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Issaquah finance director previews Q1 finances, mid‑biennium outlook and wildfire readiness costs
Summary
Kristen Garcia, Issaquah’s new finance director, told the council on July 12 that first‑quarter data show a modest revenue shortfall driven by lower sales and utility taxes offset partially by strong B&O and real‑estate excise tax receipts, and that emergency‑preparedness needs may add pressure to the 2026 budget.
Kristen Garcia, Issaquah’s newly hired finance director, gave council members a first‑quarter look at the city’s general‑fund revenues and expenses on July 12, and highlighted three areas the council will address before the end of the year: police‑city facilities and court lease negotiations, the I‑90 pedestrian crossing committee, and a review of land‑use code (Title 18).
Garcia said the city projects a roughly $0.5 million gap through the current year based on the four largest general‑fund revenue sources (sales tax, utility tax, business & occupation tax and property tax); sales and utility taxes were tracking a bit below budget while B&O tax showed a notable positive variance. She told the council that first‑quarter projections are inherently uncertain and that second‑quarter data would give a clearer picture.
On specific revenues, staff told the council that two large real‑estate transactions in April and May are expected to push real‑estate excise tax above budget by year‑end, but that construction sales tax continues to be soft. Council members asked for more detailed breakdowns — construction versus retail sales tax — and for regional comparisons to see if Issaquah’s trends align with state patterns.
On expenses, Garcia said the administration did not expect to recommend major operating reductions in the mid‑biennium, though they will review fees and charges and jail rates; staff emphasized uncertainty around staffing costs and upcoming labor negotiations.
Mayor Pauley and others flagged emergency preparedness as a potential mid‑biennium pressure. Jared Snyder, the city’s emergency manager, recently led a wildfire tabletop exercise that modeled a large brush fire coinciding with regional events, and staff said that the exercise suggested further 2026 emergency‑preparedness spending might be needed. Mayor Pauley said, “We need to come up with financing funding for that,” and council members asked staff to identify options earlier in the budget process.
Garcia also reminded the council that a court lease with King County is near conclusion and will appear on the August 11 agenda; the court move is tied to facility planning that will be a fall policy discussion.
The council asked for an August update with more detailed sales‑tax breakouts, B&O drivers, and a clearer Q2 projection. No formal budget amendments were adopted at the retreat; staff said they would return with recommended options if new information warranted action.
