next five CSO positions, Pauli said. In addition to saving the general fund about $1.1 million, the move would give officials time to evaluate the efficacy and impact of the Police Department's customer-service program.

Utility-rate increases

Residents might want to brace for utility-rate increases.

The proposed budget would usher in a projected 5.7% rate spike on solid-waste bills next year, about $3.16 on average per month, according to the city's budget-in-brief report. Power expenses in 2025 would also jump 6.5%, or a $6.72 average increase each month.

Stormwater rates would see the highest percentage increases. In 2025, a rate hike of 7.7% would translate to an additional $2.49, per the report. The following year would likely bring an 8% average monthly increase on stormwater, or $2.70.

Factors affecting the increases include higher costs because of inflation, supply-chain shortages and the need to maintain critical infrastructure, according to the report.

Other unique budget aims

Under the proposed budget, Pauli said, the city would start to implement a deconstruction and salvage assessment program , referencing a building method that effectively seeks to recycle old structures. T-Town would get a second Tidy-Up Tacoma litter-cleanup crew .

The city would also raise fees on police false alarms, she added.

Trees get some love in the 2025-26 biennium-budget, Pauli said — a major area of concern in the community .

The proposal would, for instance, launch a "new tree-maintenance crew with two additional positions," she said. Workers would care for foliage on city-owned facilities and abutting rights of way, among other duties.

Mayor Victoria Woodards told The News Tribune on Thursday that she looks forward to hammering out the budget details in the coming weeks.

"Overall, it's a tough budget. I mean, I can't say I got the budget and said, 'Oh, great,'" she said. "We've got some challenges, but I think for an initial draft, the city manager did a good job in addressing the challenges and making sure that she put funding where we said we had priorities."

What are the next steps?

The City Council will review the budget and get the chance to amend it before adoption, Pauli said during the Oct. 1 presentation. Leaders from various departments — including police, fire and public utilities — will weigh in during upcoming study sessions.

Other important budget dates include: