Lake Stevens council reviews 2026 base budget outlook and schedules retreat follow‑up

The Lake Stevens City Council on Sept. 9 reviewed the city’s 2025 estimated revenues and the administration’s initial base budget assumptions for 2026, and scheduled further, more detailed budget work at an upcoming retreat. Finance director Barb Stevens presented a citywide snapshot: estimated 2025 revenues were slightly above budget overall (about 2.3%) but the general fund showed little to no growth and some shortfalls versus prior expectations. Real estate excise tax receipts (REET) were running below budget and below 2024 levels, and construction sales tax is outperforming retail sales tax, linked to local building activity. Stevens said the city expects investment interest to vary with federal funds rates and that staff are drafting an investment diversification policy. Key cost pressures flagged by Stevens included an insurance increase (WCIA liabilities and property values driving about a 10% rise), estimated medical/dental premium increases (range cited roughly 8–10%), and projected salary cost‑of‑living adjustments based on the CPI (finance used a 2.44% COLA estimate for most nonrepresented staff; bargaining units vary per their contracts). Stevens warned that a new public‑defense standard could add material costs — staff had not finalized the dollar amount but described an increase in required attorney resources under new standards. Stevens said staff are assuming certain grants and a Public Works Trust Fund loan for stormwater will be received in 2025; if those roll into 2026 the capital and stormwater fund totals will change materially. She recommended adding dedicated council budget workshops because the calendar is compressed and several council meeting dates fall on holidays or election week. The council scheduled a retreat for more detailed discussion and debated whether to record the retreat; several council members expressed support for recording and making the budget discussion publicly available. Staff said they will examine logistics and pursue recording if feasible. Council members asked for follow‑up details: a breakdown of positions funded by grants or temporary sources, more granular revenue sensitivity analysis (particularly sales tax and REET under different economic scenarios), and a list of candidate expenditure reductions. Stevens said staff will bring that information to the retreat and to subsequent council workshops for action later in the fall.