‘Fund balance continues to erode’: City manager says MLT must address budget sustainability before 2027

City Manager Jeff Niten discusses the six-year financial forecast with the city council during the Oct. 24 meeting.

The Mountlake Terrace City Council on Oct. 24 reviewed the city’s six-year financial forecast, which shows the ending budget declining by almost $3 million annually.

The financial forecast projects future revenues and expenditures based on trends and data from city, county, state and federal agencies, along with private market data. It aids the city in projecting changes, evaluating the need to update reserves, adjusting spending, or considering new or different revenues.

City Manager Jeff Niten explained the multiple factors involved, including the decline in cable TV subscribers as more people shift to streaming services, which reduces revenue generated from cable TV taxes. However, the more significant impacts come from expenditures.

Niten said that most city revenues increased by 3%, with the exception being the utility electricity tax at 3.5%. Predictions for growing use of electric vehicles is the reason for the increase in revenue. Utility gas taxes are projected at 2%.

Utility taxes are a tax on utility companies providing service within Mountlake Terrace city limits.

However, Niten said that expenditures, including materials, personnel and “every other thing increased by 4% across the board.”

The city has been using its fund balance to afford the services at the levels it does. However, Niten pointed out that this practice cannot last long because the “ending fund balance continues to erode.”

This list of expenditures shows an ever-decreasing balance, going into the negatives in 2028. (Image courtesy City of Mountlake Terrace.)

“We do recognize that the continued use of the fund balance is unsustainable in the long term,” Niten said. “We will have to address the problem before 2027, which is why we are implementing the task force next year.”

The financial sustainability task force will consist of community members with the support of a facilitator and possibly consultants to provide staff with additional resources.

Deputy City Manager Carolyn Hope reported during the June 13 council meeting that the city’s expenditures will be higher than the operating revenues beginning in 2025 and will be depleted within 10 years.

Mayor Pro Tem Bryan Wahl said that the cost of operating a government has risen substantially and that “insurance alone has increased by 25%.”

“If we do not address this, we are going to be in a similar situation to Edmonds and Everett and others who have had to make substantial cuts to services,” Wahl said.

Recreation and Parks Director Jeff Betz answers the council’s questions about recreation fees and the Recreation Pavilion’s condition.

In other business, the city council reviewed the 2025-2026 biennial budget for the recreation, parks, property management and IT departments.

During the recreation presentation, councilmembers expressed concern about the Recreation Pavilion and its pool. The aging facility needs replacement during an economic crisis, and the pavilion – once a source of revenue for the city – is slowly becoming a liability.

Recreation and Parks Director Jeff Betz said program revenues have increased since pandemic restrictions were lifted and will continue to grow as pavilion hours of operation increase with added staff. However, fee increases are a delicate balance.

“The issue with fee increases is you think you’re going to get a 20% increase in revenue, and that’s not the way it works,” Betz said.

If the city tried a 20% fee increase for swim lessons, Betz said that hypothetically, the city would have attrition because not all customers would accept the rate increase. However, Betz added, the pool is one of the most active pools in the region and in the bottom three for admission costs.

Betz said that the recreation department will draft projections for fee increases and potential attrition rates for council review.

To view each department’s presentation materials, please see below:

– Recreation. To view the presentation materials, click here.

– Parks. To view the presentation materials, click here.

– Property Management. To view the presentation materials, click here.

– Information Technology. To view the presentation materials, click here.

To view proposed recreation and park fee changes for 2025-2029, click here.

The next meeting will start at 7 p.m., Nov. 7, at Mountlake Terrace City Hall, 23204 58th Ave. W., Mountlake Terrace. To attend the meeting online, visit zoom.us/join and enter meeting ID 810 1113 9518; no passcode is needed.

To make a public comment remotely, complete the registration form within 24 hours of the meeting’s start here.

To listen via telephone, call 1-253-215-8782 and enter the same meeting ID.

You also can view live-streamed meetings and past video recordings at www.youtube.com/cityofmlt.

The agenda can be viewed here.

— By Rick Sinnett

  1. Born and raised here and have seen how city employees are sitting in their trucks more than they are working. Start laying people off. Jerry Smith started taxing people everyway he could here and the new mayor is no better. All they do is spend money and look for a way to tax the citizens and tell everyone what a great job they are doing. We have the same population we had 60 years ago and probably 4 times as many city employees. Explain that then start layoffs with anyone you hired to force DEI on us.

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