Lacey’s nearly $225M budget for 2026 sails through final hearing 

The City of Lacey's proposed budget got $91.8 million lighter for 2026 after major construction moved toward completion and one-time capital transfers dropped off the books. 

The proposed spending plan totals $224,954,147. Capital funds took the biggest hit as completed projects erased costs that boosted the 2025 amended budget. 

The budget got through a final public hearing before the Lacey City Council on Tuesday, Dec. 2, with no public testimony and no requested amendments. 

Finance Director Troy Woo presented the proposed budget to the council. 

"Your total 2026 proposed budget is just under $225 million," Woo said. "This is a decrease of about $91.8 million. As we discussed in past presentations and hearings, this is mostly due to lower capital construction that's expected in 2026." 

The general fund portion shrinks to $74,396,916, a decline of $14,492,754 from the amended 2025 General Fund Budget. 

The completion of Greg J. Cuoio Community Park Phase 1A accounts for the bulk of the reduction, according to the city, since one-time capital transfers associated with that project will not recur in 2026. Rising labor costs, driven by inflationary growth, partially offset the savings. 

Budget revisions 

Apart from capital reductions, new developments in recent weeks drove changes to the budget since the last public hearing on Nov. 18. 

"I will note that there are three changes to the budget from what you saw at our last hearing," Woo said. "We've added a total of about $332,000 to the proposed budget." 

The first adjustment came from the Thurston County Assessor's Office, which released 2026 certified assessed values on Nov. 20. 

"We got an update to the assessed valuation from the Thurston County Assessor's Office," Woo said. "This ended up being a net reduction of about $3,400. This is due to the fact that our new construction credit went down. The new construction credit now is $68.5 million. We previously used $73.2 million." 

The second adjustment involves the city's contract with Olympic Health and Recovery Services, a provider that supplies Mobile Outreach Team and Designated Crisis Responder services to the Lacey Police Department. 

"That's a vital service that works alongside our police department. We're currently reviewing that contract and in negotiations, and it looks like the proposed agreement is actually going to be an expansion. That team will expand from a team of four up to five. That's about a $96,000 increase,” Woo said. 

The adjustment causes a double impact on the overall budget since the city must transfer additional money from the Current Expense Fund into the Public Safety Fund. 

Sales tax revenues no longer fully cover expenditures originally anticipated during planning for the Proposition One sales tax, pushing the total net budget impact to $191,616. The expansion will also draw from the Budget Policy Implementation reserve. 

The third change affects the water utility after the city received the final repayment schedule for a $10 million public works loan that funded pH treatment projects. 

The 2026 loan payment came in $69,975 higher than staff had calculated. The net budget impact doubles to $139,950 since the adjustment also increases transfers between the Water Capital Fund and the Water Debt Fund. 

In total, the three adjustments lift the planned draw from the Budget Policy Implementation Reserve to $2,991,304. 

Final vote 

The budget process kicked off months ago when staff developed the proposed spending plan throughout the summer and concluded work in September. Preliminary revenue and expenditure forecasts along with major budget considerations went before the council at the annual budget workshop on Sept. 16. 

City Manager Rick Walk formally presented the balanced 2026 budget to the council on Oct. 21. Public input came through a revenue hearing on Nov. 3, followed by the first budget hearing on Nov. 18. 

Mayor Andy Ryder acknowledged Woo and city staff for the months of work on the proposed budget. 

"Thank you so much for the update and all the hard work that your staff does," Ryder said. "I know this is a ton of work that goes into these budgets, and it started six months ago or (what)ever, to get to this point. So we really appreciate that." 

The Lacey City Council will vote on final adoption of the 2026 budget at a meeting on Tuesday, Dec. 16.