Olympia Finance Committee Covers Debt, Investments, Audit, and Washington Center Funding – July 29, 2026

The Olympia City Council Finance Committee met on July 29, 2026, from 4:30 p.m. to 6:02 p.m. The committee unanimously approved the agenda and the June 15 committee minutes, heard no public comment, and received briefings on citywide debt, city investments, the 2025 financial audit, and Washington Center for the Performing Arts funding. The transcript opens with a reference to Monday, July twentieth, which conflicts with the supplied meeting date of July 29, 2026; the date used in this summary follows the supplied metadata.

Consent Calendar

• Agenda approved unanimously.
• Minutes of the June 15 Finance Committee meeting approved unanimously.

Public Comments & Testimony

• No members of the public signed up for public comment.

Discussion Items

• Citywide debt finance budget spotlight: Accounting Manager Kenzie explained the city-wide debt portfolio, including limited and unlimited general obligation debt, revenue bonds, special assessments, and constitutional debt limits. The city has roughly $90 million of remaining non-voted limited GO debt capacity, having used about half of that capacity. Outstanding debt includes 2025 bonds for the Hands On Children's Museum and parks, earlier refinancings, City Hall, the Washington Center, and street light/transportation bonds. Debt service extends to 2055, with a dip in 2039. Revenue debt includes Washington State Trust Fund and Department of Ecology loans at favorable rates. In response to council questions, staff said a future maintenance center financed through general obligation bonds would draw on the roughly $90 million capacity and could add about $7–8 million per year in debt service. One council member expressed support for placing such large facility projects before voters rather than funding them councilmanically. Revenue debt for the Waste Resources facility would be accounted for separately.
• City investments briefing: Mitch Hankey, chief operating and compliance officer and senior advisor at Government Portfolio Advisors, presented the quarterly market and portfolio update. He reported that the Federal Reserve kept the federal funds rate at 3.5–3.75 percent in Q2 2026, but inflation expectations and market expectations for a possible rate hike have increased. Two-year Treasury yields rose 38 basis points to 4.17 percent, five-year yields rose 28 basis points to 4.22 percent, and PCE inflation reached 4.1 percent in May. The city's total portfolio book yield was 3.3 percent with an effective duration of 1.34 years. Average city cash balances increased from about $150 million in 2023 to $165 million in 2025, while minimum balances increased from $140 million to $153 million. The pooled portfolio returned 3.23 percent over the past year versus a 2.97 percent benchmark; since 2015, the return has been about 1.7 percent net of fees. A 1 percent interest rate increase would reduce the market value of the roughly $134 million core portfolio by about $2.7 million. In the first quarter the portfolio appreciated by $214,000; in the second quarter it lost $340,000 in market value because of rising rates. Council members asked about total return versus book yield, agency bullet securities, and credit ratings. One council member expressed interest in investing in other local governments as a form of social investing if risk and return were comparable.
• 2025 financial audit briefing: General Accounting Manager Kenzie Wong reported that the State Auditor's Office issued an unmodified opinion on the city's Annual Comprehensive Financial Report for fiscal year 2025, with no findings and no management letter items—only exit items. She noted this was an improvement from prior years, including the first year after Workday implementation. A separate single audit, covering the highway planning cluster with $3.7 million in federal expenditures, was expected to exit cleanly. The accountability audit is expected to begin in September. The city manager praised the finance team and emphasized the partnership with state auditors.
• Washington Center funding history: Finance Director Mike Givens presented the history of city funding for the Washington Center for the Performing Arts. The city owns the building; the nonprofit operates it under an operating agreement first signed in 1992, updated in 2018, and extended in 2022 to 2042. The city contributed $3.8 million of the $8.8 million interior renovation completed in 2022, with the remainder raised privately and through grants. Givens explained the city's 4 percent lodging tax: the first 2 percent is a sales tax credit used for tourism promotion, and the second 2 percent is a separate tax administered through the Lodging Tax Advisory Committee. A discussion arose about whether the first 2 percent must also go through LTAC or may be awarded directly by the council; staff said the first 2 percent has historically gone to the Washington Center automatically, but this year the center is applying through LTAC. A council member asked staff to return with the exact RCW language and examples from other cities. The city manager said staff is working through the process and will update the council. The former landfill site at Black Lake Boulevard and Cooper Point Road is being actively marketed, and a new appraisal is expected within at least 90 days. The center has also received voter-approved Inspire Olympia funding for the 2026–2027 cycle.
• Financial report preview: Finance Director Givens noted the June monthly financial report is on the city website and he will give an update to the City Council. The city manager reported that the city is in a much better mid-year financial position than at the same time last year, with no hiring or spending freeze needed this year.

Key Outcomes

• Received the citywide debt and city investments briefings.
• Received the clean 2025 financial audit result.
• Directed staff to follow up on the RCW requirements for the first 2 percent lodging tax and how other Washington cities handle it.
• Staff will update the council on the Washington Center's lodging tax application process.
• Staff will continue marketing the former landfill site and obtain an updated appraisal.
• Finance Director Givens will present the June financial report at an upcoming council meeting.