Lacey explores levy to address parks funding deficit 

With the city’s parks budget facing a $53.8 million capital improvement deficit and an $8.5 million maintenance shortfall, the Lacey Parks Improvement Funding Work Group met Monday, November 18, to chart a course for the city’s parks sustainability. 

“The operating expenses for our parks, culture, and recreation system is looking like … that $10.1 million to operate,” said Troy Woo, the city’s finance director. 

“And then, with the revenues from the fees and programs coming in, coming in around $1.6 million annually … you can obviously see that the revenue doesn’t cover the expenses,” Woo added. 

The group reviewed several potential funding mechanisms, including establishing a Metropolitan Park District (MPD), reallocating reserve funds, and comparing Lacey’s potential tax rates with nearby Olympia and Tumwater to provide regional context. 

Potential for a Metropolitan Park District 

Creating an MPD—a funding mechanism allowing Lacey to levy property taxes specifically dedicated to parks and recreation—was explored as a potential solution for funding the city’s parks system. 

Woo presented an overview of the MPD framework and its potential impact on residents and the city’s revenue. 

“The statutory limits for Metropolitan Park District, in terms of property tax levy, is $0.75 per $1,000,” Woo explained. 

Woo added, “Anything between zero and $0.75 is at your fingertips regarding what you might want to consider. For every $0.25 of assessed valuation compared to Lacey’s assessed value, it’s about $3.3 million. So $0.50 would be double that, $6.6 million, and three times that, going up to $0.75, would be $9.9 million.” 

Woo highlighted how the levy might affect homeowners. 

“Under this scenario, if we use $0.50 per $1,000 as a potential Metropolitan Park District levy, it’ll generate $6.6 million per year. The impact it will have on an average house in Lacey will be $250 per year. The general levy for the city next year is $351 for an average house.” 

Regional tax comparisons provide insight 

The work group examined how Lacey’s potential MPD levy would compare to those in Olympia and Tumwater, two nearby cities with established park funding districts. 

“In 2024, Olympia’s MPD levy rate is $0.50 per $1,000 of assessed value, Tumwater’s is $0.33, and Lacey’s MPD rate would be $0.00 unless established. If Lacey adopts the maximum levy of $0.75 per $1,000, it would place Lacey higher than both Olympia and Tumwater in terms of dedicated MPD tax rates.” 

Regarding the total property tax burden, Olympia residents pay a combined general levy and MPD tax rate of $1.90 per $1,000 of assessed value, while Tumwater residents pay $1.85. 

Lacey’s combined rate is $0.73—significantly lower than its neighbors. 

Even with the addition of a $0.50 MPD levy, Lacey’s total property tax rate would rise to $1.23, still below Olympia and Tumwater. 

“This comparison gives us some perspective,” Woo noted. “It shows that even with the addition of an MPD levy, Lacey would still be in a relatively competitive position compared to other cities in the region.” 

Evaluating tax impact and public support 

Workgroup member Cathy Cook underscored the value of understanding Lacey’s position within the regional tax landscape. 

“What is the percentage of single-family ownership versus multi-family?” she asked, expressing concern about how different property types might share the tax burden. 

Woo acknowledged that more analysis would be needed and emphasized that public support for the MPD levy would depend on how well the group communicates its value to residents.  

“The question is whether the community sees the value in what the additional funding would provide,” Woo said. “If residents understand that the money would go directly to addressing maintenance gaps and funding priority projects, it increases the likelihood of public support.” 

Balancing revenue options 

While the MPD was a central topic, the group also discussed other funding mechanisms, including reserve funds and grants. 

Woo detailed how reserves were currently allocated for parks. 

“The reserves the council has identified for park purposes is $4.4 million,” he said. “We identified about $545,000 that so far is dedicated to the museum project, $350,000 for the Virgil Clarkson Senior Center, and about $2.2 million for RAC field replacement.” 

However, Woo emphasized that reserves alone would not close the funding gap. 

“When you add these three sources together, there’s about $1.35 million in unallocated reserves, which doesn’t exactly match up to the project list,” he said. 

The group also weighed the advantages and disadvantages of borrowing funds versus adopting a pay-as-you-go strategy.  

Woo shared the trade-offs: “Pay-as-you-go would mean lower overall costs but project delays due to cash flow limitations. Debt issuance would provide immediate funding but at the cost of 20-year interest payments.” 

Next steps 

The group agreed to finalize its recommendations at the next meeting on December 9. 

These recommendations will include an analysis of MPD levy scenarios, regional tax comparisons, and strategies for addressing immediate and long-term funding needs. 

As part of the process, the group plans to conduct further public outreach to assess community support for the proposed funding mechanisms.