After six months of tense discussion over how to fill a $43 million deficit, the Vancouver City Council this week passed a $2.1 billion budget for the next two years.
Although the budget is $400 million higher than in 2023-24, balancing the books required cuts to nearly every department, as well as new taxes.
The deficit forced the city to make cuts for the first time in a decade, after inflation, slowing growth and softening revenues snuck up on the city. City officials expect future financial woes next budget season.
“Through a combination of targeted spending reductions, cost reallocations among funds and the addition of new revenues, this recommended budget largely maintains capacity to serve the community and enables a range of strategic investments to serve our growing and urbanizing community,” states an introduction to the city’s budget document, signed by outgoing and incoming city managers Eric Holmes and Lon Pluckhahn.
The only city councilor who voted against the budget was Bart Hansen, who has previously expressed concern about its many new taxes hurting residents.
Spending
The budget is largely broken up into two parts: the operating budget, which funds the government’s day-to-day operations, and the capital budget, which funds long-term projects.
The city’s 2025-26 operating budget will be $1.5 billion, further broken down to $769 million for general, street and fire funds and $763 million for all other operating funds. The $600 million capital budget includes spending on streets, sewer and affordable housing projects.
New taxes
The projected revenue for 2025-26 is about $1.78 billion — almost $105 million more than the last two-year budget. It comes from a variety of sources, including property and sales taxes, fees, and state and federal grants.
The city’ Chief Financial Officer Natasha Ramras said the revenue is lower than projected spending because the city taps existing reserves to fund capital projects and one-time expenses.
Five new taxes, two tax increases and a hike on certain fees will boost revenue for the next two years.
Starting Jan. 1, moviegoers will pay a 5 percent admissions tax on theater tickets (that’s 75 cents on a $15 ticket) in Vancouver.
The city council also approved an ordinance shifting the card-processing fee for electronic payments with the city to the customer starting Jan. 1. The city previously absorbed that cost.
In addition, the city council adopted a 0.1 percent sales tax to fund arts and culture programs, which will also take effect Jan. 1.
Commercial short-term parking, such as street parking or parking lots at shopping centers, will cost more starting January 2026. The council adopted a tax of 15 cents per transaction for parking in lots and garages and 20 cents for parking on streets. The tax will increase by 2 cents per transaction annually.
The most hotly debated new tax was a 0.1 percent business-and-occupation tax on retailers, which would start as soon as Jan. 1, 2026. Although the tax would be imposed upon businesses, they say the increased cost could be passed onto customers through higher prices.
Changes
The city plans to increase property tax collections by 1 percent (the legal annual maximum allowed for Washington cities).
This will increase a resident’s property tax bill by $9.88 per year for a home with an assessed value of $504,554, assuming a 1.93 percent increase in assessed value of the property, according to the city.
The council also approved rate increases in 2025 and 2026 for utilities.
Utility rates will also go up each of the next two years — 4.5 percent for water, 6 percent for sewer, and 8 percent for surface water.
The council approved doubling special license fees required for certain businesses, including tow truck operators and pawnbrokers.
The city reduced its workforce by the equivalent of about nine full-time jobs for a total of 1,356 going into 2025. No sworn public safety positions, such as police officers, were eliminated.
In 2025, the city will dedicate $20,000 to the fire marshal’s office for fireworks enforcement and $80,000 to the overtime budget for additional fire suppression training.
The social service agency the Children’s Justice Center and the environmental nonprofits Vancouver Watershed Alliance and Columbia Springs will receive $283,000, $100,000 and $30,000, respectively, in 2025. The organizations previously feared major funding cuts but are still looking for ongoing funding into 2026.
Grounds maintenance for Vancouver’s three city-owned cemeteries will lose $100,000 over the next two years.
Future problems
City staff anticipate budget deficits in the coming years, as well, with revenue failing to keep up with demands for service in the midst of inflation and a growing population.
The city, like all Washington cities, cannot raise property taxes more than 1 percent within budgets, which many cities argue does not allow them to keep up with rising costs.
The Association of Washington Cities, which represents Washington’s cities and towns on a state level, is asking the state Legislature to raise that cap to 3 percent, according to the association’s 2025 City Legislative Priorities. Democrats abandoned a Senate bill that would have done just that in February after Republicans pushed back, concerned the cap would strain taxpayers.
“While this budget generally maintains stability in services and funds some new investments in focused areas, the pressures of the structural deficit are expected to grow in the future,” the letter by Holmes and Pluckhahn stated.
