The Wait is Over — 2025 Budget Suggestions Is Here!

I received the first inquiry at the end of June. “Where can I find the new edition of Budget Suggestions on your website?” A week later, I received a second one. “When will the new Budget Suggestions be released?”

Budget staff from across the state eagerly await the annual release of MRSC’s Budget Suggestions. As part of MRSC’s contract with the Department of Commerce, Budget Suggestions must be published by August 1 each year, and we announce its publication via blog and our newsletter.

Filled with useful information for cities, towns, and counties, 2025 Budget Suggestions is now available on our website. Local governments use this annual publication when drafting their upcoming budgets, because it covers core revenues, economic factors, legislation that may affect budgets, state shared revenue projections, and budget requirements for cities, towns, and counties.

State Shared Revenue Estimates

As always, 2025 Budget Suggestions contains estimates for some of the various state shared revenues that cities, towns, and counties receive. Although MRSC cannot provide estimates for all state shared revenues, we do provide estimates for several revenues distributed on a per-capita basis. Using revenue forecasts from several state agencies, MRSC provides calendar year 2025 and 2026 revenue projections for:

• Cannabis excise taxes,
• Fire insurance premium taxes (for certain cities)
• Liquor revenues,
• Motor vehicle fuel taxes,
• City-county assistance, and
• Criminal justice appropriations.

It is important to note that in 2023, the Washington State Legislature passed ESHB 1838, which transferred forecasting duties of motor vehicle fuel taxes from the Washington State Department of Transportation (WSDOT) to the Washington State Economic Revenue Forecast Council (ERFC). Due to the transition, ERFC was unable to provide an updated forecast for the Gas Tax (MVFT), so this year’s MVFT estimate provided in 2025 Budget Suggestions continues to use figures from the June 2023 forecast provided by WSDOT. ERFC will begin posting updated MVFT forecasts beginning in September of 2024.

Cities, towns, and counties receive three portions of motor vehicle fuel taxes: MVFT, Multi-Modal, and Increased MFVT revenues. While the main MVFT distributions use the 2023 forecast, the Multi-Modal and Increased MVFT revenues distributed by the state are not impacted because they are the same each year and distributed on a per-capita basis, so those revenue estimates were not impacted when forecasting duties were transferred from WSDOT to ERFC.

Legislation That May Affect Your Budget

There are a few legislative changes to some taxes that may be of interest to local governments, which are reviewd below.

HB 1987 now allows revenues from the Local Retail Sales and Use Tax for Public Facilities in Rural Counties (commonly referred to as .09 Money) to be used for the financing of affordable workforce housing infrastructure or facilities and land for such purposes.

SHB 2428 allows cities and towns to enter into agreements to share a portion of the “basic” (first half-cent) and “optional” (second half-cent) sales tax.

HB 2044 removes the supplanting restriction on levy lid lifts that had been placed on cities within King County.

Implicit Price Deflator

Budget Suggestions usually contains a discussion of the implicit price deflator (IPD), which is important to taxing districts with a population of 10,000 or more. Such taxing districts may only increase their regular property tax levy amount by 1%, or the percentage increase of the IPD, whichever is less.

If the IPD is less than 1%, those taxing districts must pass an ordinance or resolution of substantial need if they wish to get the maximum 1% increase. Currently the IPD is 2.6%, but the official IPD figure will not be calculated by the Washington State Department of Revenue until September 25. When the final IPD figure is calculated, we will publish it to our Implicit Price Deflator webpage and in our Weekly Insights e-newsletter.

Other Budget Resources

Many other budgeting resources can be found on our website, such as budget procedures, budget calendars, financial data, checklists, and more, and the best place to start is our Budgeting webpage.

For historical data, MRSC’s Tax and Population Data webpage has population, property, and sales tax information for each city and county in Washington for the past 10 years.

As always, please reach out to me with any questions you might have. Happy budgeting!