Bonney Lake officials warn of shrinking general fund; options include permit fees, B&O tax or small public-safety sales tax

Bonney Lake’s chief financial officer warned council members at a Feb. budget retreat that the city’s general fund balance is on a downward trend and could shrink by roughly $700,000 per year under current spending assumptions.

"If you continue to spend the way you're spending currently," CFO Sherry (speaker 6) told the council, "the balance goes down by somewhere about $700,000 a year from '26 through '30." She said the forecast assumes conservative revenue projections and does not include continued funding for several limited-term positions now paid with ARPA dollars.

The projection prompted questions and a wide-ranging discussion over how to close the gap. Staff and council members outlined three principal approaches: cut services and positions, increase fees (notably permit fees), or pursue new local taxes.

On fees, community development staff said the city processed roughly 1,500 building permits last year but has moved from large commercial projects toward many smaller permits, reducing per-project fee revenue. Staff noted a recent state law change now allows municipalities to include indirect costs in permit-fee calculations, making a 100% cost-recovery permit model legally possible.

"Once we go online with Enterprise Permit & Licensing, we expect to automate many manual steps," said the community development representative (speaker 10). He said the new system should improve efficiency and enable staff to capture indirect costs, but that full rollout and measurable savings are not expected until the system is fully implemented in October 2027.

Council members also revisited broader revenue options. Several favored exploring a business-and-occupation (B&O) tax targeted at large retailers and regional commercial activity, noting that a number of out-of-town shoppers and big-box stores generate a disproportionate share of local commercial activity. Finance staff cautioned that the exact yield depends on how an ordinance is written and who would be subject to the tax.

As a nearer-term alternative, staff estimated a modest public-safety sales tax — a small fractional increase on purchases within city limits — could raise about $800,000 annually. "Anybody that purchased in the city of Bonney Lake and paid sales tax would be adding to $800,000 to pay for services in Bonney Lake," Sherry said. The council noted such a measure could be put to voters and stressed the need for public outreach before proceeding.

Council members repeatedly returned to the tradeoffs: cuts would likely affect services such as recreation programming and special events, while new taxes or higher permit fees would shift costs to businesses or customers. Multiple members urged that staff produce detailed revenue estimates and fee comparisons with peer cities before the finance committee takes up proposals.

For now, the mayor asked the council to offer early direction on what they are willing to cut and what revenues they want staff to model. The retreat produced no vote; staff will return to committee and the full council with precise fee studies, permit-fee scenarios and revenue estimates for any proposed tax measures.