Edmonds City Council Finance Committee Meeting - February 18, 2026
Edmonds City Council Finance Committee Meeting - February 18, 2026
The Edmonds City Council Finance Committee met on February 18, 2026, to review the Preliminary December 2025 Monthly Financial Report. The discussion covered fund balances, labor costs, interest income, sales tax trends, new revenue sources (public safety sales tax, transportation benefit district, red light cameras), capital project delays, and planned improvements to financial reporting and fiscal sustainability. No formal votes were taken; the meeting focused on staff updates and council questions.
Discussion Items
- Preliminary December 2025 Financial Report – Finance Director Rachel Gould presented the report, noting it is preliminary with year-end adjustments expected by April. Fund balances across all funds increased by $7.7 million, compared to a budgeted decrease of $17.2 million, primarily due to delayed capital projects (e.g., Yost Park, Highway 99 stages 3 and 4). Capital project carryovers into 2026 will increase activity this year. Director Gould emphasized the need for a more streamlined monthly financial reporting process to reduce staff burden and focus on key metrics, with policy changes proposed for the March committee meeting. Councilmembers expressed mixed views: Council President Michelle Dutch supported maintaining thorough monthly reports to track revenues closely, while others were open to quarterly detail if monthly summaries remained informative.
- Interest Income and Investment Strategy – Director Gould reported that declining interest rates have reduced earnings by 163 basis points over two years (67 bps from 2024 to 2025, 96 bps from 2023 to 2024). To mitigate further losses, she plans to purchase $2–4 million in bonds to fill gaps in the five-year ladder (2028 and 2029 maturities) at around 3.6% yield, close to current state pool returns. She also will evaluate Snohomish County pool options. Councilmember Erica Banet questioned the internal interest rate (4.4%) on the $6 million interfund loan from 2025, noting it exceeds LGIP rates; Gould explained the rate was set at the time of borrowing.
- Labor Costs – Director Gould reported labor costs were 9% under budget overall ($3.7 million) and 7% under budget in the general fund ($2.1 million), partly due to vacancies (227 filled out of 255 budgeted positions as of December 8, 2025). Payouts for retirements and layoffs exceeded budgeted amounts (budgeted $250,000, actual ~$500,000). Council President Dutch asked about tracking budgeted positions and vacancy duration; Gould agreed to improve reporting and reevaluate whether positions should be reabsorbed if unfilled for long periods. Councilmember Banet noted that one interim director was paid as a consultant, not salary/benefits, slightly skewing comparisons.
- Sales Tax Trends – Gould reported that 2025 sales tax revenue was essentially flat (down ~$10,000 year-over-year). January 2026 showed a 3.2% increase ($31,000) over January 2025, but overall trend remains flat. The 2025–2026 budget assumed zero growth, so no shortfall is expected. Councilmembers discussed the impact of new revenues: the utility tax increase (10% to 20%) will add about $3.3 million to the general fund, the 0.1% public safety sales tax is budgeted at $1 million (conservatively, based on uncertain implementation timelines and lower sales), and the transportation benefit district is similar. Councilmember Banet noted that collection rates for red light camera tickets are around 70%, requiring conservative revenue projections.
- Capital Projects and Budget Amendments – Councilmembers requested a “burn rate” report to track capital project spending against plan, particularly for delayed projects. Director Gould agreed to work with public works to improve reporting. A budget amendment may be considered in March to account for updated revenue projections and capital project needs.
- Future Agenda – The committee plans to discuss financial recovery and long-term fiscal sustainability as a special topic at the next meeting. Director Gould will bring an example of a fiscal sustainability plan.
Key Outcomes
- Financial Reporting Changes – Director Gould will propose policy changes to streamline monthly reports (e.g., moving some detail to quarterly) at the March finance committee meeting, after gathering input from all councilmembers on what information is most valuable.
- Bond Purchase – Director Gould will proceed with purchasing $2–4 million in bonds to fill the 2028 and 2029 ladder positions in the investment portfolio within the next few days.
- Labor and Vacancy Analysis – Staff will improve reporting on budgeted positions, including dollar amounts and duration of vacancies, and evaluate a policy for automatically reabsorbing funds for positions vacant beyond a set period.
- Revenue Projections – Director Gould will provide updated revenue projections for the public safety sales tax, transportation benefit district, red light cameras, and utility tax, accounting for collection rates and behavioral changes.
- Capital Project Tracking – A capital project burn rate report will be developed to help council track spending and cash flows.
- Next Meeting – The next finance committee meeting will include a special topic on fiscal sustainability and recovery planning, with a goal of long-term structural balance.
Meeting Transcript
All right, so it's recording Congress. All right, well afternoon, it's one o'clock. We'll call the finance committee meeting to order on February 17 at 101 p.m. Also Happy Chinese New Year. And on the agenda today, well, uh, before we get there, I'd like to acknowledge Finance Director Rachel Go here, uh, Council President uh Michelle Dutch and Council Member uh Erica Banet and myself will change uh present. Welcome and on the agenda today, we have one item, which is December 2025 Financial Report. And you know, you know, can go is gonna take us through it. Thank you. We are ready. All right, well, the first thing I want to make clear is that this is a preliminary report. Remember um how at the end of the year we have a lot of work to do on year end as far as the approval side of the account, and so we hope to have everything completed usually by April. We will have tighter numbers the longer we go into this. I'd like to think the numbers are pretty good right now, as far as where we are on our fund balance and expenditures revenues, but there's still some trickling. Okay, part of it also is slowed down by the trans transition tool weave software. So we have a couple challenges this year, but we're gonna go over the numbers that we have to look at and any questions you might have. But but I wanted to make that clear that um the fund balance will change. I just don't know how much, and I hope it's very little right now. It looks uh pretty solid. So for the year, the fund balances, and I'm gonna go over a little of the things that are in the packet that are in the which is mostly like on page one in your agenda property is on yeah, eight. So our questions I'll refer to some of that, okay. And so um, so fund balances are up for the year 7.7 million, that's for all the funds, not just the general plan. We had projected in the budget for 2025 initially, actually, the amended budget to be down 17.2 million, and that was going to be due to a lot of capital projects. Um and some other areas, but we did not see as much activity in the capital projects due mostly to staffing and delays. So and we do have a report that we include in this financial report for capital projects that speaks to that. Um so I would advise going through that. It's a lot of information, but it does have some detail, especially on page um six of the uh public packet, which is exhibit a that'll explain some of the reasons uh the capital project coming later. But that's the crypto project summarine, yeah, it's right. And so that'll hope you understand. There will be a lot more activity on 26. So we could push the capital projects to there. And I know that um public works director and the engineer Michael will be um talking about that as well with you. Um more to talk about that, but I want to get off practice for December. So uh that those are the reasons for for us having a positive fund balance in all the city, which is a good thing, but we know we're gonna use a lot of the time. Um next thing is extended reports. Um, because our financial policy has says all the things it lays out everything that we that the city put together a couple years ago. We have a 40-page report. Now, at the end of the year, I think that's legitimate and it's necessary because we have a lot of information we want to provide. But I have spoken with the mayor and the council president um about coming up with shorter reports for the monthly. It's less work, and you don't need to see the same thing over and over and over again when you need to see it at quarters. So we'll be coming to you with policy changes. Hopefully, the next committee meeting. We're gonna shoot for that. And we have a lot of policy changes in the financial areas, not just for financial reporting, but we'll get to those later as we go through the year. What I hope to do is bring um a list of items that we will be addressing in um so in March's finance committee. We'll at least have that list of what I propose that we look at. Hopefully, you guys also can have some for me of what you want to uh look at in future committee meetings. Because I'd like to see us be proactive in what we're working on so that I can get ahead of it staff, right? A lot of times you're gonna think of things like the third day before, like the questions you sent me, right? And um, and I didn't look at those, and I'm trying to come up with answers, but it takes time, and I don't want to rush anything. I want everything to be really very intentional and thought out well, so that when we have these meetings, we can spend our time for you know, not only practically but correctly and get you answers that you want, so we don't have to keep going back.
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