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BEL-BFC-2026-04-27 April 27, 2026 Budget & Finance Committee City of Bellingham 45 min
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The Budget and Finance Committee faced a sobering financial reality as they approved three interconnected budget ordinances that significantly worsen the city's fiscal outlook. The meeting revealed that despite two years of sustained cost reduction efforts, Bellingham is staring down a structural revenue imbalance that could exhaust general fund reserves by 2028. Finance Director Andy Asbenson presented three ordinances that must be approved together: reconciling 2026 beginning reserves with actual year-end figures, reappropriating $99 million in unspent 2025 projects, and making the first major budget amendment of 2026. The amendment alone adds $5.3 million to the general fund deficit, on top of the $350,000 deficit already built into the adopted budget. The city's updated "alligator chart" shows expenses rising faster than revenues, creating a widening gap that threatens financial sustainability. The committee discussed potential salvation through a proposed Regional Fire Authority (RFA) that could free up $20-25 million annually, but this remains in planning stages. Major cost drivers include unexpected jail housing increases (25-30% rate hikes from the county), escalating medical and workers compensation costs requiring $1.8 million in additional funding, and various operational needs that emerged after budget adoption. The city is adding a healthcare benefits analytics coordinator position specifically to identify cost savings in their self-insurance programs.

**AB 24900 - Reserve Balance Reconciliation** - **Vote:** Approved unanimously (3-0) - **Staff Recommendation:** Approve - **Action:** Reconciles estimated vs. actual 2026 beginning reserve balances and applies differences to ending reserves - **Impact:** Technical adjustment required by law after year-end calculations **AB 24901 - Reappropriations** - **Vote:** Approved unanimously (3-0) - **Staff Recommendation:** Approve - **Action:** Reappropriates $99 million in encumbered expenses and $5.8 million unencumbered from 2025 projects - **Major Items:** RG Haley/Cornwall environmental remediation ($29M), Old Town redevelopment ($3.4M), Police bui…

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**Structural Budget Crisis** The meeting centered on Bellingham's worsening structural deficit, with the general fund now facing a $5.65 million deficit ($350K from adopted budget plus $5.3M from amendments). Finance Director Asbenson's updated projections show reserves could be exhausted by 2028 if current trends continue. Mayor Lund expressed disappointment that despite "two years of sustained efforts at cost controls," the city remains trapped in "the tyranny of structural revenue imbalance." She connected this crisis directly to the city's evaluation of a Regional Fire Authority, calling it a potential strategy to "transcend these ongoing and persistent challenges." **Regional Fire Authority as Financial Salvation** The RFA emerged as the city's primary long-term solution, with expected annual savings of $20-25 million through spinning off the fire department. Council Member Hamill pressed for specifics, noting he's seen similar fiscal cliff projections for 12 years and questioned whether even $20+ million would eventually prove insufficient against rising costs. The Mayor acknowledged that Washington state's tax structure means the city will eventually face similar challenges again, but the goal is to structure RFA savi…
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**Chair Lisa Anderson (Budget and Finance Committee)** Expressed concern about structural budget deficits and supported the healthcare analytics coordinator position as essential for finding cost savings. Noted departments did "excellent job cutting everywhere they could" last year but stressed need for continued gap-closing measures. **Council Member Daniel Hamill** Questioned whether even $20+ million from RFA would eventually prove insufficient given rising costs, noting 12 years of fiscal cliff projections. Sought clarification on jail cost increases representing service maintenance rather than expansion. **Council Member Williams** Sitting in for Michael Lilliquist, participated in voting but made no recorded statements. **Finance Director Andy Asbenson** Emphasized a…
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**Finance Director Andy Asbenson, on budget amendment severity:** "I will mention everything in the general fund is really its needs for what's needed for operations. There's there isn't any wants here. This is a greater impact than we'd like to have for any amendment at this time of the year." **Mayor Kim Lund, on structural fiscal challenges:** "It is disappointing after two years of sustained efforts at cost controls to find that we still are in the tyranny of what a structural you know re…
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- All three ordinances proceed to full Council for separate votes at evening session - Continued RFA planning process and analysis for potential $20-25 million annual savings - Healthcare benefits analytics coordinator recruitment to identify self-ins…

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**Immediate Budget Impact:** - General fund deficit increased from $350,000 to $5.65 million through amendments - $99 million in encumbered 2025 projects officially moved to 2026 budget - Reserve balance calculations updated to reflect actual year-end 2025 figures **Fiscal Outlook:** - General fund reserve depletion timeline accelerated to 2028 under current trajectory - Medical and workers compensation funding requirements increased by $1.8 million annually - Jail housing costs increased by $1.75 million annua…
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### Meeting Overview The Budget and Finance Committee met on April 27, 2026, chaired by Council Member Lisa Anderson, to consider three interconnected budget ordinances that must be approved together. Finance Director Andy Asbenson presented complex adjustments to the 2026 budget involving reserve balance reconciliations, reappropriations from 2025, and amendments that reveal the city is facing a significant structural deficit. ### Key Terms and Concepts **Reappropriations:** Funds that were budgeted in 2025 but unspent, mostly for projects already under contract that need to carry forward into 2026. **Encumbered vs. Unencumbered:** Encumbered funds are already under contract and committed; unencumbered are budgeted but not yet committed to specific contracts. **Reserve Balances:** The city's financial cushion, including emergency reserves set at 18% of general fund expenses to maintain fiscal stability. **Self-Insurance:** The city acts as its own insurance company for health benefits and workers' compensation rather than purchasing traditional insurance policies. **Alligator Chart:** A budget visualization showing revenue and expense trend lines - when the expense line (orange) is above revenue (blue), the city runs deficits that eat into reserves. **RFA (Regional Fire Authority):** A proposed separate fire district that would take over fire services, potentially saving the city $20-25 million annually. **Structural Deficit:** When ongoing expenses consistently exceed ongoing revenues, requiring use of reserves or service cuts to balance. **Contingent Loan:** A potential loan that only activates if needed, in this case up to $1.5 million to keep the Medic One fund positive. ### Key People at This Meeting | Name | Role / Affiliation | |---|---| | Lisa Anderson | Council Member, Budget & Finance Committee Chair | | Daniel Hammill | Council Member, Committee Member | | Williams | Council Member, sitting in for Michael Lilliquist | | Andy Asbenson | Finance Director | | Forest Longman | Deputy City Administrator | | Kim Lund | Mayor | ### Background Context Bellingham has been fighting structural budget deficits for year…
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Budget & Finance Government Operations AB 24900 AB 24901 AB 24902 Budget Finance Committee City Council Police Department Whatcom County Andy Asbenson Council Member Williams Daniel Hamill Forest Longman Kim Lund Lisa Anderson Michael Lilliquist Budget Finance Cost Savings Deficit Spending Healthcare Costs Infrastructure Investment Jail Planning Reappropriations Regional Fire Authority Reserve Balances Self Insurance