MLT Council approves fiscal task force proposal to close City’s $4.2 million budget gap

Key takeaways:

• City Council voted 5-2 to adopt the Fiscal Sustainability Taskforce’s proposal to close the City’s budget gap.
• City Council unanimously voted to authorize the transfer of a $2 million interlocal loan from the stormwater fund to the parks capital fund.
• Recreation and Parks staff presented survey respondents’ choice for the new playground design at Firefighters Memorial Park.
• City Council made four proclamations and awarded participants of the MLT Community Academy.

The Mountlake Terrace City Council voted 5-2 Thursday to adopt a proposal the City’s Fiscal Sustainability Taskforce had recommended to close the City’s $4.2 million budget gap. Reserves are projected to fall below minimum levels by 2027, and the city staff forecast an additional $2.3 million gap by 2030 if the current shortfall is not addressed.

Mayor Steve Woodard and Councilmembers Erin Murray, Sam Doyle, Kyoko Matsumoto Wright and William Paige, Jr. approved Proposal 1. Mayor Pro Tem Bryan Wahl and Councilmember Laura Sonmore rejected it.

City Manager Jeff Niten had presented two “what-if” scenarios to the City Council in April that covered different revenue streams, expense cuts and layoffs. Two weeks later, Deputy City Manager Carolyn Hope presented updates to the two proposals:

• Proposal 1 has a higher tax levy rate and a potential future transportation levy.
• Proposal 2 has a lower tax levy rate but relies more on fee increases for programs that include recreation and permitting.

Before the final vote, Murray suggested an amendment to Proposal 1 that preserves the funding for the Recreation and Parks and Economic Development positions and increases Economic Development fees, which would bring in $200,000. This would be a net gain of $39,923 to the ending fund balance compared to the original Proposal 1. 

The amendment passed 6-1 with Sonmore opposed.

“We have hard decisions in front of us, and there are no easy answers,” Murray said. “We’ve been cutting for 25 years. There’s not a lot to cut … Saying ‘no’ doesn’t solve anything. It just leaves us with a $6 million gap and potentially no city government.”

Sonmore said the City is focusing “too hard on tax and fee increases without first exhausting internal cuts and structural changes.” She cited past budget practices, and warned against relying on “non-recurring savings,” such as position vacancies, delayed spending and underspending.

“If we keep on increasing all these fees and put it on our citizens, how are they going to find affordable housing?” she said. 

Sonmore suggested the Council should go through each item in the proposals, line by line, to see what can be cut or reduced before asking residents. “Residents may feel that the City is asking for the taxpayers to solve the problem that was caused by some of our overspending,” she said.

Wahl also opposed the tax-heavy approach, centering his remarks on residents’ cost of living. “We need to continue working to fine tune and find ways … to deliver the services that we need to deliver, but in the most cost-effective manner,” he said. “If [residents] are willing to vote to support additional property taxes, which we’ll be asking them to do, then they’ll have the opportunity to tell us that it’s OK to increase our property taxes to be able to fund the services that they need.”

Murray said that the proposals do not add extra services or positions; they only maintain existing ones. “I would love to hear a single other councilmember make a proposal about how we move forward,” she said.

Doyle said Proposal 1 is “the most equitable and reasonable plan” and said that if voters later reject the levies, they need to understand the consequences.

Paige said the task force’s work “was not in vain,” pushing back on criticism he’s heard that they “didn’t get it done.”  “We were [getting] nowhere before the [task force] was put together. And when we go forward, and I know there are other cities now trying to practice the model that you put together to help them in the position that they’re in,” he said.

Matsumoto Wright used the Candy Cane Park closure as an example of what happens if the budget gap remains. “We’re trying to keep a level of service going in the City, and yet prices keep going up, and it’s just a no-win situation for any city right now,” she said. “We’re just going to have to figure out how we’re going to pay for it.”

Niten said he will return within six weeks to present the Council with a revised list of Recreation and Parks fees and again during the City’s December fee schedule update.

Interfund loan from stormwater fund to parks capital fund

The council unanimously voted to authorize the transfer of a $2 million interlocal loan from the stormwater fund to the parks capital fund. Finance Director Sirke Salminen said an interfund loan is a temporary, internal line of credit “from one fund to another to solve cash‑flow problems while the city waits for grant reimbursements.”

Salminen said interlocal loans last about one to three years, though they can be renewed. Unlike a lump-sum loan, the proposed arrangement would allow monthly draws based on eligible expenses. The loan also requires repayment of both principal and interest.

Salminen said using an interfund loan allows the City to “pay ourselves instead of going to an outside financial institution and pay them the interest.” The interest rate would match the current Local Government Investment Pool rate at 3.7%, which staff said is lower than commercial loan rates ranging from 5.2% to 9%.

Niten said the City has a lot of parks projects funded by grants (about $6.9 million in current awards) and, historically, these grants have been successfully reimbursed.

In response to Sonmore’s concern about the parks capital fund lacking a cash balance, Salminen said that fund is a separate construction fund that typically does not maintain reserves. Instead, money from sources such as real estate excise taxes and the general fund is transferred into the parks capital fund only when needed for specific projects. Salminen said that in the past, the city did not maintain separate cash balances for all funds, describing it as “just one bucket of money.” As a result, projects were effectively being paid for by borrowing from other funds without a formal arrangement. Salminen said the proposed interfund loan would formalize and correct that longstanding practice.

Firefighters Memorial Park playground survey results

Recreation and Parks Director Jeff Betz said the City received 699 responses and 576 comments from a survey on the new design for the Firefighters Memorial Park playground. Respondents voted for option B, which has a firetruck theme with a fire pole, a swirly pole step climber, two slides and interactive play elements.

Betz said a $30,000 Snohomish County REET-funded grant for the playground was secured with help from County Councilmember Jared Mead. 

Betz said the existing firefighter-themed truck is about 43 years old and no longer meets current safety and accessibility standards. Most of the equipment will be removed, and the swing set will be relocated onsite. 

Parks Supervisor Celina Williams said the total cost for the project is nearly $60,000. The REET fund will cover half of the amount, with the rest coming from the capital improvement fund ($20,000) and the City’s Parks and Recreation budget ($9,559). The project includes playground equipment, ground surfacing, borders, ADA compliance and stormwater drainage. Construction will begin in July or August.

In other business:

City staff recognized 24 Mountlake Terrace residents who completed the eight-week community academy program, which helps to inform the public about how local government works. Eleven were present at the City Hall to receive their award.

The City Council also made four proclamations earlier in the meeting.

Jewish Heritage Month with American Jewish Committee Director Regina Sassoon Friedland.

ALS Awareness Month with the Barham family.

Water Safety month with Recreation Supervisor Rose Ploeg.

National Police Week with Cmdr. Scott King, Sgt. Eugene Shin and Officer Valensce Ostrovkin.

The entire meeting can be viewed on the City’s YouTube channel.