Mountlake Terrace fiscal forecast shows multi‑million-dollar gap; task force to seek community input

Baker Tilly consultants and Mountlake Terrace staff presented an updated long-range financial forecast and fiscal sustainability plan to the City Council on Oct. 9, describing a multi-million-dollar shortfall in the general fund and outlining a task force process and community engagement schedule to identify possible solutions.

Steve Toler, director with consultant Baker Tilly, said the forecast and the fiscal sustainability plan are intended to “tell the story” of the city’s finances using updated year-end numbers. He said the city’s forecast has been revised after completing the 2024/2025 close and resetting beginning reserves; the report shows the fiscal gap grows to roughly $4 million in new ongoing strategies needed by fiscal 2027 and an additional $2.3 million phased in over a three-year period starting in 2030. Toler summarized that the combined work would be necessary to avoid reserve levels falling below policy minimums.

City Manager Jeff said staff closed prior books and provided updated figures; he told council the city has experienced "doubling of insurance costs over the last couple of years" and construction cost increases that affect capital projections. Jeff said the updated year-end close reduced available reserves by about $3.2 million compared with earlier projections. When asked about the city’s strategic reserve balance, staff reported the strategic reserve has about $934,000 (about 5%).

Revenue risk: the forecast incorporates a potential drop of about $1 million in gambling tax receipts tied to the city’s primary local operator, which entered Chapter 11 proceedings and closed operations for part of 2025. Toler said staff are pursuing collection actions, but the forecast was adjusted conservatively to account for possible reduced receipts, which increased the shortfall.

The fiscal sustainability plan deliverable provided to the task force lays out 22 candidate strategies (plus eight additional ideas held aside) across revenue and expenditure categories, and includes sample “budget strategy scenario packages” that combine options into possible packages to address the gap. Toler said the task force will use those scenario packages to deliberate and shape recommendations.

Process and public engagement: the fiscal sustainability task force (FST) has held three meetings with another scheduled for the end of the month; consultants and staff plan in-person community engagement events on Nov. 17 and Dec. 2 plus online feedback opportunities. A follow-up public discussion (“Tara’s Talk”) was scheduled for Dec. 10. Toler said the task force will refine recommended strategies in December and January and submit formal recommendations to council early next year.

Council reaction: the presentation prompted extensive council discussion. Several councilmembers and at least one task force volunteer expressed urgency about cost containment, transparency, and the sequencing of public engagement and staff actions. Councilmember Sonmore and Councilmember Salmore pressed staff and consultants on immediate actions—hiring freezes, program-level cuts and clearer comparisons to peer cities—while others, including Mayor Pro Tem Wall, urged careful public outreach to ensure impacted residents and equity considerations are part of any revenue or service-level decisions.

Key numeric details staff provided or incorporated into the forecast: - Fiscal gap: approximately $4,000,000 in ongoing strategies needed by fiscal 2027, plus $2,300,000 phased in over three years (roughly $800,000/yr phased starting 2030). - Strategic reserve balance: about $934,000 (reported as roughly 5% of reserves). - Adjusted reduction in reserves following the year-end close: about $3,200,000. - Potential gambling tax revenue loss associated with a Chapter 11 filing: approximately $1,000,000.

Next steps: consultants and staff told the council they will continue FST meetings, run the November–December engagement events, solicit public feedback online, and return to council with the task force’s prioritized recommendations and proposed implementation steps early next year. Several councilmembers asked staff to provide one-page summaries of proposed strategies that show how each would affect the general fund, which residents each would affect most, and the approximate taxpayer impact.

Ending: Toler and staff said they expect the FST recommendations to inform mid‑biennium adjustments and any council decisions about revenue, service changes or implementation timing.