Mountlake Terrace officials reviewed the city’s fiscal year 2024 financial report Wednesday, reporting a modest revenue surplus in the general fund but a nearly $933,000 shortfall in water-service revenues and several large timing-driven variances in capital funds.

The presentation was given by Aris Nemati, senior accountant for the City of Mountlake Terrace. Nemati said the general fund’s actual revenues were about $600,000 higher than budgeted but cautioned several variances were driven by accounting and timing differences. “Our actual revenues came in slightly higher than the budgeted revenues,” Nemati said. He explained the city’s recent move to cash-basis accounting: “We are now a cash‑basis government … we book the revenue the day it comes in.”

Why it matters: council members said the water shortfall and capital reimbursements could affect near‑term spending choices. The presentation and follow-up questions repeatedly framed the variances as largely timing issues — loan drawdowns not taken, grant reimbursements delayed, and revenue recorded only when cash is received — but councilors asked for clearer, consolidated measures of operating results and reserve status.

Key figures and drivers

- General fund: Revenues ended about $600,000 above the adopted budget, with stronger collections in utility taxes, solid‑waste fees and higher interest earnings.
- Water service revenue: The slides show water-service actuals of roughly $7.2 million versus a budget of $8.1 million, a gap of about $933,000 that staff described primarily as a timing and accounting effect from the cash conversion and, in part, from accounts receivable and customer payment patterns.
- Loan drawdowns: Nemati said the budget assumed maximum loan drawdowns but actual draws were lower because projects did not require the full amounts during 2024, creating variance in both revenue (loan proceeds) and capital outlays.
- Capital funds: Several capital and street construction projects are grant‑reimbursed; if project expenditures did not occur in 2024, the city had neither the reimbursed revenue nor corresponding expenditure in that year, creating sizable variances.

Council concerns and staff responses

Council members pressed staff for a clear, single‑page accounting of the city’s overall operating position and ending fund balances. One council member noted prior warnings about fiscal pressure and said the city needs transparent, actionable numbers on how quickly reserves will be drawn down; the council member stated a figure of roughly $2,400,172 as a projection they had calculated from earlier materials (that figure was presented by a council member during the meeting and was not disputed by staff during the session). Nemati and city staff repeatedly told council members that some of the variances are accounting‑method driven rather than performance failures, and that further detail on operating deficits and the water management plan would be provided in upcoming materials.

Water collections and customer programs

Council members asked whether overdue water accounts were being managed with cutoffs or with payment‑assistance programs. City staff said the city has payment programs and works with customers to avoid shutoffs where possible; the city had paused cutoffs during the COVID period and has recently restarted limited cutoffs while offering payment plans and outreach.

Gambling revenue and local impacts

Council member Ryan raised an additional revenue concern: a closure on Highway 99 (a Maverik‑owned gambling venue) that will reduce the city’s gambling revenue going forward. Ryan linked the closure to state policy, referencing Senate Bill 5512 in discussion as a contributing factor; staff said they are monitoring impacts and coordinating with neighboring jurisdictions to understand and plan for the revenue change.

Presentation format and next steps

Council members and the city manager suggested tweaks to future presentations: begin and end with the big picture (ending fund balance), present each fund’s revenues and expenditures together, and highlight the largest variances and recommended actions. Council members asked staff to return with the consolidated operating picture, an update on the water management plan, and a list and timeline of the capital projects that generated the capital‑fund variances so the council can see which projects are expected to carry into 2025.

What staff said will happen next: staff will provide more detailed materials in the coming budget and management plan discussions, and the finance committee will review presentation format and follow‑up items.

Ending: The council thanked Nemati and the finance team for the year‑end work and said they want more timely mid‑year reporting for 2025 to monitor trends earlier in the budget cycle.