Mill Creek council holds public hearing on proposed 2026 property tax levy; asks staff to model two new options

The Mill Creek City Council on Oct. 28 held a public hearing on the proposed 2026 property tax levy after Finance Director Ermina Lombard outlined five levy options and several multi‑tool revenue scenarios intended to close an estimated operating gap.

Lombard told the council that through Sept. 30 the city had collected about $8.7 million in general‑fund revenues and had recorded roughly $10.5 million in expenditures, producing a year‑to‑date shortfall that contributed to a projected biennial deficit of roughly $1.5 million. She presented five levy options ranging from a 1% increase (about $44,000 net) to larger packages that would use banked levy capacity to raise up to roughly $1.8 million in one year. Lombard also laid out combined scenarios that paired limited levy increases with a utility tax and a transportation‑benefit district (TBD) to produce longer‑term fiscal sustainability.

During public comment, resident Barb Heidel urged the council to adopt a package that combined a moderate levy increase with a utility tax, endorsing what staff had labeled "scenario B" and, if needed, "scenario C," because they provide more near‑term breathing room for unanticipated costs. "We must act now to not be in serious trouble financially," she told the council.

Council discussion centered on how to balance revenue enhancements with spending reductions and on protecting the city's long‑term financial health. Councilmember Steckler suggested modeling a package the council had discussed earlier in which a 1% property tax increase is combined with a 6% utility tax and a $20‑per‑vehicle TBD fee. Councilmember Cavalieri proposed an alternative that couples a 1% levy increase with specific budget reductions (he suggested removing two management positions and one IT position funded previously by ARPA, and other line‑item reductions) rather than relying primarily on banked levy capacity.

No levy was adopted during the hearing. Council voted 6‑0 to open the public hearing and to close it after testimony. The council asked staff to prepare two additional fiscal models for the next meeting: (1) the combination Steckler described (1% levy + 6% utility tax + $20 TBD) and (2) Cavalieri's package of a 1% levy plus proposed personnel and program reductions, with clear estimates of what service levels those cuts would affect. Lombard said staff will return with modeled impacts and estimates at the next hearing and the mid‑biennial budget review.

The council emphasized several constraints revealed in the staff presentation: sales tax collections have flattened, court and jail costs are rising, and one‑time federal (ARPA) funds and banked levy capacity are limited. Lombard noted the highest lawful levy capacity and reminded council that the levy rate is set against assessed value; Snohomish County preliminary numbers show a roughly 5% assessed‑value increase that would moderate rate changes for many homeowners.

Next steps: staff will model the two packages requested by council, provide service‑level implications for Cavalieri's suggested cuts, and return to council at the next public hearing and the mid‑biennial budget review with more detailed dollar impacts and scenario comparisons.