Issaquah reviews mid‑biennium budget fixes; director proposes moving Metroflex funding to TBD and using public‑safety sales tax for recurring costs
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Summary
Director Kristen Garcia presented a multi‑year decline in Issaquah’s unrestricted general‑fund balance and proposed a package of mid‑biennium adjustments, including removing select new spending, moving Metroflex money out of the general fund for possible TBD support, and using public‑safety sales tax revenues to offset recurring safety costs.
Director Garcia presented a historical review showing the city’s unrestricted general‑fund balance fell from roughly $20 million in 2020 to about $9 million (≈14% of expenditures) in 2024, driven by slower ongoing revenue growth, one‑time and ongoing commitments, ARPA spending and storm‑related costs in 2024.
Garcia walked council through candidate mid‑biennium adjustments intended to restore reserves toward the policy target of 15%: removing several proposed one‑time expenditures from the mid‑biennium adjustments (for example, a $150,000 affordable‑housing study and a Pickering Barn generator/server relocation), reallocating Metroflex funding ($120,000 in the adopted budget for 2026) out of the general fund with a proposal that the TBD could be a potential funding source, using the newly established public‑safety sales tax fund to cover certain public‑safety personnel and fleet allocations, and completing ARPA close‑out entries by reclassifying a $12,000 audit cost.
Garcia said the city is excluding approximately $9.6 million in proceeds from the sale of a property from the unrestricted fund‑balance calculations because those proceeds are treated as restricted/capital‑facility proceeds but said staff could move those proceeds into a capital projects fund for clarity. She also proposed clarifying the reserve‑policy language to compute the unrestricted fund balance as a percentage of unrestricted expenditures (not total expenditures) and suggested establishing a standing audit committee to review year‑end performance and interact with auditors.
Council members asked for follow‑up data and scenarios: how much would cuts be to reach 12% or 15% within the current biennium; how restricted revenues (King County parks levy, public‑safety sales tax, sale proceeds) should be represented; and whether Metroflex should be preserved through TBD funding. Several council members said they did not want cuts to public safety or human services but were open to identifying one‑time capital delays and other nonoperational adjustments.
On Metroflex, staff explained removing the $120,000 from the 2026 general fund is a placeholder option and that the TBD fund balance could be used if council directs it; staff warned TBD projections are estimates and sensitive to project costs, tariffs and sales‑tax volatility. Garcia also noted the city would create a separate public‑safety sales‑tax fund for revenues that will be received beginning in 2026 and that using those funds to offset certain general‑fund public‑safety costs would reduce the uncovered general‑fund expenditures in the 2026 forecast.
No formal budget ordinance or vote occurred at the Oct. 27 meeting. Staff will return at the Nov. 10 and Nov. 17 meetings with refined forecasts, and the public hearing on the budget will continue on Nov. 17. Council asked staff to bring scenarios showing the cuts required to reach 12% and 15% reserve targets and to provide clearer restricted vs. unrestricted presentations for the next meeting.
