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City presents mid‑biennium budget update; staff recommend transfers to stabilization fund and fee adjustments
Summary
Finance staff briefed council on mid‑biennium adjustments including a recommended $500,000 transfer to the budget stabilization fund, opioid settlement spending, capital scheduling changes, a state‑reimbursable land purchase for Shop 1 and modest permit fee adjustments to improve cost recovery; council held questions but took no votes.
City finance staff presented a mid‑biennium budget update at the Oct. 14 council meeting that included recommended transfers to the budget stabilization fund, planned opioid settlement spending and itemized capital project scheduling and cost adjustments; no council action was requested at the study session.
Deputy Finance Director Andrew Wan Chong and Finance Director Kwan Wong described three categories of mid‑biennium updates: General Fund operating adjustments, capital program adjustments and proposed 2026 rates and fees. Staff recommended transferring an extra $500,000 to the budget stabilization fund (on top of an existing $250,000 annual transfer) when the general‑fund balance exceeds the city’s 90‑day threshold. The transfer aligns with a council‑adopted stabilization policy intended to keep reserves between 10% and 15% of general‑fund expenditures.
Staff said the city is beginning to spend opioid settlement proceeds, primarily funding a YMCA contract, and that a previously omitted low‑income utility assistance item has been added to the packet. Capital adjustments total roughly $3 million of cost increases (funded by grants and surpluses) and $2.4 million of scheduling changes that push unfinished projects into future years. The only new purchase singled out was a Shop 1 site change: staff described a $3.7 million land purchase for Shop 1 that they expect to be reimbursed by the state.
On fees, staff reported a 2024 study that found community development permit fees were recovering about 98% of costs. Proposed adjustments would target the remaining shortfall on selected land‑use and fire permitting fees; staff said about 120 permits annually would be affected if all recommended cost‑recovery adjustments were implemented. Most other city fees would be increased by the June CPI (2.7%) or remain unchanged.
Property tax planning: staff said the 2026 property tax ordinance is due to the counties by Nov. 26 and that the 2026 budget assumes the city will take the allowable 1% increase plus new construction capacity. Staff noted the city will also act as the Bothell Urban EMS District board for a separate EMS levy ordinance due the same county deadline. Several council members asked for clearer tables comparing the originally adopted biennial budget with current projections; staff said they would produce the requested year‑over‑year comparisons.
Why this matters: transfers to the stabilization fund and fee adjustments are structural financial choices that affect resilience and user charges; capital scheduling changes affect project timing and service delivery. Staff emphasized the presentation was informational and items requiring council action will return in the coming weeks for public hearing and adoption.
Upcoming procedural steps: a public hearing on the mid‑biennium amendments and 2026 property tax rates is scheduled next week, with proposed adoption actions in November and the mid‑biennium ordinance adoption planned for Dec. 2.
