Roughly 1,200 people sleeping in city-funded shelters in Tacoma could lose their beds as the city confronts a $40 million structural budget deficit heading into the 2027-2028 biennium.

City Manager Hyun Kim told the News Tribune on July 24 that the one-time federal pandemic dollars and a $3 million state grant that have paid for those shelter beds are running out.

"We don't have the funding," Kim said. "It was not there yesterday. It's not there tomorrow."

City leaders will not announce specific cuts until September 2026. The warning comes as the city's own data shows the number of unhoused residents already exceeds available shelter space.

What the city has done so far

Tacoma has already taken several steps to close the gap.

A hiring freeze implemented earlier in 2026 is projected to save about $7.4 million across general government, including roughly $2.2 million in the General Fund, according to a Tacoma Weekly report on the city's July 7 council study session.

The city also merged its Public Works and Environmental Services departments and is consolidating Human Services, housing, and homeless services into the Neighborhood and Community Services department.

That consolidation drew pushback at a July 2026 council meeting. Council member Latasha Palmer said she worried homeless services would get "buried" inside the larger department.

Council member Sarah Rumbaugh raised the same concern about housing programs. Kim responded that both remain top priorities and that the reorganization reflects "a natural nexus" between the issues.

The numbers behind the gap

The $40 million shortfall is structural, meaning it cannot be fixed with a one-time cash infusion. It is driven by rising labor costs, health care expenses, inflation, and shrinking state and federal funding, according to city budget documents presented at the July 7 study session.

Kim has labeled the city's multi-year strategy to address it the "roadmap to recovery."

The state offers little safety net. Washington itself faces a projected budget shortfall of nearly $500 million, and Gov. Bob Ferguson has said he will not propose new taxes to close it.

What advocates are saying

Rob Huff, spokesperson for the Tacoma Pierce County Coalition to End Homelessness, said Tacoma already has more unhoused people than shelter beds. Losing capacity heading into winter would deepen the crisis on the streets, he told the News Tribune on July 24.

Huff urged the city to redirect money spent enforcing its ban on homeless encampments toward maintaining shelter capacity instead.

District 1 Council member John Hines defended the original decision to spend pandemic dollars on shelters, saying at a council meeting earlier in July that the city could not have justified sitting on emergency funds while residents needed help.

What happens next

Kim said the city will work with state partners to advocate for more shelter funding, but called it "not a guarantee." Specific budget cuts are expected in September 2026. Public hearing dates for the 2027-2028 budget have not yet been posted online.

Pierce County's homeless population was estimated at nearly 3,000 in 2025, an 11 percent increase, according to figures cited in a December 2025 Tacoma Weekly report. Kim's September announcement will determine how many of the city's 1,200 beds survive.