(The Center Square) – Just months after closing a $25 million deficit, Spokane is scrambling to put its budget back together. Revenues are falling short of projections as fears of a recession spread across the country, leading to a dire warning from city officials on Monday as imminent cuts lie ahead.
Spokane Chief Financial Officer Matt Boston said January and February marked the first time in almost a decade that revenues have dropped like this. The city’s sales tax collections came in 2% below last year’s goal, which he called “incredibly alarming,” after recording year-over-year increases since 2017.
He blamed President Donald Trump as consumer confidence falls due to his tariff policies stirring up the markets. A surplus from the end of last year could offset a deficit in 2025, but Boston said if the city adjusts its revenue projections, it will require cuts to balance the budget in 2026.
“The mayor and our executive team are already working with me to identify potential solutions,” Boston told the Spokane City Council on Monday. “However, I want to remind you that the 2025-2026 general fund-supported budgets we adopted were already extremely lean.”
Boston budgeted a 2% increase in sales tax revenue for 2025, which seemed conservative at the time but has since proven otherwise. He said further cuts will require difficult decisions.
Councilmember Jonathan Bingle questioned whether Trump is really to blame. He advocated for lower projections and further cuts with Councilmember Michael Cathcart last year, but the city went a different route. Now, Mayor Lisa Brown and her administration are circling back for more.
“[There’s] going to be some challenges to implementation, but we’re taking the administration by their word,” Councilmember Zack Zappone said last year when passing the budget to close the $25 million deficit.
While sales tax collections are behind what the city initially projected, Jessica Stratton, director of management and budget, said growth is flat considering all revenue streams.
The issue is that consumer confidence is expected to continue falling, with household spending following suit. Sales tax collections make up the city’s biggest chunk of revenue, so even if the other sources trend well, Spokane will need to tighten its belt or pull from reserves to make do.
Boston said ongoing cuts to federal spending could make the situation worse. Trump already put $48 million at risk for Spokane, but Boston said service providers could also lose funding. Many are already facing cash-flow issues and may ask for a bailout if they become insolvent.
“These issues are compounding. Many of them have direct, immediate, and long-term impacts on the health of our general fund,” Boston said. “We must continue to plan proactively, adapt quickly and prioritize critical service to weather the challenges ahead.”
