Tacoma's roughly 4,000 city employees could face layoffs, benefit cuts, or higher healthcare premiums as City Manager Hyun Kim negotiates with 31 labor unions to close a $40 million structural deficit before a September budget announcement.
Personnel costs eat 59% of the city's general fund. That makes the workforce the biggest lever Kim has, and it puts the Joint Labor Committee, the coalition of unions that collectively bargains employee benefits, at the center of the conversation.
Kim told The News Tribune on Sunday, August 2, that healthcare plan design, contribution levels, and other cost-sharing measures are all on the table.
He said the city's path forward isn't limited to cuts or new taxes. Part of the strategy is growing revenues by creating conditions for businesses, startups, and restaurants to invest in Tacoma.
That revenue-growth bet matters for Tacoma's business community. Kim's strategy depends on making the city friendlier to new investment even as services shrink. He has acknowledged residents will see service reductions, though he has not specified which departments will be affected.
Unions remember 2011
The last time Tacoma faced a comparable shortfall was the 2011-2012 budget cycle, when the gap hit $60 million. Firefighters in IAFF Local 31 gave up a 2.5% cost-of-living raise to save jobs.
Patrick McElligott, now vice president of Local 31, was a probationary firefighter who received a layoff notice that year. He kept his position because of that sacrifice.
McElligott says the city never reciprocated, and his members won't do it again.
"Our members are not going to stomach voting on another cost of living adjustment cut," McElligott told The News Tribune.
IBEW Local 483, one of the largest unions representing city workers, also forewent raises in 2011 and moved at-risk employees into vacant positions to avoid layoffs. Alice Philips, former business manager of Local 483, said the city worked well with the union during that crisis.
The numbers so far
The deficit was revised upward from $27 million to $40 million in June 2026 after the city received new projections on rising healthcare and fuel costs. A hiring freeze already in place is projected to save $7.4 million across general government in 2026, including $2.2 million in the General Fund, according to Kim's "Roadmap to Recovery" plan presented at a July 7 City Council study session.
The city has also merged its Public Works and Environmental Services departments and is consolidating Human Services, housing, and homelessness programs into a single Neighborhood and Community Services department.
Garrett Milam, a professor of economics at the University of Puget Sound, said restructuring healthcare could help but won't close the gap alone. Higher premiums for employees are one likely outcome.
What's next
Kim will announce specific cuts in September 2026. Public budget hearings for the 2027-2028 biennium will follow. As we reported July 26, the same deficit already threatens 1,200 homeless shelter beds funded through the city's general fund.
About 70% of Tacoma's city workforce is unionized. The September announcement will determine whether those workers absorb the pain through benefits, headcount, or both.
