Spokane spent $43K on campaign for tax hike; might balance deficit with reserves

(The Center Square) – Records show Spokane put nearly $100,000 from the city’s general fund toward “information mailers” for the mayor’s proposed tax increase while grappling with a $25 million general fund deficit.

According to a September 2024 Intrafund Budget Transfers sheet, Spokane transferred $99,798 between three departments’ general fund budgets for the mailers. Councilmember Michael Cathcart said $50,000 is the threshold for asking for the council’s approval, but since the sum was split, it almost snuck by.

Informational campaigns are legal and standard practice with tax proposals like this, but Cathcart is concerned with how Spokane went about it. He said the city essentially subverted a vote from the city council by splitting it between multiple expenses.

“Clearly, the steps they took were to avoid any sort of public or council scrutiny,” Cathcart told The Center Square. “I had frustrations with transparency with the previous administration, don’t get me wrong, but here it just feels like we’ve taken it to another level.”

Cathcart thinks it would have passed if the council voted on it, likely five to two, with him and Councilmember Jonathan Bingle dissenting. His issue is the timing and relation to the deficit.

The expense comes as Spokane grapples with a general fund deficit of roughly $25 million and around $21 million in depleted reserves. Closing the deficit is among Mayor Lisa Brown’s top priorities, and projections indicate it’s now at $7.9 million for 2025.

The mayor will release her official budget proposal next month, which is anticipated to balance the remaining deficit but might take longer than initially thought.

Brown previously told voters they may have to pass a $40 million property tax levy to close the deficit. However, Brown pulled the measure due to concerns and a lack of information and proposed her 0.1% sales tax increase instead for “new investments.”

The general fund previously supported many of those investments, but some were suspended because of the deficit. Still, Communications Director Erin Hut told The Center Square last month that “the sales tax has always been new investments,” which differs from Brown.

“If we’re able to achieve our budgetary goals of getting that structural deficit down to zero,” Brown told the council on Monday, “then all of the community sales revenue can go to new investments, and we’ve discussed before what these look like.”

Following Brown’s comment, Hut sent a text to The Center Square noting she understands the confusion, “but there is no plan to use the funding from the sales tax proposal to fill the deficit.”

“We have identified a path forward out of the deficit by the end of the upcoming biennium without the money from the sales tax proposal,” she wrote.

Hut added that while nearly $100,000 was moved around for the proposal’s messaging campaign, the city only spent $43,000. The rest is still available, and the county has also sent out informational mailers regarding its tax renewal while under its own revenue shortfalls.

State law requires the city to operate under a balanced budget, and it’s doing so for 2024 thanks to moves taken by the city over the last few months. Still, since Spokane recently transitioned to a biennial budget, it doesn’t have to balance the delta entirely until the end of 2026.

“The decisions made in 2024 have already put us on the right path, and we will continue to do so through 2025 with the objective to close it completely during that [2025-2026] biennium,” Hut wrote. “While the budget will be balanced, as required by RCW, our focus is on creating a sustainable budget.”

However, cuts might not balance the budget after all. Hut said they’re looking at other cost-saving measures but hinted that it might come down to the city’s diminished reserves. In April, Brown said the reserves had sunk from $28.3 million to $7.6 million since 2019, slightly less than the remaining deficit for 2025.

“We will be operating within a balanced budget – the key word here is ‘structural’ deficit. We are ultimately trying to match revenues and expenditures. A balanced budget is resources meeting expenditures [required by law],” she said. “Resources can be reserve dollars, too.”