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Anacortes mayor presents balanced 2026 budget after $9 million shortfall; council begins public-works review
Summary
Mayor Miller presented a proposed 2026 budget that staff says closed an approximately $9 million gap with a mix of expense reductions, revenue changes and staffing reductions. Council and staff began a detailed public-works budget workshop and asked for clearer capital-project prioritization and a centralized opioid-funds schedule.
Mayor Miller presented a proposed 2026 budget for the City of Anacortes that staff described as balanced but requiring significant reductions and structural changes to close an internal shortfall the administration estimated at about $9,000,000. "This is not a decision we make lightly," Mayor Miller told the council as she announced cuts that include removing 8.9 full-time equivalent positions across departments and measures that will affect 13 people currently employed by the city.
The mayor said the proposal would preserve core public-safety services while reallocating or deferring other programs and capital projects. The draft includes a 1% property tax increase and a proposed 2% increase to utility taxes for water, wastewater and stormwater; the package also reallocates $250,000 from the Library Reserve Fund to the general fund and reduces funding for some nonprofit partners. "We will work to support affected employees through this transition," Mayor Miller said.
Finance Director Steve Hoagland summarized the steps staff took to close the budget gap and urged council members to view the plan as the start of an extended discussion. "This is the most difficult budget I've worked on," Hoagland said, describing a combination of flat or declining revenues, higher wages and benefit costs, and sharply higher construction costs. He told council the draft reflects both one-time and ongoing changes: deferring capital projects, lowering equipment-replacement allocations in the general fund and using some restricted settlement and grant funds for targeted needs.
Public-works staff presented its draft operating and capital numbers during a workshop that followed the mayor’s message. Staff said they had prioritized essential maintenance and projects eligible for grant support but asked council for direction on which capital projects to fund from limited local sources (TBD, REIT and utility rates). Public-works staff also described a proposed phased approach for the South Commercial Avenue repaving project because full funding is not available in 2026.
Councilmembers asked for two clarifications before adopting any parts of the budget: a prioritized capital facilities plan that shows which CFP projects are funded under the revised numbers, and a consolidated schedule showing proposed uses of opioid settlement funds. Hoagland said staff will return with those materials and that three council work sessions are scheduled to continue the budget review. The mayor and council emphasized that the budget presented was a balanced draft subject to revision before final adoption.
Background and context: the proposal relies on a mix of service reductions, targeted use of restricted funds (including opioid settlement and federal grant money), and modest tax and rate increases; it also assumes some revenue growth and continued pursuit of grants for capital projects. Staff emphasized the draft preserves statutory and core public-safety obligations while signaling material changes in program levels and capital phasing.
