City of Lacey’s 2026 budget gets full council support 

All seven Lacey City Council members backed the municipality's spending blueprint for fiscal year 2026, opting to pull from reserves and spare the workforce from cuts. 

Ordinance 1693, which establishes the city's 2026 budget, received unanimous support at a regular meeting the Dec. 16. The vote followed two public hearings at Lacey City Hall on Nov. 18 and Dec. 2.

The budget totals $224,954,147, which represents a decrease of $91,815,418 from the amended 2025 budget. The decrease largely stems from reduced capital expenditures and the removal of one-time capital transfers, including funding for Greg J. Cuoio Community Park Phase 1A. 

The general fund dropped to $74,396,916. That was down about 16.3% from 2025. 

Lacey Finance Director Troy Woo said the budget leaves some departmental requests unfunded, particularly staffing additions needed to match community growth. 

"This budget falls short by $3 million," Woo said. "Thankfully to the council's vision and identifying reserves, we have some time to take a methodical approach and (address) this shortfall." 

The city will draw $2,991,304 from its Budget Policy Implementation Reserve to close the general fund gap. 

Woo said Lacey has arrived at "the midpoint of a two-year process" to fix a structural imbalance through new revenue sources, smarter economic development and a reevaluation of service priorities. 

Adjustments 

The final spending plan differs from the Oct. 21 preliminary budget on several items. 

Property tax projections climbed a net $106,695 thanks to the 2025 refund levy calculation, cutting how much the city needed from reserves. 

However, on Nov. 20, the Thurston County Assessor's Office released new property values that dropped Lacey's new construction credit from $73,279,975 to $68,479,975, trimming projected property tax income by $3,371. 

The Lacey Police Department's contract with Olympic Health and Recovery Services for the Mobile Outreach Team, the unit that responds to mental health crises alongside officers, expands to five workers from from four in 2026. 

The expansion costs an extra $95,808, which is paid from the reserve fund. Because of how money moves between city accounts, the total budget hit reaches $191,616. 

Other changes include a $20,659 increase to joint animal services fees, a $6,373 bump to Long Lake Management District assessments and $5,000 more for Department of Health fees. 

Water, wastewater and stormwater construction budgets grew by $30,000 to cover design work on two smaller projects. A state loan repayment for the Water Fund also came in $69,975 higher than staff expected, producing a $139,950 total increase once transfers between accounts get factored in. 

The Lodging Tax Advisory Committee also reshuffled how hotel tax dollars get spent, affecting both the Regional Athletic Complex (RAC) and the Parks, Culture & Recreation Department. 

Where the money goes 

The budget money is spread across dozens of funds dedicated to specific functions. 

The Current Expense Fund, which covers most basic city operations, receives $61,999,390. 

Water Utility gets $26,568,039 and Wastewater Utility receives $29,815,305, both are funded by ratepayer bills. Stormwater Utility gets $6,204,191. 

Capital funds include $26,118,726 for Water Capital projects, $12,788,382 for Wastewater Capital and $7,142,500 for Arterial Street work. 

Transportation Improvement receives $5,380,000. Smaller funds cover everything from criminal justice ($1,582,403) to RAC operations ($1,537,994), as well as capital projects ($2,492,200). 

The Equipment Rental Fund gets $6,474,561 and Information Management Services receives $4,044,370. 

Joint Animal Services, the shelter operation Lacey runs with Olympia and Tumwater, has a separate $3,941,921 budget. 

Fiscal discipline 

Council members credited decades of conservative management for the city's ability to absorb the budget shortfall without layoffs or service cuts. 

Council member Lenny Greenstein said the reserve cushion gives Lacey options other cities lack. 

"The $3 million shortage, we're in a position that we can, we can afford to pay it," Greenstein said. "We have the money in reserves, which not a lot of jurisdictions do." 

Greenstein noted recently retired Lacey Police Commander Joe Upton's earlier comment that "we've never laid anyone off in Lacey." 

Outgoing council member Robin Vazquez echoed those sentiments.

"I think it's the right choice not to hire people until you know that you can maintain those positions and continue the funding," Vazquez said. 

Council member Nicolas Dunning praised the sacrifices across city departments. 

"Every time I see an article in the paper about another jurisdiction in their budget, I am so grateful for the not only the work that you guys do in finance, but the sacrifices and understanding that every department in Lacey has," Dunning said. 

Deputy Mayor Malcolm Miller credited growth-era fiscal discipline, particularly in the Hawkes Prairie area, for allowing the city to build a new police station "without adding any tax burden to the residents." 

Miller also recognized City Manager Rick Walk for his work minimizing the shortfall and identifying new revenue streams. 

Council member Michael Steadman acknowledged the tight staffing, but defended the approach. 

"We ran lean as a city staff for decades," Steadman said. "It is expensive, full-time employees, right? But it's also our biggest asset." 

2027

The city plans to balance its books by 2027 without leaning on reserves. 

Three strategies could get Lacey there: finding new revenue, deciding which services matter most, and investing in economic development to grow the tax base over time. 

Next year's priorities include an annexation study, design work for RAC improvements, environmental regulation compliance, replacement of aging equipment and higher maintenance costs. 

Mayor Andy Ryder said budgets reveal what a city truly values. 

"If you want to look at (a) city's values, you look at the budget they adopt," Ryder said. "I have always been proud of the values here in the City of Lacey, with our public safety, with our public works, with our parks." 

The approved budget heads to the Washington State Auditor and the Association of Washington Cities per state requirements.