Mill Creek posts $9.4 million surplus; council to handle fee study in-house

The Mill Creek finance director, Armina Lambeth, reported a healthy general fund position and recommended next steps after the council discussed a range of finance topics, including a decision to bring a planned fee study in-house.

Lambeth told the council the general fund’s balance increased by $4.3 million for the 2023–24 biennium, leaving an ending fund balance of about $13.4 million and an available surplus of about $9.4 million after the required 15 percent reserve. “Your general fund remains healthy again. The surplus for general fund starting 2025 is at 9.4 million,” she said.

Lambeth presented revenue and expenditure highlights: biennial revenues totaled about $24.8 million (roughly 4 percent above budget), with taxes — primarily property and sales tax — accounting for about 75 percent of general fund revenues. She said sales tax receipts grew earlier in the period and then plateaued as the consumer price index moderated; city-origin sales tax constitutes a much smaller share of the total taxable base.

Lambeth also reviewed expenditures and notable cost drivers. Salaries and benefits remain the largest expenditure category (about 53 percent of biennial costs), with some vacancy-driven savings in 2023. She said jail costs paid to Snohomish County corrections rose sharply — about 159 percent over the prior biennium — and the city’s pooled property and liability insurance through Washington Cities Insurance Authority increased substantially over four years. “Our jail costs have substantially gone up... that increased by 159 percent which is equal to $300,017.71 thousand in the biennium,” Lambeth said.

Council asked whether the city could conduct the fee study without outside consultants to save costs. City management said they would start the study in-house and could hire consultants later if needed. “We made a decision today to bring that study in-house... we could probably save quite a bit off of what potentially that could be as a total cost of roughly $200,000,” the city manager said. Council members asked that benchmarking and examples from other cities be included in the study; staff said they would incorporate peer examples and bring back findings.

Other items Lambeth covered included special revenue and capital funds, higher-than-expected investment returns (the city reported a strong return from pool investments), opioid settlement receipts and an affordable housing fund set aside for housing-related uses. Council asked staff to provide legal clarification on permissible uses of the affordable housing funds under state law before drafting a spending policy.

What happens next: staff will begin the fee study internally and return with benchmarks and proposals; the finance office will also provide the council legal citations on the allowed uses of the affordable housing fund.