Lake Stevens staff present salary survey and budget options; mayor backs modest market fixes as public‑safety tax faces compliance questions

City staff and outside consultants reviewed a compensation study and a set of budget‑balancing options at the Lake Stevens City Council workshop on Oct. 21, offering council several implementation scenarios and prompting discussion about sustaining services while remaining competitive in the regional labor market.

Shannon and Kathy of Compensation Connections presented three options for nonrepresented employees (the study used the 60th‑percentile market reference): a cost‑of‑living adjustment only (COLA), a COLA plus targeted market adjustments to move jobs under 95% of market up to 95% (mayor’s recommendation), and a COLA plus adjustments to bring those jobs to 100% of market. Shannon summarized option 1 as “everyone in the nonrepresented group would receive an ... pay increase of approximately 2.44% with this particular option.”

The staff numbers shown to council: - Option 1 (COLA only): roughly $250,000 total cost (including benefits) for nonrepresented ranges. - Option 2 (COLA + move jobs under 95% to 95%): about $88,000 additional market adjustment cost; 16 jobs would be re‑graded; modeled overall midpoint for nonrepresented jobs would rise to roughly 99% of market. - Option 3 (COLA + move jobs under 95% to 100%): larger market adjustment cost (market component near $150,000) and total estimated loaded cost about $404,000.

Mayor Gailey said he favors option 2 and staff captured that as the mayor’s recommendation for council consideration. The consultants and staff explained modeling assumptions: COLA applied first, employees retain their step placement within any adjusted grade, and market comparisons use midpoint of comparable jurisdictions’ pay ranges rather than employee step or tenure.

Councilmembers raised multiple fiscal and personnel concerns. Questions and staff clarifications included: - Teamsters and other represented groups: Teamsters jobs averaged about 91% of the market reference in the compilation shown; represented bargaining is a separate negotiation. - Longevity pay and other supplements: staff noted longevity pay (a post‑hire supplement) is excluded from the base‑range market comparison, which can make some incumbent employees’ effective pay appear higher than the midpoint comparisons alone indicate. - Benefits and cost‑sharing: staff modeled several employee premium‑share scenarios. Increasing employee share to 5% and dependent share to 15% would reduce citywide medical costs by an estimated $124,000 for nonrepresented employees (and additional amounts if applied to bargaining groups). A higher share (10% employee / 20% dependent) produced larger estimates shown to council; staff cautioned these are policy choices with retention tradeoffs.

Finance Director Barb reviewed broader budget options and revenue strategies demonstrated in the packet and presentation. Highlights and staff‑proposed moves included: - One‑time reclassification of pandemic recovery (ARPA) funds into capital project funds to free roughly $1.2 million in unrestricted cash for the general fund in 2026 (one‑time). - A property‑tax allocation change that would reassign a share from the street fund to the general fund and is estimated to add about $940,000 annually to the general fund (staff said the change will be refined to protect street fund sustainability). - Implementation of credit‑card fees (council previously passed a resolution to start recouping merchant costs on Jan. 1) and modest technology/user fees. - Proposal to impose a utility tax on the city’s stormwater fund for internal use (staff modeled a 10% tax as an example), producing roughly $560,000 annually if fully implemented and absorbed initially by the stormwater fund; staff said the rate and pass‑through to ratepayers require further review.

Staff also included a placeholder for a 0.1% councilmanic public‑safety sales tax in the 2026 forecast (about a half‑year yield of $375,000 if imposed in April). Mayor Gailey and the police chief flagged a risk: the Washington Criminal Justice Training Commission (CJTC) has issued strict compliance guidance to jurisdictions that already passed the tax, and staff said King County and Kent received compliance memos that could trigger audits or withholding. “There’s a lot of conflicting issues with this sales tax right now,” the mayor said; council members agreed the city should not finalize a levy absent clarity on state‑level compliance and potential federal accreditation conflicts.

Council discussion covered tradeoffs between making market corrections now (to help retention) and preserving long‑term budget flexibility. Several councilmembers said they support a modest COLA but urged caution on larger market moves until the city’s revenue picture is firmer. Staff agreed to provide updated allocations and revised permit‑fund assumptions, and to return with adjusted salary‑survey models and budget scenarios at the next available meeting. The council also prepared to enter an executive session after the workshop to discuss collective bargaining strategy.

No formal ordinance or binding vote on compensation or taxes occurred at the workshop; council discussion produced a staff direction to refine numbers and return with updated options for formal action.