Mountlake Terrace staff outline choices to close a multimillion‑dollar gap: layoffs, new taxes or service cuts

City staff told the Mountlake Terrace City Council on March 12 that a fiscal sustainability task force and staff analyses identify a structural shortfall that will require a mix of savings and new revenue to restore reserve levels and balance the general fund.

Deputy City Manager Carolyn and City Manager Jeff Knighton presented preferred and alternate budget strategy packages, describing a baseline forecast staff summarized as an annual deficit of roughly $4,200,000 per year through 2030 and a further increase they quantified in the presentation as $5,400,000 through 2035. To close the gap and rebuild reserves toward a 20% target, staff said the packages combine one‑time historical savings, cost efficiencies and potential revenue measures.

What was proposed: staff said the preferred package relies on three principal revenue elements and cost adjustments: (1) using 100% of the city’s property tax bank capacity (staff quoted an amount of $2,400,000), (2) a Transportation Benefit District (TBD) sales tax that staff estimated could raise about $835,000 annually if dedicated to streets, and (3) a planned 5% reduction in general fund expenses (described as a $1,000,000 target over two years, though staff noted additional historical savings and revisions reduced some of that estimate). Staff also described an alternative that would use 75% of bank…