Spokane County sees revenue bump as $20M deficit and potential cuts loom

(The Center Square) – With a $20.6 million deficit on their heels, Spokane County officials caught a glimpse of hope on Monday as recent sales tax collections show revenue coming in faster than expected this spring.

Jeff McMorris, senior director of Finance & Administration, said the fiscal year started with a bang, but there’s still a long way to go. The county borrowed $2 million in reserves to balance the budget at the beginning of the year, so collections must keep pace to recover that money.

McMorris said Spokane has collected $19.3 million in sales tax revenue so far this year, about 2% more than his predecessor budgeted. The county averaged about 4% growth over the last two decades but is aiming for 1% this year, after only reaching half of its 2% goal last year.

“That 2% we’re over, we need that to be about 2.5% to replace that $2 million,” McMorris told the Board of County Commissioners. “As good as this news is, it doesn’t get us out to a zero.”

If sales tax revenue continues to outpace growth projections, the commissioners could use it to help offset part of the deficit alongside cuts. Several eliminated positions have already saved around $1 million ahead of the 2026 budget cycle, leaving a $19.53 million shortfall still on the table.

McMorris and the board will send letters to all county departments in the coming weeks addressing the potential extent of the cuts. Outside agencies, such as Spokane Sports, that receive revenue from other partners could face reductions of 50% to 100% of their county funding.

He said that general fund departments, such as the Sheriff’s Office and others, should expect to cut spending by about 7%. Since salaries and benefits make up most general fund spending, cuts will likely hit personnel and overhead the hardest.

“We’ve been here before,” Commissioner Josh Kerns said. “Doesn’t mean it’s going to happen, but it could.”

The commissioners want to look for efficiencies everywhere possible, even for simple things like combining the county’s different booths at local job fairs. They balanced a similar shortfall heading into 2025, but with another deficit looming, McMorris says now’s the time to get on track.

The $20.6 million deficit could reach $70 million by 2030 if left unchecked, but state law requires the county to pass a balanced budget. The officials could identify stop-gap measures to fill the hole for now, but that could prove challenging and compound the issue in the future.

McMorris said the 2026 budget cycle will get underway around September, so they have time to get their ducks in a row, but not long. The officials plan to meet monthly to stay on top of revenue trends and potential options before moving full swing next fall.

“We’re not proposing to cut their budget from last year, but we’re saying you have to have a flat budget,” Spokane County Chief Executive Officer Scott Simmons told the others in the room. “Give them the early expectation of a target.”