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Anacortes finance director flags roughly $2.4M gap for 2027; council seeks revenue and cost options
Summary
Finance director Rhonda Peck presented a Q2 update showing year-end revenue and expense projections and a preliminary $2.4 million shortfall for 2027 driven largely by salary and benefit increases; council discussed revenue diversification, historical trends in building permit revenues, and requested further reports and public engagement.
Rhonda Peck presented the city's Q2 finance update and an early look at 2027 budget assumptions. After removing uncertain one-time items (event center bond, South Commercial, creosote-pile work), staff estimated year-end revenues and expenses around $49.5 million. Building permit revenues are pacing at roughly 51% of expected and remain below recent prior-year levels.
Peck said staff's initial assumptions for 2027 (utility-tax increases aligned with CPI, property tax at the 1% statutory limit, modest sales-tax growth) produced a preliminary gap of about $2.4 million largely driven by contractual salary increases and rising benefit costs. Council members urged both short-term and long-term strategies: a brainstorming session for revenue ideas, a 3'5 year fiscal view, targeted grant-seeking, and examination of statutory/nonnegotiable expenses. Peck committed to follow-up materials, a budget web page and additional workshops to refine options before the preliminary budget delivery.
"We go from a budget of 61,500,000 down to a, anticipated spend of 49.5," Peck said during her presentation to show updated year-end projection and to frame the scale of potential adjustments. Council emphasized protecting core services while exploring revenue options and asked staff to identify statutory constraints and potential revenue measures for forthcoming budget discussions.
