Lynnwood City Council members received preliminary financial data on Monday indicating a projected shortfall of $21.4 million for the 2027-28 fiscal period. Although the figures rely on cautious revenue assumptions, they also account for potential property tax hikes that have not yet received final approval.
Mayor George Hurst acknowledged the projected gap during the session, noting that while the current paperwork reflects a roughly $21 million hole, he remains confident the issue can be addressed. He indicated that a detailed budget proposal, which he described as involving difficult choices, will be introduced on Oct. 12.
This latest projection follows 2025 findings that revealed a deficit exceeding $20 million, driven by underperforming income from sales taxes, development fees, and red-light camera fines. The previous budget had anticipated $74 million in revenue for 2025, but the city only collected $67.8 million. Monisha Harrell, the assistant city administrator, explained that the new projections aim to correct the inaccuracies of the prior biennium by using more realistic figures.
Harrell emphasized the need to scrutinize revenue sources, admitting that previous estimates had been flawed. Some council members raised concerns that certain utility tax projections might be overly pessimistic. For instance, the budget anticipates generating approximately $620,000 from water utility taxes in 2027, despite the city having already collected $778,000 from that source in 2026. Harrell defended the approach, stating that the city is avoiding predictions based on temporary spikes.
The proposed budget incorporates a property tax increase, with a council vote scheduled for November. State regulations permit a 1% annual rise; if the council opts against an increase, that percentage is added to the city’s banked capacity. The document notes that Lynnwood’s current banked capacity stands at slightly more than $2 million.
Significant uncertainties also exist on the spending side. A budget memo highlights the possibility that Healthcare Delivery Services, the medical provider for the city jail, could terminate its contract by the end of the year. While the memo did not specify a reason for the potential exit, it warned that the city could incur an extra $1 million to $2 million in costs if a replacement must be secured. The document stated that officials are collaborating with the provider, the Association of Washington Cities, and other local jails to explore options for retaining the current service. Gregg Curtis, the jail manager, previously noted that the provider began operations in April.
Furthermore, the budget calculates a 6.2% rise in employee insurance premiums. However, staff anticipate the actual increase, to be finalized in October, could range between 11% and 14%. The plan also accounts for the removal of job positions that had been frozen since the end of the previous year.
City leaders plan to finalize the fiscal 2027-2028 spending plan on Nov. 23. Prior to that vote, the city council will convene two public hearings, scheduled for Sept. 28 and Nov. 9. Following the mayor’s presentation of a comprehensive budget outline in October, officials from various municipal departments will present their funding requests for the upcoming two-year period to the council.