While a finalized budget won’t be approved until later this year, city officials began preliminary discussions about the 2025/26 biennial budget at last week’s City Council meeting, with more meetings and public hearings scheduled.
Yelm Finance Director Stephanie Nanavich presented a preliminary budget report to the Yelm City Council on Tuesday Oct. 8. She reported she, along with Mayor Joe DePinto, City Administrator Todd Stancil and several different department directors have been working hard to create the budget for the council’s eventual vote.
She emphasized that the numbers presented to council during the meeting are preliminary and will change as the process is ongoing.
Nanavich said the 2025-26 biennial budget goals include creating and maintaining safe neighborhoods, sustainable and cost-effective infrastructure, a strong and diverse economy, clean and vibrant public places and the best run government the city can offer.
“Our policy is to maintain a balanced budget for ongoing programs and to maintain the general fund ending-fund balance at 22% of annual expenditures,” Nanavich said. “Our objectives are to ensure financial integrity, sound and prudent financial management, maintain programs ensuring a long-term ability to maintain them, and to promote openness and transparency.”
According to Nanavich, in 2025, the City of Yelm anticipates $11.06 million in revenue and $12.516 million in expenditures. In 2026, the revenue source is projected to be $9.86 million, while expenditures are expected to be $10.09 million.
Nanavich presented a five-year forecast of the general fund, tracking beginning reserves, revenues, expenditures and ending reserves to try to “look out at least five years.” She noted that the city always wants to have 22% of operating and maintenance reserves set aside in the general fund.
“You can look at 2025, we’re going to have about $1.9 million for that [operational and maintenance] reserve in the general fund. Right now, the preliminary is saying there’s about $1.58 million in the general fund of undesignated reserves. Some of that is going to be used up as we progress through this budget as we add and takeaway things and resolve the union contracts. Some of that will be used up.”
In 2025, operating revenues will exceed operating expenditures by $802,248 and will decrease to $293,924 in 2026. The operating revenues balance will again decrease in 2027 to $242,251 and once again to $159,429 in 2028. Nanavich projects the balance to be around $75,350 in 2029. She pointed out that these projections don’t take into account every variable.
“What we’ve done with this projection, we’ve said, based on historical data and without knowing large things that might come in the future like large commercial or residential developments — those are unknowns — but based on historical data, with modest growth, will we be able to support operating expenditures in the next five years?” Nanavich said. “What this is showing you, going out five years we’re still going to be where operating revenues are still above operating expenditures.”
She added that the city can assure revenues will exceed expenditures at least another five years, providing support and affordability.
“We’re comfortable with the operations that we’re proposing, that we can maintain those operations at least over the next five years,” Nanavich said.
Ongoing expenditures proposed in the 2025-26 budget include a Risk Management Service Agency insurance increase of 4.1% in 2025, an estimated cost-of-living-adjustment increase based on current labor negotiations and an anticipated increase in employee medical benefits at 8% and dental benefits at 4% each year.
The ongoing expenditures proposed also include the addition of one police officer in 2025 and two in 2026 — both using public safety sales tax money to fund the positions. Nanavich said the city expects $400,000 from the tax. Another ongoing expenditure is the addition of one project and grants manager, with up to 50% of that salary and benefits reimbursed through grants.
The budget also proposes the addition of one wastewater treatment plant operator and one maintenance worker in parks and, lastly, to fund outside agency requests at $50,000 annually, including the beautification grant program and the art program at $25,000 and $8,000 each.
One-time expenditures in 2025 include new police officer training and equipment at $126,900; LaserFiche, Bias Cloud and Flock Cameras programs at $62,750; and the transfer of $1 million from the general fund to reserves to anticipate growth and to pay off the Public Safety Building one year early, saving nearly $30,000 in interest and further increasing the city’s debt capacity.
One-time expenditures planned for 2026 include two new police officers and training and equipment at $253,980, and Flock Cameras and BIAS cloud systems at $35,000.
“There are requests from the departments that we’ve received that we might not be able to put into the preliminary budget, but as we move into 2025, and the contracts are settled and we have more knowns, we might be able to add some of those items in mid-biennium,” Nanavich said.
More budget discussions will take place at upcoming meetings on Tuesday, Oct. 22; Tuesday, Nov. 5; Tuesday, Nov. 12; and Friday, Nov. 22.
