Title
Consideration of the Recommended 2027 Proposed Operating, Special (Dedicated) Funds and Capital Budget for Final Budget Balancing
Recommended Action
Committee Recommendation:
Move to approve a recommendation to the City Council to consider the 2027 Preliminary Operating, Special (Dedicated) Funds and Capital Budget for Final Budget Balancing.
City Manager Recommendation:
Move to approve a recommendation to the City Council to consider the 2027 Preliminary Operating, Special (Dedicated) Funds and Capital Budget for Final Budget Balancing.
Report
Issue:
Whether to approve a recommendation to the City Council to consider the 2027 Preliminary Operating, Special (Dedicated) Funds and Capital Budget for Final Budget Balancing.
Staff Contact:
Michael Githens, Finance Director, 360.753.8465
Presenter(s):
Jay Burney, City Manager
Michael Githens, Finance Director
Background and Analysis:
As part of the development of the 2027 budget, staff conducted a comprehensive review of projected revenues, expenditures, service demands, capital needs, contractual obligations and policy priorities.
Throughout the budget development process, staff updated revenue forecasts using the most recent economic and local financial information and identified expenditure changes associated with inflationary pressures, cost escalation, labor agreements, benefits, operating requirements and capital project delivery. Staff also evaluated one-time and ongoing funding requests submitted by departments and assessed the impact of those requests on fund balance sustainability and future financial capacity.
The recommended 2027 proposed operating, special (dedicated) funds and capital budget reflects the City’s ongoing commitment to maintain essential services, advancing Council priorities, preserving critical infrastructure and complying with adopted financial policies. The Finance Committee’s review of the proposed budget and final balancing recommendations provides an opportunity to ensure that available resources are aligned with community needs and organizational priorities before consideration by the City Council.
The City Council held the first public hearing on October 27, 2026. The second public hearing will be held on November 17, 2026 with final budget balancing to occur on November 24, 2026. Adoption of the 2027 Operating Budget, Special (Dedicated) Funds, Capital Budget and the 2027-2032 Capital Facilities Plan is scheduled for December 8, 2026.
The recommended 2027 proposed budget was developed using current revenue and expenditure projections and incorporates adjustment necessary to maintain a balanced budget across operating, special (dedicated) and capital funds. Staff evaluated each fund independently to ensure sufficient resources are available to support planned activities while maintaining appropriate reserves and fund balances.
Key factors considered during final budget balancing include:
• Updated projected for economically sensitive revenue sources, including taxes, fees, intergovernmental revenues and other charges for service.
• Inflationary impacts on purchased services, supplies, utilities, insurance and construction costs.
• Personnel-related costs, including negotiated labor agreements, benefits, and organizational staffing needs.
• Previously approved capital commitments, project timing adjustments and funding source availability.
• Compliance with City financial policies related to structural balance, reserves, debt management and long-term fiscal sustainability.
• Alignment of expenditures with City Council goals and strategic priorities.
Staff reviewed operating and capital requests to determine whether proposed expenditures could be supported by ongoing revenues, available fund balance, dedicated funding sources or existing project appropriations. Where funding constraints existed, staff prioritized expenditures based on regulatory requirements, public safety considerations, asset preservation, service delivery impacts, operational efficiency, and Council direction.
The final balancing recommendations are intended to:
1. Maintain structurally balanced operations to the greatest extent possible.
2. Preserve adequate fund balance and reserve levels consistent with City policy.
3. Support essential City services and programs.
4. Advance priority capital investments and ongoing asset maintenance.
5. Position the City to respond effectively to future economic uncertainty and emerging service needs.
Finance Committee discussion and feedback on the recommended 2027 proposed budget will inform the final budget presented to City Council for consideration and adoption.
Climate Analysis:
No specific climate impacts are identified. However, the 2027 Operating Budget contains funding to continue the City’s Climate Work Plan.
Equity Analysis:
No specific equity impacts are identified. However, the 2027 Operating Budget contains funding to continue the City’s internal/external Equity Work Plans.
Neighborhood/Community Interests (if known):
Members of the community may have an interest in this agenda item as it is related to City finances and fiscal governance.
Financial Impact:
The Preliminary 2027 Operating Budget appropriates $ 248.7 million of which $ 131.2 million is General Fund.
Options:
1. Move to approve a recommendation to the City Council to consider the 2027 Preliminary Operating, Special (Dedicated) Funds and Capital Budget for Final Budget Balancing.
2. Move to approve with amendments, a recommendation to the City Council to consider the 2027 Preliminary Operating, Special (Dedicated) Funds and Capital Budget for Final Budget Balancing.
3. Take other action.
Attachments:
None