Anacortes mayor proposes 2026 budget with layoffs, 1% property-tax increase and utility tax hikes to close $9 million gap

Mayor Miller presented the City of Anacortes— proposed 2026 budget on Oct. 27, saying the plan closes a reported $9,000,000 gap through a mix of expense reductions, reserve reallocations and revenue adjustments.

"This budget reflects substantial efforts to close a $9,000,000 budget gap," Mayor Miller said while reading the budget message, noting a combination of staffing reductions, fee adjustments and capital deferrals.

The memo filed with council cites a proposed 1% increase in property taxes and a proposed 2% increase in utility taxes for water, wastewater and stormwater, along with rate adjustments that will require council adoption. The mayor said the budget would remove 8.9 full‑time equivalent positions from the 246-employee workforce and explicitly said layoffs were necessary after an extended review of revenues and expenses.

The mayor listed other measures to balance the books: delaying some capital projects; reallocating $250,000 from the Library Reserve Fund to the General Fund; reducing certain nonprofit partnership funding; removing replacement charges for equipment and information systems from some general‑fund allocations; and using opioid settlement funds for several one‑time items identified in the presentation, such as social‑work support and preventive programming. He also said fiber operations are projected to contribute to the general fund in 2027.

Finance Director Steve Hoagland and other staff told council the initial draft showed nearly a $9 million shortfall and that the document presented to council is balanced across accounting funds using a combination of the actions summarized by the mayor. Hoagland said the city had used reserves and grants in recent years to smooth operations but had reached a point where those one‑time sources would not cover recurring shortfalls.

Council members pressed staff on specifics, including which positions and programs would be reduced and whether the library reserve reallocation would affect services. Several councilmembers recommended further council discussion about the allocation of opioid settlement funds and asked staff to provide clearer, project‑level capital funding tables that distinguish aspirational CFP requests from the amounts actually allocated in the 2026 budget.

Why it matters: Mayor Miller and finance staff said the changes aim to preserve core services (police, fire and emergency response) while ensuring long‑term fiscal stability. Council members raised concerns about service impacts, the human effects of layoffs and the need for transparent prioritization of capital projects and restricted revenue use.

Next steps: Staff scheduled three council work sessions and public comment hearings on the 2026 budget. Council must adopt rates and ordinances for tax or utility changes before they take effect.