Olympia City Council set to adopt 2026 budget with new taxes, position reductions 

New revenue tools and department position cuts are expected to be adopted by the Olympia City Council in order to close a $6.5 million budget deficit.

The city council is scheduled to consider adoption of the final 2026 buget at a meeting on Tuesday, Dec. 9.

 City Manager Jay Burney presented a budget that was shaped through retreats, study sessions and multiple updates from department directors over several months.  

“I want to acknowledge that this has been a difficult time over the past couple of budgets,” said Burney, in addressing city employees during a meeting on Tuesday, Nov. 5. “But with the decisions made this year, we are on a path to better budget sustainability.” 

Revenue measures 

To help balance the 2026 budget, the council has approved two revenue measures: 

• A 0.1% public safety sales tax, authorized by House Bill 2015, is expected to generate about $1.5 million this year (half-year collection), and $3 million annually starting in 2027. Until full-year revenues arrive, the city will rely on a one-time use of Real Estate Excise Tax (REET) funds.  

• An increase to the Business & Occupation tax, setting all categories to a 0.002 percent rate except retail, which will be a 0.0015 percent rate, and raising the filing threshold to $500,000 in gross income. This change is expected to generate $1.8 million in 2026.  

Eliminations and additions 

The budget also calls for eliminating eight positions across several departments, including communications, the city manager support position, legal and economic development, Familiar Faces and climate programs. 

A federal lobbyist contract will also end, and a position in the Community Planning and Economic Development Department will be vacated early next year.  

The total reductions are projected to save $1,284,593.  

Burney acknowledged the difficulty of the moves, but said departments would continue advancing council priorities.  

The budget also  includes several ongoing and grant-supported additions: 

General fund impact: 

• Olympia Fire Department bunker gear replacements - $84,000 

• Accounting for increased jail contract costs - $900,000 

• Funding to establish an emergency manager position (potentially shared with another jurisdiction) - $75,000 to $100,000 

• Continued support for the Olympia Downtown Alliance guide expansion - $195,000 

• Olympia’s share of the Home Energy Score Program - $60,000 

• Funding for downtown flower baskets - $20,000 

• Ongoing Olympia Strong implementation - $100,000 

Neutral or grant-funded additions include: 

• One additional firefighter (offset by overtime savings) - $180,000 

• A climate resilience coordinator (grant-supported) - $152,592 

• Safe housing and rental efficiency program staffing (grant-supported) - $150,000 

• Climate Energize fellow - $93,750 

• Energize Olympia marketing and outreach - $15,000 

• Support for the Sea Level Rise Collaborative - $117,000 

• 1.5 full-time equivalent positions for rental registry implementation (funded by registry fees) - $191,070 

• Sidewalk repair team funded through the Transportation Benefit District - $830,000 (in the first year, includes $149,000 of one-time equipment purchases); $681,000 each year following 

Utility rates, development fees 

The council reviewed proposed utility rate increases for 2026. Combined, water, wastewater, stormwater and other utility charges amount to a 3.74% hike, or about $12.04 on a bimonthly bill. 

“They kept these increases close to where we are with CPI (consumer price index) over the past year,” said Burney, noting the rate recommendations are supported by the Olympia Utility Advisory Committee.  

Development-related fees, including General Facilities charges, LOTT Capacity Development charges and permitting fees, also reflect adjustments. That includes a 2.7% increase in permit fees and a 10% increase in transportation impact fees due to rising labor and construction costs.  

Developers pay the fees to help expand utility services.  

Mayor Dontae Payne acknowledged the difficult choices involved in closing the budget gap.

“It is not ideal … to have to tax the community, but we are also taking $1.2 million in reductions. We wanted to listen to the voices of the community, who still told us that, despite our budget deficit, we still have priorities and things that we care about as a community, we don’t want to see drawn back, reduced, or cut altogether," he said.

Council member Clark Gilman’s motion to approve Burney’s recommendations was approved.