Council hears more proposals to close MLT budget gap

Key takeaways

• The Council heard an updated financial report on options to close the City’s $4.2 million budget gap, including raising Recreation Pavilion fees

• The City’s traffic engineer presented an update on Phase II of Main Street redevelopment.
• Councilmembers made two proclamations: one for Children’s Day and the other for Asian American, Native Hawaiian and Pacific Islander Heritage Month.

The Mountlake Terrace City Council and the City’s Fiscal Sustainability Taskforce returned for another round of budget updates as the City is still facing a $4.2 million budget gap. Earlier in April, City Manager Jeff Niten gave a few “what if” scenarios on what may happen to services and staffing if the Council adopts certain options.

Deputy City Manager Carolyn Hope led the budget update with Recreation and Parks Director Jeff Betz and Building Official Matthew Gisle. Hope presented two proposals that aim to reduce costs by $1.3 million, with a combination of expense cuts and new revenue generation:

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, such as recreation and permitting fees.

Hope said that City Manager Jeff Niten is already “looking at every vacancy” and that two positions have been “frozen” in the last couple of months: One in finance and one in police. She noted the City “adopted an AI policy” to streamline work citywide, but cautioned that AI is unlikely to save a whole full-time equivalent (FTE) even though it can save time. 

Responding to Councilmember Laura Sonmore’s comment on staff and Council training cuts, Hope said the City is not “wiping out training for any department” but is cutting back on optional – especially out‑of‑state –  conferences. Sonmore said that the City had sent four people to a recent city manager conference, but the City has “historically” sent just the city manager. 

She suggested the City should learn from past spending patterns and formalize that learning into policy, so overspending on travel and training doesn’t “keep on happening.”

Hope said that the Washington City/County Management Association had encouraged non-city management staff to learn about the profession. “I think living within the means that we have set for ourselves and making sure that the training is appropriate is what we’re doing,” Hope said.

Regarding the Mountlake Terrace Police Department, Hope said the task force is looking to cut a vacant officer position and a booking officer position.

Regarding recreation and parks, Hope said that while the department provides highly visible services, those are not a core function of city business. In addition, the department is subsidized by the general fund so would see reductions if revenue goals are not met.

Revenue

Hope proposed main five revenue-generating options:

• A fleet partnership with other cities
• A 10% youth program fee increase
• A park rental fee increase
• Aquatics fee increases
• A 9% increase in development fees

Hope said that with fee increases in both youth programs and aquatics, the goal is to come up with $100,000 in additional revenue. Youth programs include childcare, sports programs and camps.

The fee schedule is on the City’s meeting agenda.

Betz said the Recreation and Parks Department has been progressively increasing childcare fees over the last few years because the City has been predominantly on the lower end of the price range compared to private child care facilities. 

“It also puts us at a disadvantage when our expenses are increasing, but our revenues are not increasing as fast,” he said. “There are a lot of programs that charge more than we do… it’s a great service, but there’s also a cost to that.” Betz added that the increases are meant to help close the general fund gap.

Betz said KinderCare in Brier charges about $1,900 a month, while the City’s proposed preschool resident rate – with the cost increase – would be about $1,242. Other nearby preschools and child care facilities charge “a little over $2,000 a month,” he added. 

Councilmember Erin Murray said that she would like to see the City move toward market rate for non‑resident fees and continue to hold costs down for residents. She asked Betz what child care fees would look like if resident fees increased 5% while non‑resident fees rose 10%.

Betz said the current calculation is “more of a 20,000‑foot view” for hitting the revenue target now.

Building Official Gisle said that raising most development fees by 9% – as opposed to the initially proposed 7% –  would still keep the City competitive. He said the City’s proposal is to multiply “everything above 9% except for electrical residential and fire permits” to reach about $200,000 in added revenue, adding that the increase is “modest, targeted, aligned with regional trends.”

“Mountlake Terrace will be competitive with these changes as the regional market continues to go up,” Gisle said. “The City of Lynnwood is currently at $228 per hour. Shoreline is $267 an hour. Edmonds is $143, but they have some add‑ons…With this change we’d go from $200 an hour to $218 an hour.” 

For minor, over-the-counter home remodeling permits, such as kitchen and bathroom remodeling, the fee will increase from $465 to $505, Gisle continued. “Lynnwood, earlier this year, increased their fees by 14.7% and [is] looking at increasing them again,” he said. “Shoreline, same thing. They’re higher as well as Edmonds. So [we’re] pretty cost‑competitive if we approve this to go above the 9%.” 

When Mayor Pro Tem Bryan Wahl raised concerns about housing costs, Gisle said that using an  average remodel in Mountlake Terrace, the fee hike would  increase the average cost from $175 to $185 per permit.

Other revenues

Hope also mentioned other ways to generate revenue.

Banked capacity 

Banked capacity is property tax revenue that the City is legally allowed to collect but has not taken in the past few years. Hope said the task force proposed splitting the use of 100% of the City’s banked capacity over two years. 

“If you don’t take the banked capacity, we’d be looking at $2.5 million worth of cuts,” she said, reminding the Council about the potential staff layoffs that she and the task force presented last March.

Transportation Benefit District (TBD) license fee

An increase from $20 to $40 in TBD license fee would add $315,000 to the transportation fund, which would reduce some of the general fund contribution.

General fund levy

Hope proposed a general fund property tax levy lid lift instead of a Mountlake Terrace-only Metropolitan Parks District, which would generate $2.3 million under Proposal 1 and $1.5 million under Proposal 2. “The impacts of not doing this [a levy lid lift] are basically removing our recreation program,” she said.

Transfer of real estate excise tax (REET) to operations

Hope proposed transferring REET from street projects to street operations, which would save $175,000 in the general fund. “There are $100,000 or 35% of the total REET funds [that] is allowable to use for operations,” she said. 

Councilmember Murray said she wanted to avoid cutting two positions in parks and police and instead use fee increases to protect services. “There is not an ideal solution… so it’s trying to figure out, what are the right trade‑offs to make?” she said. 

Murray added that the City has been cutting its budget for 25 years. “Every budget cycle we go through with a fine-tooth comb… we have done a really good job for a small community of continuing to maintain services, despite the fact that our budget has not kept up with inflation and the cost of doing business,” she said. 

Wahl brought up affordability several times, mainly around housing costs and the tax and fee burden on residents. “Everything we do has an impact on the cost of housing,” he said. “Currently, government impact on the cost of housing ranges from $75,000 to $125,000 additional dollars that we’re adding to the cost of a house.”

Sonmore said that residents living paycheck to paycheck are already overburdened and said the City should have acted more aggressively a few years ago and pressed for more internal cuts and stricter policies on spending. 

Mayor Steve Woodard said that costs are going up regardless, and the Council has to decide between maintaining current service levels with more revenue or making explicit cuts. He emphasized that there is zero growth in the budget. “It is not going up. It’s either going down or we’re spending that cost across everyone…to figure out how to maintain the baseline, but there’s no growth,” he said.

On the bright side, Hope said Snohomish County has a property tax exemption program for seniors, low-income households and other populations. She also mentioned the City’s financial assistance program for utilities and garbage, under which eligible residents can qualify for a 30% discount.

Near the end of the meeting, Woodard read an email from Mountlake Terrace resident and accountant Roberta Hodgson, who suggested the City use the banked capacity instead of draining reserves and tightening operations by eliminating duplication and reevaluating vacancies

“Raise fees for services, but be mindful where taxpayers can find relief,” Woodard read. “Fund some scholarships for park programs for those who cannot afford the costs. You speak of your goals to attract people and business to our city. You cannot do this if you cut costs that will allow you to meet this goal. The lack of an adequate police force will also limit growth. Residents will always think taxes are too high, but most will pay them and appreciate the services provided. Residents know that everything costs more, and so be ready to explain why.”

City staff will return on May 7 for another budget update.

Main Street Phase II

City Traffic Engineer John Marek presented a proposed supplement to the City’s existing professional services contract with Perteet Inc. – a Seattle-based civil engineering firm – for the Main Street Phase II project. Marek said that the contract covers the entire finishing design, which includes completing the state transportation certification, preparing construction contract documents and providing right‑of‑way services. Right-of-ways are legally designated strips of land over which the public has the right to pass, such as roads, bike lanes, medians, sidewalks and street trees.

Last summer, the City hosted an open house for the Main Street Phase II project, which includes plans for multimodal transportation, such as a roundabout or signal at 220th Street Southwest and 58th Avenue West and buffered bike lanes on Van Ry Boulevard.

“The contract in general kind of fits in with Council’s goals – in particular, growing our bike community and responsible governance to ensure desired level of service,” Marek said. 

The Main Street project originally included improvements along 56th Avenue West between 236th and 230th Streets Southwest. However, after Mountlake Terrace was not selected for a $23 million federal grant in 2024, the City downsized the scope to 56th Avenue West between 236th and 230th Streets Southwest. Because of that reduction, staff had to “go back to some of those property owners and work through some agreements” to adjust the right‑of‑way needs, according to Marek.

He added that the cost of the new contract supplement would be an extra $106,637, which would bring the total contract to about $3.3 million. “It is within our existing budget,” Marek said.

The Council will vote on this change as part of the May 7 consent agenda.

Taluswood Apartments fire

During public comments, Mountlake Terrace’s Diversity, Equity and Inclusion (DEI) Commissioner Vonita Francisco talked about the fire at Taluswood Apartments that displaced at least 25 people and 15 pets last Sunday. In conjunction with Children’s Day, she presented Prepare with Pedro, an activity book series used by the American Red Cross to teach children and families about disaster preparedness. 

“Home fires move fast. We often have just a couple of minutes, two minutes to get out safely,” she said. “That means what we do before an emergency really matters.”

Hope later said that Mountlake Terrace’s Studio 6 Extended Stay supported some of the residents during their first night of displacement.

Proclamations

The City Council made two proclamations: Children’s Day and Asian American, Native Hawaiian and Pacific Islanders (AANHPI) Heritage Month. 

Councilmember Paige said there are more than 25 million Asian, Native Hawaiians and Pacific Islanders nationwide, and in both Washington state and Mountlake Terrace, this group represents 11% of the population, originating from 42 countries.

He recognized several local AANHPI leaders and volunteers, including Councilmember and former Mayor  Kyoko Matsumoto Wright; DEI Commissioners Priya May-Folden, Scott Matsuda and Kyo Pedersen; Arts Advisory Commissioner Ben Hou; and Planning Commissioner Cameron Wu.

Councilmember Murray said that Children’s Day is her favorite meeting of the year because children get to role-play City Council and speak at the microphone at City Hall.

DEI Commissioner Kerem Onat said April 23 is both Children’s Day and a major national holiday in Turkey that celebrates the founding of the Turkish parliament in 1920. 

“Think about how important and valuable you are, and act accordingly in your studies and efforts,” Onat said to the children present for the proclamation. “We have great expectations from you: Children in safe and comfortable homes, children who sleep on the streets and children [who are] living in war zones, facing violence, hunger and genocide. I wish a happy Children’s Day to all of them because every one of them is the hope and promise for our shared future.”

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