Name: Bellingham City Council - Budget and Finance Committee meeting, Apr 27, 2026
Start: 2026-04-27
End: 2026-04-27
Location: City of Bellingham

City Council - Budget and Finance Committee

Mon, April 27, 2026

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City Council Budget and Finance Committee — April 27, 2026

This was a committee meeting chaired by Councilmember Lisa Anderson, with Councilmember Dan Hammill and Councilmember Skip Williams (sitting in for Councilmember Michael Lilliquist) in attendance. Mayor Kim Lund joined remotely. Finance Director Andy Asbjornson presented three interrelated budget ordinances, offering a sobering picture of the city's general fund financial trajectory.

Items 24900, 24901, and 24902 — 2026 Budget Amendments: Reserve Reconciliation, Reappropriations, and Amendment No. 1

Finance Director Asbjornson explained that all three ordinances are interdependent and must be approved together to maintain a balanced budget. He walked the committee through color-coded materials tying each ordinance to specific line items.

Ordinance 24900 — Reserve Balance Reconciliation: This is a routine annual adjustment that reconciles the estimated beginning reserve balances used when crafting the 2026 budget against the actual ending balances from 2025, then recalculates the estimated 2026 ending reserves accordingly.

Ordinance 24901 — Reappropriations: This ordinance carries forward $99 million in encumbered (already-contracted) expenses from 2025 into 2026, plus $5.8 million in unencumbered funds and $33.1 million in associated revenues, for a net change of approximately $72 million. These are funds tied to ongoing or contracted projects that simply could not be fully expended in 2025. Notable items include:

About $29 million in encumbered expenses and $23.8 million in revenue related to environmental remediation at RG Haley and Cornwall Avenue.

$3.4 million for Old Town Redevelopment.

$2.6 million for Squalicum Landing (also connected to RG Haley/Cornwall remediation).

$2 million for the police department building envelope project.

$700,000 for Joe Martin Stadium improvements (Parks and Rec).

Councilmember Hammill asked for clarification on the Joe Martin Stadium entry appearing twice across two pages — Asbjornson confirmed it was the same item split by a page break.

Ordinance 24902 — Budget Amendment No. 1: This is the first formal amendment to the 2026 budget and adds $11.3 million in revenue and $14.7 million in expenses to various funds, for a net increase to the deficit of approximately $3.4 million. Key items include:

Medical and workers' compensation rate increases (~$1.8 million impact to the general fund): The city's self-insured health benefits and workers' comp funds required additional appropriation to meet legal reserve requirements. This cost ripples through nearly every city fund that has personnel.

Jail costs and home monitoring (~$1.75 million): The Whatcom County jail raised per diem rates by an estimated 25–30% late in the 2025 budget process, leaving insufficient appropriation in the 2026 adopted budget. Deputy City Administrator Forest Longman noted these were unavoidable, late-breaking cost increases. Councilmember Hammill confirmed these reflect maintaining current service levels, not expanding them.

Medic One contingent loan (up to $1.5 million): A contingent year-end loan to keep the Medic One fund in positive balance. Staff noted this will be monitored and will only be drawn if needed.

Electric Avenue Bridge ($1.5 million in the street fund): Not fully funded in the adopted 2026 budget.

Day shelter options ($1.4 million in Fund 120): Funding to advance options for a day shelter, as previously discussed by Council.

FTE correction (~$35,000): A 1.0 FTE position that was inadvertently omitted from the adopted budget.

Healthcare Benefits Analytics Coordinator (new position, Fund 565): A new hire dedicated to analyzing the city's self-insurance claims and benefits data to identify cost savings. Both Asbjornson and Longman stressed the city's self-insurance costs have become increasingly opaque and costly, and this position is intended to pay for itself through savings.

General Fund Fiscal Picture: Asbjornson presented an updated "alligator chart" showing the gap between revenues and expenditures. The city entered 2026 already carrying a $350,000 general fund deficit from the adopted budget. These amendments add approximately $5.3 million to that deficit, bringing the total general fund structural gap to roughly $5.65 million for 2026. At the current trajectory, the city's reserves could be depleted by 2028.

Councilmember Anderson noted that departments worked hard on cost controls in 2025, and acknowledged the difficulty of being self-insured — transitioning to the state's employee health plan would require covering existing liabilities and would be a significant financial lift that the city cannot currently afford.

Mayor Lund, joining remotely, echoed the frustration, calling it "the tyranny of a structural revenue imbalance." She explicitly connected the fiscal discussion to the Regional Fire Authority (RFA) planning process underway, characterizing it as the option most likely to put the city on a different long-term financial trajectory. She estimated an RFA transition could free up $20–25 million or more in ongoing general fund revenue. Councilmember Hammill asked whether that savings would be durable or simply delay the same structural problem. Lund acknowledged that Washington State's tax structure means the city would eventually face similar pressures again, but argued that careful management of the freed-up funds — particularly investing in capital rather than ongoing programming — could meaningfully extend the city's fiscal stability for a long time.

Vote: Councilmember Hammill moved to recommend all three ordinances together; Councilmember Williams seconded. The committee voted 3–0 in favor. All three ordinances will be brought to the full City Council for action the same evening.

Key Takeaways

The 2026 general fund deficit is now approximately $5.65 million after accounting for unavoidable cost increases — primarily jail per diem rate hikes, rising self-insurance costs, and a contingent loan to Medic One — that could not be anticipated when the budget was adopted.

At current trajectory, the city's emergency reserves could be exhausted by 2028, according to Finance Director Asbjornson's updated projections.

Nearly $100 million in previously contracted projects are being formally carried forward from 2025 into the 2026 budget through the reappropriation ordinance — this is largely routine but reflects the scale of ongoing capital work.

A new Healthcare Benefits Analytics Coordinator position was added to help identify savings in the city's self-insurance programs, which have seen escalating and difficult-to-control costs.

The RFA planning process was highlighted by Mayor Lund as the most promising structural solution to the city's long-term fiscal gap, with potential ongoing savings of $20–25 million or more if the fire department transitions to a regional authority.

AI-generated summary from voice-to-text transcript. Not the official record. Verify important details with the source documents linked above.

What happened at this meeting

An ordinance amending the 2026 adopted budget, reconciling the differences between estimated 2026 beginning reserve balances and actual 2026 reserve balances and applying the differences to the ending reserve balances

# Summary: Ordinance 24900 - 2026 Budget Amendment

Finance Director Andy Asbjornson presented Item 24900, an ordinance amending the 2026 adopted budget to reconcile differences between estimated and actual 2026 beginning reserve balances, explaining it works in conjunction with two related ordinances (24901 and 24902) that address reappropriation of unspent funds and first-quarter budget amendments. Staff presented a budget overview revealing an approximately $6 million deficit into 2026 that will impact the emergency reserve at 18%, with Councilmember Hamel clarifying that police fund items on page 74—including jail housing cost increases and home monitoring services—maintain current service levels without new provisions. Councilmembers Anderson and Marilyn expressed concern about the city's ongoing structural revenue imbalance despite two years of sustained cost control efforts and discussed the need for continued cost reduction measures and alternative strategies. Staff recommended pursuing an RFA planning process related to potential fire department restructuring, which could generate $20-25 million in ongoing revenue and address the city's pattern of fiscal challenges over the past 12 years.

An ordinance amending the 2026 budget increasing appropriation authority in various funds to pay for goods and services authorized in the previous budget cycle

# Summary of Budget Amendment Ordinance 24901

Staff presented ordinance 24901 addressing two categories of budget adjustments for 2026. The first component involved reappropriations totaling $99 million in encumbered expenses and $33.1 million in revenue carried forward from 2025, with major items including RG Haley and Cornwall environmental remediation ($29 million), Old Town Redevelopment ($3.4 million), Greenways/Squalish Landing ($2.6 million), police building envelope ($2 million), and Parks and Recreation improvements ($700,000). The second component increased appropriation authority by $14.7 million in expenses and $11.3 million in revenue, with Deputy City Administrator Forest Longman explaining that $1.75 million was needed for jail and home monitoring services due to unexpected 25-30% county per diem rate increases, $1.8 million for health benefits and workers compensation increases across departments, $1.5 million as a contingent loan to Medic One, and funding for a new health care benefits analytics coordinator position to identify cost savings. Staff warned that these amendments would grow the general fund deficit from $350,000 to over $5.3 million, potentially depleting reserves by 2028 if current spending trends continue, though they emphasized these represented operational necessities rather than discretionary spending.

An ordinance amending the 2026 budget - amendment no. 1

# Summary: Ordinance 24902 - 2026 Budget Amendment No. 1

Staff presented ordinance 24902, the first amendment to the 2026 budget, which ties together three related budget ordinances. The amendments include recommended changes of $338,000 in revenue and $5.7 million in expenses to the general fund, with major adjustments for medical and workers compensation rate increases detailed on page 73 using color-coded columns. The ordinance aims to correct budgetary errors, adjust appropriation authority, provide positive estimated ending reserve balances, and add budget authority for missed or post-adoption items. The committee approved all three budget amendment items (24900, 24901, and 24902) together by unanimous voice vote, with the understanding they would be considered separately during the full council meeting.

Agenda items (3)

Procedural (3)

24900ProceduralAn ordinance amending the 2026 adopted budget, reconciling the differences between estimated 2026 beginning reserve balances and actual 2026 reserve balances and applying the differences to the ending reserve balances

The city is adjusting its 2026 budget to correct the starting reserve balances based on actual numbers rather than estimates, which will affect how much money the city has available at the end of the year.

What happened

24901ProceduralAn ordinance amending the 2026 budget increasing appropriation authority in various funds to pay for goods and services authorized in the previous budget cycle

The city is increasing spending authority in its 2026 budget to pay for goods and services that were already approved in the previous budget cycle but need additional funding.

What happened

24902ProceduralAn ordinance amending the 2026 budget - amendment no. 1

This is the first formal amendment to the city's 2026 budget to make adjustments to spending and revenue as needed.

What happened

Additional votes recorded in minutes

Approve budget ordinances AB 24900, AB 24901, AB 24902

aye 3 · absent 1

Daniel Hammillaye

Edwin 'Skip' Williamsaye

Lisa Andersonaye

Michael Lilliquistabsent

Verbatim transcript available

101 transcript segments indexed

Good morning and welcome to the Bellingham City Council Committee meetings. Today is Monday, April 27th, 2026. Um, just wanted to make note that this morning Marilyn is joining us remotely, so welcome.

City of Bellingham Budget and Finance Committee minutes April 27, 2026, 10:00 AM Chair: Lisa Anderson Phone: 360-778-8200 Members: Daniel Hammill, Michael Lilliquist Email: ccmail@cob.org Web: cob.org/council City Council committee meetings Standing committee members receive reports and information, ask questions, and vote on a recommended action for consideration by the full Council at the regular meeting.

There is no public comment period during committee sessions. Call to order and roll call Council President Stone called the meeting to order at 10 a.m. Present: Committee Chair Lisa Anderson, Fifth Ward Committee Member Daniel Hammill, Third Ward Committee Member Edwin H.

Um, and just noting some changes in chambers, so we do have Deputy Administrator, um, Keller as well as Longman with us and Deputy City Attorney Erb as well and for City Attorney Mariner. So, um, welcome everyone.

"Skip" Williams, Fourth Ward Excused: Committee Member Michael Lilliquist, Sixth Ward 24900 1. An ordinance amending the 2026 adopted budget, reconciling the differences between estimated 2026 beginning reserve balances and actual 2026 reserve balances and applying the differences to the ending reserve balances Summary: Andy Asbjornsen, Finance Director, and Eric Johnson, Budget and Treasury Manager, presented the ordinance, which reconciles the differences between estimated 2026 beginning reserve balances and actual 2026 reserve balances.

We are going to start this morning with budget and finance. That committee is chaired by Councilmember Anderson, so I'm going to turn it over to her and I believe we may have Councilmember Williams sitting in for Lilliquist.

Council Members discussed the ordinance and asked questions. Action: Daniel Hammill moved to approve the three budget related ordinances (AB 24900, AB 24901, AB 24902). MOTION CARRIED 3-0. 24901 2. An ordinance amending the 2026 budget increasing appropriation authority in various funds to pay for goods and services authorized in the previous budget cycle Page 1 of 2 Summary: Andy Asbjornsen, Finance Director, and Eric Johnson, Budget and Treasury Manager, presented the ordinance, which amends the 2026 budget by increasing appropriation authority in various funds to pay for goods and services authorized in the previous budget cycle.

So. Thank you. Good morning. Um, we have three items ahead of us today. Joining me is Councilmember Hamill and Councilmember Williams is sitting in for Councilmember Lilliquist, who is running a little bit of little bit late.

Um, so our first item ahead of us is item number, um, 24900. Um, it is a ordinance amending the 2026 adopted budget, reconciling the differences between estimated 2026 beginning reserve balances and the actual 2026 reserve balances and applying the difference to the ending reserve balances.

Council Members discussed the ordinance and asked questions. Council approved the ordinance via one motion (See AB 24900). 24902 3. An ordinance amending the 2026 budget - amendment no. 1 Summary: Andy Asbjornsen, Finance Director, Forrest Longman, Deputy Administrator, and Eric Johnson, Budget and Treasury Manager, presented the ordinance, which amends the 2026 budget by correcting budgetary errors, adjusting appropriation authority to provide positive estimated ending reserve balances for all City funds, and adding budget authority for items missed during budget development or after adoption of the 2026 budget.

Council Members discussed the ordinance and asked questions. Council approved the ordinance via one motion (See AB 24900). Adjournment There being no further business, the meeting adjourned at 10:33 a.m.

Um, lots of balances in there, but joining us today is our Finance Director, um, Andy Asbjornson and I'll turn it over to him. All right, thank you, Councilmember Anderson and and Council. Um, I'd like to speak to all three ordinances as they all are directly connected to each other and so the first one is the reserve balances and so after year end, well, when we create the budget, we have an estimated beginning reserve and not until year end can we actually calculate the true ending, uh, ending reserve, which then becomes the beginning reserve for 2026.

And then, um, by default we have to recalculate that to get to the actual ending reserve or estimated ending reserve for 2026. Uh, so we have, um, the first ordinance addresses, uh, amending the beginning reserve of the balances and then establishing the new estimated ending reserve.

The second ordinance is, um, what we call the reappropriation. So, these are funds that were budgeted in 25, but were unspent. The projects were, uh, many of them were already have begun in 25. Uh, and, uh, but others were, uh, maybe some smaller amounts that we were not able to get to those projects in 2025.

So, these are all items that were budgeted in 2025 and then want to reappropriate to 2026. And then the third ordinance addresses amendments. So, this would be our first amendment to the 2026 budget. And when we're going through the reappropriation process and getting into the new year, sometimes we identify, um, items that should have been budgeted, things that were, uh, small corrections or already adjustments in that first quarter or we need to adjust to make sure that what we have adjusted our beginning balance to and with reapprops that we ensure that the ending reserve balance is positive or at least zero so that we have the balanced budget.

So, I'll walk you through, uh, these three ordinances. There's a lot of paper, a lot of numbers and so what I provided for you is a new is a packet on each of your desks that has, um, color coding to be able to walk through these different ordinances.

Uh, all of these numbers and what I provided you is in the packet. I've just color coded it so we can follow along in what these numbers are. So, I'd like to start with, um, the first page you have in your packet is actually the table that's in the memo for the first agenda item, uh, in the reserve memo on page, uh, 49 of your packet, I believe, but in this it is, um, uh, page two in the memo and this shows the full table of what's going on.

So, the first column is the current estimated ending reserve, so that's right out of our 2026 adopted, uh, budget and then, uh, preliminary revised ending reserves. Um, and then we have, uh, less change in reappropriation, so that is the second amendment that we will, uh, the second ordinance that we have.

And then, uh, less change in the budget amendments or adjustments, that's going to be the the third ordinance, but then the first ordinance that we're addressing right now is the total reserve 2026 ending reserve or revised 2026 ending reserve and that's color coded in the green.

And you'll notice the next column in your, uh, the next, uh, uh, item in your packet is the ordinance. And so each of these color coded items actually connects directly to the ordinances that are coming forward.

So, the green, uh, matches the first ordinance. The blue will match the the second ordinance and then the orange matches the third ordinance. So, you can follow along on, uh, really seeing where those numbers are coming from and seeing, um, just that new calculation that goes into the, um, the easiest one probably is just that new calculation for the beginning reserve to the new ending reserve.

What's important is that we, uh, don't get to that revised estimated ending reserve without the change in the reappropriation and without the change in the amendment. So, all of these are connected so that they all have to be approved at the same time so that they're all accurate and stay in line with each other if that makes sense.

Um, so with that, um, the the first one is just that ordinance of the beginning reserve. That's pretty straightforward, I believe. Not a lot of, uh, significance in that. You can see how, uh, through the ordinance, um, how the numbers have have changed.

This has to do with, uh, many of those items that were maybe, uh, this is that cost savings that we've been able to recognize within the budget or just additional changes, uh, within the budget. Um, but I think what I'd like to do is actually draw your attention to, um, reapprops, uh, next as those are the things that are changing the the ending balance.

Um, so if you go to the blue, uh, reso- or blue ordinance, um, you'll find that in, uh, in your packet on page 55 has the memo for all the reapprops. And that will take us through all of the line item details.

Um, and I will mention that the changes that were sent out had nothing to do with any of the reappropriations or any of the amendments. So, all of those line items are the same as as what you had received in your printed packet as well.

Um, so on the reappropriations and this is the second ordinance that I'm I'm talking to you right now. Um, you'll see in the general fund we have, uh, I'll walk you through the table first. So, uh, things that are already contracted are are those things that are encumbered on this on this table.

So, anything encumbered is already under contract under under already underway. Anything unencumbered, which is this much smaller amount, was something budgeted but weren't able to get to in the 25 budget.

Uh, so most of the items here are really in the encumbered, uh, category. Um, and so you'll see in the general fund we are looking to bring forward, uh, 1.2 million in, uh, encumbered, uh, expenses and then 700,000 in revenue.

You'll notice the largest item is at the bottom of page 55 is the, uh, Parks and Rec with the 700,000 in revenue and a 700,000 in in project. Um, and many of these are just projects that need to be, uh, reappropriated.

Um, the next largest items are really when it comes to, uh, on the next page on page 56, Planning Community Development. Um, and a lot of that has to do with their, uh, the timing of their contracts. A lot of their contracts are July 1 to June 30 and so a lot they often overlap years.

And so you have all the line items of what is in the Planning Community Development, uh, 426,000 in encumbered, uh, expenses that will be moving forward for 2026. As we move forward the rest of the list, you'll notice that a lot of these are just projects.

A lot of the big numbers are just projects that are are throughout, uh, either the street fund, uh, when it comes to, um, uh, pavement preservation or or other large projects. Um, the bottom of page 57 probably has the largest items that are moving forward in the reappropriations and that has to do with RG Haley and Cornwall at in the environmental remediation fund of 136, about 29 million in encumbered expenses and 23.8 million in revenue.

Just kind of walking through some of the highlights, some of the other larger costs my are in, um, REET in 141, uh, on page 58 of 2 million for the building envelope for the police department. That you can see that project is actively being worked on right now.

That's $2 million that's being reappropriated. In 142, one of the largest projects still on page 58 is Old Town Redevelopment at 3.4 million. Um, and then in, uh, on page 59, we have Greenways has a larger project with the Squalish Landing also associated with RG Haley and Cornwall.

That's at 2.6 million. So, you can see most of these are, uh, are projects that are underway or contracted that that just need to be moved forward in the reappropriations. Um, and it's it's pages and pages of projects that that we go through, um, to be able to to bring forward what is is under contract and needs to move forward into that 26 budget.

So on the the grand total at the end of page 68 is 99 million in encumbered funds or encumbered expenses that we'd like to move forward in reappropriations. 5.8 million in unencumbered and then 33.1 million in revenue making that total net change of the 72 million 46,675 dollars.

I'm happy to answer any questions associated with those items in the reappropriations. Do you have any questions? Not yet. >> [laughter] >> Well, for on my end it benefits having the one-to-one sessions going over this.

So I feel like it's a um review again for me. So I my questions were answered. So I and I appreciate you um folding some of that into the presentation. I'm highlighting the high numbers. Um Council Member Hammel.

Yeah, just a more of a clarifying question on page bottom of page 55 Parks and Rec 700,000 dollars encumbered and then next page on 56 um it same number for Joe Martin Stadium. Is that the same item? It is the same item.

So each of the the funds will have a total and that then rolls up or and in that situation it is the department that has a total that rolls up. And so the only thing in that department that's coming forward is at the top of page 56 is that Joe Martin improvements of the 700,000.

Okay. >> And it would have been helpful if those were in the same >> okay. I it was just a page break there. Yeah, got it. Thank you. Okay. So seeing no other questions, um did you have Since there are three ordinances and they all kind of fall like dominoes, I know how to present to go forward for a vote.

But did you have you wrapped up what you wanted to cover on the three or Nope, that was the reappropriations. Now I'd like to get into the amendments. Okay. Um so we've talked about the first ordinance of adjusting the beginning and ending balances cash balance and then that's the second ordinance was the reappropriations and now I'd like to talk about the third ordinance which is actually the first amendment that then ties it all together.

So the amendments are outlined on page 73 of your packet. I believe is the start of the amendments that goes through line by line and you'll be able to tie these amendments to the orange columns on what I provided in the color coding as well.

So but if I can draw your attention to page 73, you'll see that the general fund our recommended amendments are 338,000 in revenue and 5.7 million in expenses to the general fund. So with that one of the major changes that we need to bring forward is you'll see medical comp and workers comp rate increase.

And so when we evaluated our expenses at the end of year end associated with our health benefits fund and workers comp fund, those both needed additional funding to make sure that we're meeting our legal requirements for self-insurance and being able to adequately cover those those costs.

So you'll see that throughout and it impacts almost all funds. Any funds that have um personnel in them, that'll impact a portion of their salary or it be added to the costs of those benefits of those departments.

So you'll see medical comp and workers comp throughout all these pages actually because it hits many many funds throughout the throughout the city. So that's about a 1.8 million dollar expense being added to the general fund is one of the major impacts of that 5.3 million.

Uh They are one of the other major impacts is on page 74 and so when we were able to close out the year, we saw that we didn't adequately budget for the jail increasing jail expenses and and home monitoring services.

So you'll see in the police department there on page 74 that's about 1.75 million that's being added for just those two line items. Um Also ending 25 and with the change in reappropriations and and the adjustments we are adding a contingent loan to the Medic One fund.

And so that is necessary to make sure that that fund ends in a positive way for 2026. So that's a contingent loan. It's not going to take place until year end, but that's up to 1.5 million dollars. We'll continue to monitor that and make sure that we're bringing any changes.

That that come along as as we've talked about on as the budget never stops and we'll continue to bring bring forward what we see in changes in revenue and expenditures. Um One other item I could bring to your attention is the top of 74 is there's a correction.

So there are a few FTE changes and they really are just kind of corrections to make sure that we have the right numbers and the right funding for what was intended be or what was presented in the budget and intended to move forward.

So it's just bringing it's a small 35,000 but it's just bringing back a 1.0 FTE just a correction that that should have taken place. Uh And so those are the major impacts in the general fund. As we move forward on page 74, you'll see the street fund has 1.5 million for the Electric Avenue Bridge.

So that was not originally fully funded in the 26 budget. Fund 120 has 1.4 million as we try to move forward with options for a day shelter as has been discussed. Um As a highlights and then other large items that are in the amended budget.

If you go to page 76, you'll see the Medic One fund receiving the revenue for that 1.5 million that enables that fund to stay positive at year end. And then at the bottom of page 77 you can see the impacts of >> [clears throat] >> the revenue coming into fund one 562 and 565 for that medical comp and workers comp rate increase.

And so those that's the where the revenue is. You'll see all those line items hitting the expense of many funds. But then you'll see the revenue then coming into 565 and 562 to be able to cover those expenses.

I will note that on the in page 77 also in fund 565 is a health care benefits analytics coordinator. So that is an added position. It's something that is we feel is important to add to be able to evaluate our self-insurance programs and really our our insurance programs in general to be able to evaluate our claims and and benefits and and dig into those numbers to see if there's any cost savings available.

Yeah. Just Forest Longman, Deputy City Administrator. Just wanted to add a couple things to add a little bit of context to the the jail costs. That was very challenging to budget coming into this year because we did see some very late breaking increases to the per diem rates from the county.

So I believe it was around a 25-30% increase in per diem rates. Um Is it more than that? Well, sort of that late breaking as the budget was already being passed. So a lot of that is to rectify those costs that we could not anticipate.

Um And then you know, and that health benefits coordinator as we saw all these costs escalating, the city's self-insured and that process, although we have some great partners um in it, that process remains fairly opaque and we wanted to try and bring somebody in who could really help us dig into the data there and try and get these numbers back under control because we have been successful with self-insurance in the past.

Thank you. Um So that as a little context to some of the amendments and then at the bottom of page 77 you have the grand total of what is being brought forward for the proposed amendments of 11.3 million in revenue, 14.7 in expenses for a net change of the 3.

3 almost 3.4 million to be the net difference in the amendment. So those are all the line items in the amendments and I will mention everything in the general fund is really it's needs for what's needed for operations.

There's there isn't any wants here. This is a greater impact than we'd like to have for any amendment at this time of the year. So we started the year with a 350,000 dollar deficit in the general fund and this adds another 5.3 million to that deficit.

So these are significant and one of those ongoing evaluations where we have to continue to find ways for cost savings and and continue to adjust the budget. I have updated the alligator chart to be able to show um Council the impacts of these changes.

So, you'll see this is the alligator chart that I shared uh last Council meeting uh where it shows that that was when we were at a $350,000 deficit going into 2026, what was part of the adopted budget.

But now with the reappropriations and the amendments, and this is focused on the general fund, um you'll see that the change uh uh uh uh creates that that bigger gap and at this uh continued pace, we would basically be running out of reserves in 2028 for the general fund.

But this is one of those ongoing things where we know we need to continue to bring those lines together. So, um I should have explained the graph for anybody who hasn't seen the graph before, if this the first time they're watching, but uh so the yellow line that turns into orange is the expenses and the blue in the in the background, the darker blue transitioning to the lighter blue is revenues.

So, uh that and then the axis to the left uh shows how many millions uh is associated with those numbers. So, what we'd like to see is the the expense line uh touching the blue lines and know that we are at a at at a balance where basically our expenses are equaling our revenues.

If the line is below, then we're in a surplus position. If the line's above, we're in a deficit position. And in a deficit position, it is then impacting the column at the bottom uh that shows our reserve balances.

And so, um as you see our reserve balances, we started 2025 or this is the end of 2025 with just a little bit of economic reserve. That's that sliver of red there. And then the green is our emergency reserve set at 18% and then you'll see the impact of having a approximately a $6 million deficit into 2026 eats into that uh emergency reserve.

And so, the the whitish uh hashed green um empty area is the missing part of the of the emergency reserve. So, um this is um as I say an area that um we'll continue to to monitor and evaluate how we can create additional cost savings and continue to evaluate our revenues hitting our marks for our projections.

And again, this is budgeted, so we still have to uh evaluate actuals each month and to try to bring these numbers together. Thank you. Um Committee, are there any questions? Councilmember Hamel. Uh thanks for the presentation.

Um it's sobering, to say the least, the the amount of work that's going to have to go into making those um lines connect. Um so, my it's more of a clarifying question. Page 74, the police fund, um there's two items there I have one that I have questions on.

One is the jail housing cost increase and the second is increase to home monitoring services. And I'm just it's more of a clarifying that that's to maintain the current service levels, is that correct?

There's no increase to uh any kind of service provision. Okay. That's correct. Any further questions? Um Andy, are you finished with the three? Yes, is that okay? Um yeah, it's uh that walks us through each of the ordinances.

Um I'm happy to take any questions on those. So, hopefully the the color coordinating assists in this process. Um where the uh first one is of course the as I mentioned in the beginning, reserves. The second one is the reappropriations and the third one is the amendment.

So, but happy to take any questions. Thank you. I know I don't have any specific questions cuz I've already had the opportunity to sit one-on-one. Um and just to um mirror Councilmember Hamel's comment, um >> [clears throat] >> going through um meeting regularly about the budget and monitoring last year, um many of our uh departments did an excellent job at cutting everywhere that they could, which brought to this year in, I think, a little bit better than we anticipated.

And having conversations with you, looking forward, how are we going to address to ensure that we don't continue with this gap, especially in light of having to adjust an additional 5 million um for costs that we we can't avoid.

They're, you know, specifically to jail costs and um a couple other items, especially medical. We um just for other Councilors, we had a conversation during our last meeting because I've always been concerned being self-insured cuz we're having to put more and more money away to the side because costs are escalating.

But um just to share to to move to something like buying into the state's um employee health care, we have to cover our liabilities in the past and also going forward. So, it would be a really huge financial lift to switch lanes, so to say, and we're just really not in a position.

So, we talked about the new um analytic position coming in, which I'm very supportive of, because we really need to have some specialized specifically tasked with looking at where we might be able to have cost-saving measures.

So, the hope is is that minimally they'll be able to um pay for themselves, which would be great, but hopefully we'll be able to cure more cost savings. Um and I just have a question for um Mr. Herb, make sure that I'm doing this correctly.

Since Anderson, I just want to make sure you saw that Marilyn has her hand up. >> Oh, I am sorry, I did not. Um recognizing Marilyn. Thank you, Councilmember Anderson. Uh I just wanted to um you know, emphasize and share the the sentiment of Councilmember um Hamel and Anderson in that it is disappointing after 2 years of sustained efforts at cost controls to find that we still are in the tyranny of what a structural, you know, revenue imbalance looks like.

So, we're um we will be approaching this creation of the coming years' budget with a similar set of um cost reduction by necessity to get controls of this, and it's disappointing that we find ourselves there, but I just wanted to say that um this is not completely disconnected from the planning process that we're undertaking as we seek to evaluate what an RFA structure could mean for our community, and if that is um a viable strategy for us to kind of transcend some of these ongoing and persistent challenges as we face increased costs just to do the city's essential services.

So, Thank you, Mayor. Um Councilmember Hamel. Yeah, thanks, Mayor, for bringing up the RFA. I have a clarifying question for um what those savings would would look like from year to year. I've heard a couple of numbers uh around 20 million in savings and then 22.

I can't I don't know which one is correct. And does that mean that that's a one-time savings, or is that carrying from year to year? It we we have been a little um vague on the number because we haven't we need to continue to do the analysis of what it would look like to have the fire department completely spin off, but we do expect that it's somewhere in the 20 to 25 million dollar range, perhaps a bit more.

Um >> [clears throat] >> that would be ongoing um revenue for the city. So, it would and that's why we're pursuing we've recommended pursuing this RFA planning process because it of the solutions that we looked at, uh that solution was the one that put the city on a different financial trajectory and created durable stability for the city in the long term.

Yes, follow up. Right. So, I thank you for clarifying. Um what I am worried about is I've seen iterations of this chart over the last 12 years where there's um the im- uh impending fiscal cliff that we are always staring down.

And I mean, it's conceivable that even with that 20 million plus dollar boost at some point in the future that that just won't be enough because of the the continued rising costs just keep how do how would that catch up, or would it catch up to those increase in costs?

Yeah, that's a great question. It's going to be really critical how we structure whatever programming we plan for that those excess dollars that we don't immediately put them into ongoing programming that we maybe perhaps use that to invest in capital programs so that over time it can transition into staffing programming.

It also by having the fire department not be a part of the city anymore, it frees up a lot of resources and it changes that orange line trajectory. So we they're a significant cross cost driver for our general fund and if you take that out that flattens that line a bit.

So in the combination ultimately yes, the way that taxes are structured in Washington state ultimately it will be in this place again, but we're hoping it's a we can structure in a way it'll be very long time before that happens.

Any further questions? Councilmember Hamel Are you wanting three to separate motions for these zone? I was going to read all three. Um and then ask for I was going to actually ask legal if it's appropriate to read all three, ask for a motion for the three together since they all have to be approved together or should I just do each one individually?

Does it matter if one is hooked to one and it was the other was approved first? I I think it's fine this morning to to combine all three for purposes of this committee. Obviously I think this evening we would do them separately.

Okay. So I will read all three for the record. So the first one was item 2490 an ordinance amending the 2026 adopted budget reconciling the difference between estimated 2026 beginning reserve balances and actual 2026 reserve balances and applying the difference to the ending reserve balances.

Item number 24901 an ordinance amending the 2026 budget increasing appropriation authority in various funds to pay for goods and services authorized in the previous budget cycle >> [snorts] >> and lastly item 24902 an ordinance amends the 2026 budget to correctly budget to correct budgetary errors, adjust appropriation authority and provide positive estimated ending reserve balances for all city funds and add budget authority for items missed during the budget development or materialized after adoption of the 2026 budget and I'll consider a motion for all three.

So moved. Wonderful. I tie will go to my right Councilmember Hamel. So um all those um in favor say I. I. I. >> [snorts] >> Hearing no opposition those three will be brought together tonight for a full council and I turn it back to Council President Stone.

And thank you Andy. Thank you very much Councilmember Anderson. So we will pause just a moment to queue up the next meeting which will be chaired by Councilmember Williams. That's Parks and Recreation.