The City of Bellingham’s expenditures are outpacing revenues, similar to Whatcom County, which just this morning, Monday, July 15, announced a hiring freeze.
Bellingham has not announced a hiring freeze at this time, but the city’s finance director Andy Asbjornsen said at the July 15 city council committee meeting that the city is looking at reducing costs while still providing the “highest level of service we can.” Mayor Kim Lund told employees that the city is seeking budget reductions targeting 5% in all general fund departments, aside from public safety departments, in an email on June 4.
In a presentation on the city’s finances up to May, Asbjornsen said there’s been only half a percent of growth in sales tax revenue this year. The B&O (Business and Occupation) tax revenue is trending slightly below last year, according to numbers from May. Whatcom County has also seen stagnation in sales tax revenues.
Asbjornsen said the city is seeing an ongoing operating deficit of about $3.5–4 million.
The city started the year with about a $42 million reserve balance and is budgeted to end the year with about an $18.5 million reserve balance — although about $11 million of the reserve spent was associated with American Rescue Plan Act (ARPA) funds the city needed to allocate by the end of the year.
Lund said the city and the county are in a similar position and “living in the same economic reality where we see that flattening of our revenues coming in across the board.”
“We have a lot of work as a community at the county level and city level to try to adjust expectations and growing complexity and needs of our community with the budget reality,” she said.
Whatcom County Executive Satpal Sidhu issued a 90-day hiring freeze this morning to slow spending due to stagnant sales tax revenue and the end of COVID-19 federal aid. The county’s projections show it will spend $15 million more than it brings in this year.
“Coming out of COVID, there’s been an increased expectation for services when it comes to fire and police …” Asbjornsen said. “It has a domino effect across the city. It isn’t just in one area. Once one area increases, it can increase the needs in HR and in legal and it all has a connected impact.”
The city recently voted to change to an annual budget cycle from a biennial budget cycle. Asbjornsen said that change will be useful to allow the city to “react more quickly to a changing economy.” But he added that any add-in services will have to be considered with a potential reduction somewhere else or the addition of a revenue stream.
Lund said in the letter to employees that the 2025 budget will prioritize funding for public safety, housing investments, support for internal services and climate action.
She asked each department to evaluate open positions to “ensure they are still consistent with existing needs and priorities,” consider how existing resources could be reprioritized and ensure new requests align with those priorities or the “Council’s Legacies and Strategic Commitments.” Lund said the city aims to avoid layoffs.
City council president Dan Hammill said the city’s situation creates a case for them to work with state legislators about a statewide solution to help contribute revenue to cities.
City property tax rates can only increase by 1% every year, and in his comments, Hammill referenced an effort in the Legislature to allow local governments to extend the 1% cap on annual property tax increases. A bill on the issue wasn’t acted on last session due to significant opposition.
The public budgeting process will begin next month and continue through to December. Here’s a list of the upcoming dates of public engagement opportunities related to the budget:
- August City Council meeting: Asbjornsen will present a Budget 101 Presentation to discuss the basics of the budget and the budgetary constraints the city is facing.
- Sept. 30: 2025 budget presentation
- Oct. 7: Public hearing on the budget
- Oct. 21: Public hearing on the revenue forecast and property tax
- Nov. 4: Public hearing on the budget
- December: City Council will pass 2025 budget ordinance
This article was updated at 10:45 a.m. on Wednesday, July 17 to add information about the city’s budget priorities and anticipated reductions.
Charlotte Alden is CDN’s general assignment/enterprise reporter; reach her at charlottealden@cascadiadaily.com; 360-922-3090 ext. 123.
