(The Center Square) – The Spokane Valley City Council approved the 2026 budget on Tuesday, filling a $1.5 million general fund deficit between nonrecurring revenues and spending with “excess” reserves.
Last December, the officials passed the 2025 budget, which balanced recurring revenues and spending while adopting a $1.1 million general fund deficit for one-time expenditures. The deficit surpassed $10 million on Tuesday after the general fund was amended to move existing reserves to other accounts.
Internal policy requires the city to maintain general fund reserves equal to at least 50% of spending in that account. After approving the 2026 budget and amending the outgoing framework, the council will have $36.5 million left over, which is about 53% of spending, with the citywide balance at $97 million.
“Easy to call a budget balanced when you don’t pay for some of your needs,” Councilmember Al Merkel argued Tuesday night. “We’re still about at least 10 officers short if you hypothetically include the next 10 that we’re going to add; so to me, that’s not a balance. That’s just not paying some of your bills.”
A consulting firm recommended that the council expand the local police force by around 30 officers a few years ago. The officials included funding for the first 10 in the 2025 budget, and voters passed a historic tax hike in August to fund the next round, but the Valley still needs to identify funding for the last round.
Merkel has repeatedly proposed allocating some of the existing fund balance toward hiring those 10 officers, but his peers want to hold onto the reserves and identify a recurring revenue source instead.
Still, the council elected to fill another $1.5 million deficit in nonrecurring general fund spending with reserves, which the agenda describes as “a planned spend down of fund balance for one-time items.”
All in all, recurring general fund spending exceeded recurring revenues by about $118,000, with total expenditures at $68.5 million, 7% higher than the 2025 amended budget. The citywide budget across all 31 funds amounted to $148 million after capital expenses, outpacing total revenues by $8 million.
“We are meeting our two primary budgetary goals in our general fund,” Finance Director Chelsie Walls confirmed on Tuesday. “Recurring revenues exceed recurring expenditures by about $119,000, and our ending fund balance in the general fund is estimated to be about … 53.44% of recurring expenditures.”
Public safety spending increased by nearly 12% in the 2026 budget, while all of the other general fund departments only saw expenses rise by 1.27%. The increase to public safety is largely financed by the voter-approved sales tax, as the council already rejected a 1% property tax increase allowed for 2026.
The $1.5 million deficit between nonrecurring general fund revenues and spending is attributed to new police vehicles, technology, software, facilities upgrades and updating the Valley’s comprehensive plan.
The capital budget includes $47.9 million in spending, with $34 million in state and federal grants. One project not included in that total but that could be in the near future, is a $44 million ice rink proposed by an anonymous donor. That person would cover the costs outside of $2 million for preliminary work.
The city’s Lodging Tax Advisory Committee recommended amending the budget as soon as Dec. 16 to include $2 million for that preliminary work. The LTAC also recommended allocating up to $600,000 in operational support for the ice ink starting in 2027, despite hopes the project would be self-sustaining.
The Center Square filed a records request in October for emails between the donor and City Manager John Hohman after he refused to disclose their identity. Deputy City Clerk Patricia Rhodes said the city informed the donor so they could seek a court order prohibiting the request. However, after a Nov. 24 deadline passed, Rhoades noted that other work had come up and extended that to Dec. 29.
“We need additional time to respond due to the scope of the request, workload issues, the holidays, and the need to prioritize other essential functions, Rhodes explained on Nov. 24. “If we encounter a need to extend our estimate, we will contact you promptly with a revised estimated date.”
