Budget and Finance Committee

The central policy discussion focused on the city's increasingly constrained fiscal position and the structural challenges facing municipal finance in an inflationary environment. Finance Director Aspegren emphasized that flat sales tax revenue combined with rising operational costs creates a "scissors effect" that threatens service delivery sustainability. Committee members engaged extensively on the implications of global economic events, particularly how ongoing conflicts affecting energy prices and supply chains could impact local consumer spending patterns. Council Member Anderson raised concerns about war-related economic impacts, noting that increased fuel costs typically shift consumer spending from discretionary retail items (subject to B&O tax) toward necessities like food (not subject to B&O tax). A significant portion of discussion centered on the Medic One fund's structural deficit, with staff explaining that…

**Finance Director Andy Aspegren** emphasized the need for conservative financial planning given economic uncertainty, advocating for maintaining lower-end revenue projections rather than optimistic forecasts. He highlighted that the requested $7 million in budget adjustments represents necessary operational expenses, not discretionary spending. **Council Member Michael Lilliquist** (Acting Chair) focused on technical aspects of fund management, particularly questioning accounting methods for negative ending reserves and the adequacy of the claims and litigation fund reserves. **Council Member Daniel Hammill** inquired about the drivers behind increased B&O and utility tax revenues…

**Andy Aspegren, on sales tax trends:** "We're not seeing a lot of growth in our sales tax. It's very, very flat throughout the last four years." **Andy Aspegren, on inflation's impact:** "The actual impact with inflation is that we're reducing the power of the dollar each year. And so the equivalent of about 27.2 million for 2025. Those are in 2020 dollars." **Council Member Anderson, on war-related economic impacts:** "Is anyone on staff taking a look at some of the analytics of what happe…

Following this presentation, the Budget and Finance Committee now has comprehensive understanding of: - The city's narrow avoidance of 2025 deficit spending through $8.7 million in strategic revenue adjustments - Confirmed flat sales tax growth patterns continuing into a fourth consecutive year - The severity of inflationary erosion on municipal purchasing power - Structural deficits in the Medic One enterprise fund requiring intervention - Below-target reserve levels in the claims an…

### Meeting Overview The Budget and Finance Committee of the City of Bellingham met on April 13, 2026, with Council Member Lilliquist chairing in place of Chair Anderson who participated remotely. The committee reviewed the city's 2025 year-end financial results, showing a city that narrowly avoided deficit spending by making strategic revenue adjustments, but faces ongoing fiscal challenges ahead. ### Key Terms and Concepts **General Fund:** The city's main operating account that funds basic services like police, fire, and parks. Contains about 13 departments and is funded by sales tax, property tax, utility taxes, and other revenues. **Alligator Graph:** Bellingham's nickname for their general fund reserve projections chart that shows how reserves are being "eaten away" over time if current spending trends continue. **Emergency Reserve:** A required fund balance equal to 18% of the general fund budget, designed to cover unexpected expenses or revenue shortfalls. **BNO Tax:** Business and Occupation tax levied on gross receipts of businesses operating in Bellingham. **REIT:** Real Estate Excise Tax collected when properties are sold, providing revenue to the city. **Self-Insurance Program:** The city's approach to handling workers compensation and medical claims internally rather than purchasing traditional insurance. **Enterprise Funds:** City operations that function like businesses, funding themselves through user fees (water, sewer, stormwater, Medic One). **Yield Curve Inversion:** An economic indicator where short-term investment returns exceed long-term returns, historically predicting recessions. ### Key People at This Meeting | Name | Role / Affiliation | |---|---| | Michael Lilliquist | Council Member, Acting Committee Chair | | Lisa Anderson | Council Member, Committee Chair (remote) | | Dan Hammill | Council Member, Committee Member | | Andy Asbroen | Finance Director, City of Bellingham | | Hannah Stone | Council President | ### Background Context Bellingham concluded 2025 in a precarious financial position, avoiding deficit spending only through three strate…