Lacey City Hall

Lacey officials talk first quarter’s finances, 2021 budget


LACEY –– In the midst of an economic downturn caused by the COVID-19 pandemic, Lacey’s financial officials are set to talk about the city’s first quarter finances on June 23 at 8: 30 a.m.

As of March 31, the city’s general fund expenditures totaled more than $10.3 million, or 18.5 percent of the city’s 2020 budget – a total increase of 7.1 percent over the first quarter of 2019. Most of the budget increase was caused by inflationary increases and rising labor force expenditures. First-quarter general fund revenues increased $839,425 compared to the previous year, mostly because of natural gas utility and solid waste utility revenue.

Telephone utility revenue went down because many are switching to cell phones and cancelling landlines. The total lost because of declining phone line revenue totaled $37,306 compared to the previous year. Cell phone data plans are exempt from local utility taxes.

City finance officials also expect some financial hardship in the wake of the COVID-19 pandemic. On May 4, Gov. Jay Inslee signed the “Safe Start” order, outlining a phased approach to re-starting the state’s economy, closing many businesses and bringing the local — and national — economy to a standstill.

A June 19 memo from city staffers states while those sacrifices are necessary for public safety, the business closures had a significant impact on city revenues. This revenue impact already required a $6.7 million reduction to the city’s general fund budget. The reduction was based on a three-month scenario of severe decline to revenues from mid-March to mid-June. The scenario assumes a shorter-term event with a relatively quick recovery. If the emergency lasts longer than three months, the revenue impacts will be greater, and the possibility of a slower recovery increases. A longer emergency and slower recovery may require additional budget reductions, so more reductions are not being ruled out.

The state-wide “Stay Home, Stay Safe” order severely impacted the city’s revenues as travel came to a halt and many jobs were suspended. Despite the unknown impacts of the public health emergency and challenges identifying the beginning, length, and strength of the economic recovery, city officials plan to develop the 2021 budget in the coming months.

City finance officials expect next year’s budget will not be one of expansion. There is an increasing likelihood further decreases will be necessary to sustain the city’s finances, and it is unlikely nonessential budget requests will be considered without offsetting reductions in other areas or an identified revenue source.

Notably, Hawks Prairie Casino appealed to reduce the tax rate temporarily by 50 percent through the third and fourth quarter of this year and by 25 percent of the current rate in 2021 in an effort to recover the loss and keep the doors open. Last year the Hawks Prairie Casino paid the city of Lacey $350,425 in taxes. The average per year net profit for the casino is $321,619.

Those interested in attending the remote meeting can view it online at KUT09, and the password is 912249. Those tuning in by phone can dial (888) 788-0099 or (877) 853-5247. Enter the Webinar ID 863 3213 5822 when prompted and press #. A participant ID is not required.

Lacey, Lacey City Hall, 2020 budget, 2021 budget, COVID-19, coronavirus, pandemic, Lacey finances, Lacey budget, Safe Start


No comments on this item Please log in to comment by clicking here