City of Mountlake Terrace faces $4.2 million budget gap

Key takeaways

• The City of Mountlake Terrace is facing a $4.2 million budget gap through 2030 with reserves dipping below its minimum requirement by 2027.
• A public sector advisory firm is reviewing 30 strategies to help the city close the fiscal gap.
• State lobbyists will advocate during the next legislative session for $300,000 to fund for the roof replacement of the MLT Library, but will wait on the Mickey Corso Community Clubhouse roof until the 2027 session.

During a discussion with the city’s Fiscal Sustainability Task Force, the Mountlake Terrace City Council learned that Mountlake Terrace faces a $4.2 million shortfall through 2030 and reserves are projected to fall below minimum levels by 2027.

According to Steve Toler of Baker Tilly – a public sector advising company – the updated financial forecasts show reserves have been reduced by about $3.2 million following the year-end close, leaving the City with less “runway” to work with.

To close the shortfall, Toler said the City will need about $4 million in new, ongoing strategies by 2027 – roughly 17% of annual operating costs – and an extra $2.3 million phased in over three years starting in 2030. Those measures aim to keep reserves near the city’s target of 20% of operating expenses.

Toler said the closing of Dragon Tiger Casino last July and its Chapter 11 bankruptcy filing has reduced City revenue by about $1 million a year. He said the City is monitoring the bankruptcy proceedings and working with the casino’s owners to collect remaining taxes while making conservative revenue assumptions in the City’s updated forecast.

Toler said that 30 potential strategies are identified to address the gap, including 22 core options and eight secondary ones related to strengthening revenues, improving efficiency, or adjusting service levels. These strategies include cutting City sponsorship of events, restructuring City departments and enhancing property tax banked capacity.

The task force will review the options, gather community feedback at meetings in November and December, and present final recommendations to the City Council in early 2026.

Niten added that the City’s insurance premiums have doubled in the past few years while construction costs increased 5.9% over the past year. 

Councilmember Laura Sonmore said that she is against raising property taxes. “We’re suggesting huge tax increases to our neighbors. How are we explaining that?” she said. “Why aren’t we cutting services and looking at what we can do first instead of just saying, ‘Well it’s the state’s fault. Well, we lost gambling. We’re paying more insurance. But didn’t we raise about $3 million in salaries? And we’ve been spending money like crazy.

“I’m afraid that we’re going to have to have layoffs because we’re overstaffed, and we don’t have the budget for it,” Sonmore said. 

Mayor Pro Tem Bryan said about 80% of the city’s operating budget is tied to staffing costs, making it difficult to reduce expenses without affecting personnel or the services they provide. To address this, the Task Force had discussed using a priority-based budgeting approach, a method that ranks programs and services based on their importance to community goals and long-term sustainability.

Deputy City Manager Carolyn Hope said the Task Force will begin setting priorities at its next meeting.

In other business, the Council met with state lobbyists to discuss an additional $300,000 the city is requesting from the state to replace the Mountlake Terrace Library’s roof and HVAC system, and $1.15 million to replace the roof and HVAC system at the Mickey Corso Clubhouse in Ballinger Park.

After state lobbyists Amina Teouri and Shelly Helder reviewed the legislative process to councilmembers, Teouri said that she and Helder had originally requested $800,000 for the library roof and HVAC project but had secured $500,000 from the state capital budget. 

“The previous supplemental budget was about $211,000, so the $300,000 request is ambitious, but certainly not unrealistic,” Teouri said. She advised the Council to move the Clubhouse request to the next biennial budget in 2027 rather than the current one.

She added that the City’s Main Street Revitalization Project has been removed from the top legislative priorities this year since no direct new money is being sought for it during this session. Instead, Teouri suggested that city leaders should focus on:

• Enhancing indigent public defense by increasing state support and funding and increasing the workforce
• Improving the city’s housing supply to improve housing affordability and investments
• Improving sustainable funding for local transportation systems
• Preserving state-shared revenues, which “may be on the chopping block” as the state anticipates lower-than-expected revenue in the upcoming budget cycle

Councilmember Erin Murray said she wants the city’s housing priorities to include not only different types of housing but also more ways for residents to become homeowners. She suggested the city encourage legislators to support programs that reduce barriers to development and help first-time buyers.

City Manager Jeff Niten agreed, noting a regional shortage of entry-level homes and larger rental units for families. He said new language in the city’s agenda could align with recommendations from the Housing Affordability Regional Task Force, which is expected to issue an updated guidance in early 2026.

Teouri said she and Helder will revise the housing section of the agenda to better reflect the council’s feedback. 

In other agenda items: 

• The City proclaimed Oct. 14 as Leadership Day with Councilmember Steve Woodard presenting the award to CEO of Leadership Snohomish County Adrianne Wagner. Wagner said more than 1,200 people have gone through their leadership program.
  
  “We’ve had three multi-generational pairs go through the program, and so we’ve been all around long enough to serve parents and children of parents that have been through the program. So it’s a pretty awesome honor to lead this organization,” she said.
• City Manager Niten said the public works department is looking into improving pedestrian safety at the intersection of 236th Street Southwest and 56th Avenue West, based on two residents’ comments from last week’s meeting. They will also look into adding more crosswalk lights and other safety measures at other intersections.

The full meeting can be viewed on CityofMLT Youtube channel.