Kirkland City Council Special Meeting: 2027-2028 Budget Study Session

The Kirkland City Council convened a Special Meeting on October 29, 2026, beginning at 3:00 PM, to conduct a comprehensive 6-hour study session on the City Manager's Preliminary 2027-2028 Budget. Led by City Manager Kurt Triplett and Financial Planning Manager Kevin Pelstring, the session presented a $1.15 billion balanced biennial budget (with a $361.9 million General Fund) that relies heavily on one-time fund balance to cover a growing structural deficit. The Council reviewed major budget priorities, discussed new sustainable funding options such as the children and families sales tax and a potential community safety initiative, and provided initial feedback on the draft 2027-2028 City Work Program.

Public Comments & Testimony

• No public testimony was taken during this study session. The meeting was dedicated entirely to Council and staff deliberation. Public hearings on the budget are scheduled for November 4 and November 17, 2026.

Discussion Items

Budget Overview and Strategic Anchors

• City Manager Triplett framed the budget around three strategic anchors: affordability, sustainability, and responsiveness to the public. He noted the budget is balanced, all general purpose reserves are fully funded, and the city’s triple-A credit rating is maintained. The only significant new investment is the Kraken Iceplex and Kirkland Community Center (KIKCC), which is fully funded.
• Kevin Pelstring described the 9-month budget development process. He detailed a $10.6 million structural deficit in the base budget that is closed with one-time fund balance ($14.8 million) derived from conservative budgeting practices in the previous biennium, including salary savings, a two-year sales tax lag, and utility taxes coming in above budget.

Budget Priorities

• Kraken Iceplex and Kirkland Community Center (KIKCC): Grace Hansen presented the $5.3 million plan for the 12,500 square foot community center opening in January 2028. It is funded by program and rental fees, beach parking fees ($435,000), King County Parks Levy funds, and $1.9 million from the General Fund. Councilmember Prem asked for clarification on the parking lot, clarifying that the city owns and is responsible for the entire north lot.
• Human Services: $5.28 million in grant funding was presented, including a $433,000 increase to the ongoing base from HB 1406 funds. Councilmember Falcone explained to viewers that per-capita funding has not increased due to the expiration of one-time federal dollars that previously boosted the budget.
• ARCH Contributions: The city is increasing its contribution to the Regional Coalition for Housing (ARCH) to $1.43 million over the biennium, funded by a new fee-in-lieu on homes over 2,000 square feet. Councilmember Arnold stressed the importance of preserving dedicated revenue sources for these ongoing needs rather than using them for one-time costs.
• Public Defense: The cost of public defense has approximately doubled (98% increase) due to new Washington State Supreme Court caseload standards, which is a primary driver of the structural deficit.

Balancing the Budget and Future Outlook

• Structural Deficit Projections: The current structural deficit of $19.7 million in 2027-2028 is projected to grow to $24.3 million in 2029-2030 and $26.9 million in 2031-2032, assuming current service levels and no new revenue sources. This is driven by salary and benefit growth far outpacing the 1% property tax increase limit plus new construction.
• On the Radar: Deep dives were presented on several areas:
  • Health Benefits: Medical claims are up 22% from the 2025-2026 budget.
  • Street Fund: Hit by a structural deficit due to rising costs (insurance, energy) outpacing growth in the property tax and declining gas tax revenues. Balanced with new King County TBD sales tax revenue and parking fee increases.
  • Parks Levy Fund: Approaching a structural gap as operating costs rise faster than levy revenues. Councilmember Pascal asked for a historical look at the original levy projections vs. current reality.
  • Public Records: Costs rising to $1.5 million in response to increased demand, including more complex requests and the emergence of AI.
  • Kingsgate/Peter Kirk Pool Financing: Staff outlined the closing of the Kingsgate property acquisition and a planned bond issuance to repay interfund loans and fund pool renovations.
• Unprogrammed Fund Balance (~$616,000): Staff presented initial options for the remaining unprogrammed General Fund balance, including an AI intelligent transportation system pilot ($106,000) and a 4-year citywide speed limit reduction program. Council deferred specific decisions, noting other emergent needs like increased jail medical costs and a lower-than-expected Evergreen Levy contribution.
• Children and Families Sales Tax (ESHB 2442): Staff presented a new 0.01% sales tax adopted by King County. By opting in, Kirkland can direct an estimated $665,000 over 2027-2028 to local housing, childcare, and youth services. The Council expressed a strong consensus to opt in. Councilmember Pascal stated the city could spend it more effectively locally. Councilmember Falcone supported using the dollars for the city's own growing needs. Councilmember Black supported it. Councilmember Arnold stated, "I was in support." Councilmember Timchison supported collecting the tax. Councilmember Prem reserved her detailed comments for a later time.
• Community Safety Initiative 2.0 (0.1% Sales Tax): Tracy Dotlap introduced this potential sales tax generating ~$4.2 million per year for a wide range of uses (police, public defense, human services). Council action is required by June 30, 2028, to avoid a public vote. Councilmember Falcone requested information on the impact of this tax on a typical Kirkland family and what purchases it applies to. Deeper discussion was deferred to the November 17 study session.
• HB 2015 Grant Award: The city was announced as a recipient of the grant, funding 6 entry-level police officers (with a $75,000 city match), a jail navigator, and an officer wellness program for the grant period.

Department Highlights

• Police: Mike Liu highlighted the budget for 163 FTEs and the new grant. Councilmember Pascal requested more data on how school zone safety camera locations were determined based on Public Works speed studies and the accounting for the revised state law sharing revenue with the Cooper Jones safety account.
• Fire: The budget includes a new fire strategic plan (first since 2012) and continued funding for the Mobile Integrated Health (MIH) team via the Evergreen Levy. Councilmember Arnold requested more information on a decision to move a fourth firefighter from Station 24 to the ladder truck, which was acknowledged as a change from original Prop 1 plans.
• Public Works (Transportation and Streets): Veronica Hill presented service packages for parking study implementation (increasing rates at Lake Shore/Lake Street, charging on Sundays, and adding summer beach parking fees). City Manager Triplett acknowledged the budget proposal did not fully align with the Council's recent direction on speed limit reduction implementation and promised a reconciliation at the next meeting with options to fund a faster roll-out.
• Parks and Community Services: KIKCC, Kirkland Teen Union Building (KTUB) programming, and new turf fields at Crestwood and 132nd Park were reviewed. Councilmember Falcone requested exploring a partnership with EvergreenHealth for mammogram spots for uninsured residents at the annual health and wellness fair. Councilmember Pascal asked for an evaluation of the newly installed security gates at Juanita and Houghton Parks.
• Planning and Building: Adam discussed service packages for affordable housing contributions and an AI permitting tool pilot. He clarified this is a Kirkland-specific initiative distinct from the regional Challenge Seattle or ECD Gov Alliance efforts, focusing on front-end application completeness and planning inquiries.
• Other Departments: The supported employment program for individuals with developmental disabilities is being restarted. A new business license enforcement position was noted as net revenue positive for the city.

Key Outcomes

• Policy Direction: The Council reached a broad consensus to move forward with the adoption of the Children and Families Sales Tax (ESHB 2442) to direct the 0.01% levy revenues locally. Staff will prepare the necessary legislation for consideration during the budget adoption process.
• Budget Clarifications Requested: Staff will bring back detailed information at the November 4 and November 17 meetings, including:
  • Scoped costs and timelines for implementing a faster speed limit reduction program.
  • The specific impact (e.g., per $100 purchase) of a 0.1% Community Safety Initiative sales tax on a typical household.
  • More detailed justification for proposed school zone safety camera locations based on speed/safety studies.
  • Options for an increased frequency of the Kirklander newsletter and potential sponsorships.
• City Work Program Feedback: Council provided extensive input for the draft 2027-2028 City Work Program. Additions discussed for potential inclusion were:
  • Transit-oriented development and Bus Rapid Transit (BRT) readiness at 85th Street.
  • Setting sustainable, target investment levels for human services and homelessness.
  • Feasibility study for a community pool at the newly acquired Kingsgate property.
  • Creating a holistic citywide AI governance and policy framework.
  • Implementing great ideas identified in the forthcoming transit needs study.
• Next Steps: The formal budget adoption process continues with a study session and public hearing scheduled for November 4, followed by another study session and public hearing on November 17. Final adoption of the 2027-2028 budget and the 2027-2032 CIP is scheduled for December 8, 2026.