Special City Council Budget Workstudy: 2027-2028 General Fund Forecast and Options – October 13, 2026

The North Bend City Council held a special workstudy on Tuesday, October 13, 2026, starting at 7:00 PM at City Hall. The sole agenda item was a 90-minute presentation and discussion on the 2027-2028 biennial budget, focusing on the General Fund forecast, financial sustainability, and potential options including a Regional Fire Authority (RFA) and a levy lid lift. No public comment was permitted, as is typical for workstudies. All council members were present: Brendan Ellwood, Costline, Robin, McPhee Rustic, and Suzanne Torreson. The presentation was led by Finance Director Martin Chaw, with contributions from Mayor Amber and other staff.

Discussion Items

• Guiding Principles for the General Fund: Staff outlined six principles: maintaining existing service levels, no new staff or programs in the General Fund, continued fire and police services (50% of the budget), prioritizing economic development, collaborating with interjurisdictional partners, and continuing administrative cost reductions begun in 2025 (totaling ~$2.5 million over six years). Council noted that police and fire contracts are largely locked in, though service-level adjustments remain possible through renegotiation.
• Financial Forecast (2026-2032): A baseline forecast showed the General Fund balanced only through 2028, with fund balance falling below target in 2029 and negative by 2032 if no action is taken. This assumes a new criminal justice sales tax (estimated $330,000/year starting 2027) but no RFA or levy lid lift. Expenses, particularly police (10–11% annual increases) and fire (12.9% negotiated for the biennium, down from an initial 18%), are outpacing revenue growth constrained by the 1% property tax cap.
• Scenario Analysis: Three scenarios were presented:
  1. RFA: Shifts fire costs to a new authority, restoring fund balance to $6.3 million by 2032. Fire benefit charges (up to 60% of RFA funding) could reallocate costs from residential to commercial properties based on risk. Requires a 60% vote if a fire benefit charge is included; otherwise a simple majority.
  2. Levy Lid Lift: A $0.68 per $1,000 increase (roughly 90% of the current $0.77 rate) would close the gap and maintain fund balance near target through 2032. This requires a simple majority vote and can be adjusted annually. The state now allows a 10-year approval window (previously six years).
  3. Combination or Higher Levy: An $0.80 per $1,000 rate would achieve the same 2032 fund balance as the RFA scenario.
• Community Impact: Staff presented examples for residential and commercial properties. For a typical home (1.2 million assessed value, paying ~$900/year currently), the levy lid lift would add ~$907/year, while the RFA with a 60% fire benefit charge could reduce the total fire-related cost. Commercial properties (e.g., Nintendo, Safeway, McDonald’s) would see higher charges under a fire benefit charge, potentially impacting business costs. Nonprofits like the North Bend Theater and food bank could petition for reductions.
• Timeline and Next Steps: The RFA planning committee will report to council by the end of 2026, with a decision on whether to proceed expected within 30–45 days. If council chooses RFA, joint resolutions must be filed by February 2027 for an April special election. A levy lid lift could follow a similar timeline. The next workstudy on October 27 will cover deeper General Fund details, utilities, and the Capital Improvement Plan (CIP).

Key Outcomes

• No formal votes or decisions were taken. The council directed staff to continue developing both RFA and levy lid lift options for further discussion.
• Council emphasized the need for robust public communication to explain the city’s fiscal challenges and the trade-offs between maintaining services, increasing revenue, or reducing service levels.
• Staff will present additional data on service-level impacts, population service area, and utility fund interdependencies at the October 27 workstudy.