The Budget and Finance Committee received a sobering year-end financial report that revealed Bellingham ending 2024 in its emergency reserves with only $361,500 remaining in economic reserves. Finance Director Andy Asbjornsen presented the 2024 financial review showing the city collected $403 million in revenues against $420 million in expenses across all funds, creating a $16.5 million shortfall citywide. The most concerning finding centered on the General Fund, which serves as the city's primary unrestricted funding source. General Fund revenues of $108.7 million fell short of expenses totaling $127.2 million, creating an $18.5 million deficit that pushed the city into emergency reserves. The committee learned that sales tax revenues, one of the city's largest revenue sources, have been essentially flat for three years despite inflation eroding purchasing power by approximately 13%. Mayor Kim Lund acknowledged the gravity of the situation, explaining that staff implemented 6% cost reductions across all departments except police and fire in 2024, and are now undertaking an additional 3% reduction exercise that includes all departments. The city has also conducted "Ask Me Anything" sessions to communicate the situation to staff and prepare for potential further cuts. Council members explored the disconnect between the General Fund crisis and the city's ability to continue spending millions on park acquisitions and infrastructure projects, with Council Member Michael Lilliquist noting public confusion about simultaneous budget crisis messaging and major expenditures. Mayor Lund emphasized that the city operates 50 restricted funds with healthy balances, but the General Fund crisis threatens essential services like police, fire, and basic city operations. #
Budget and Finance Committee
Executive Summary
Key Decisions & Actions
& Actions No formal votes were taken during this informational presentation. The primary action was receiving the 2024 year-end financial report and staff's analysis of the city's financial position entering 2025. Staff announced plans to bring forward reappropriations at the March 24 meeting, which will establish beginning reserves across all funds and identify projects from 2024 that need to carry forward into 2025. This will provide a clearer picture of available resources and committed expenditures. The committee also acknowledged the city's transition from biennial to annual budgeting, with the 2024 report marking the end of the 2023-2024 biennium. Of the $214 million in capital projects approved in that two-year budget, $131 million remained unspent, highlighting challenges in project execution timelines. #
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**March 24, 2025**: Staff will present reappropriations from 2024 projects that need to carry forward into 2025, along with updated beginning fund balances across all city funds. **March 31, 2025**: Chair Anderson scheduled a meeting with Finance Director Asbjornsen to discuss budget monitoring strategies. **Ongoing**: Additional 3% cost reduction exercise across all departments, including police and fire, with departments identifying potential savings areas. **Ongoing**: Police and fire departments conducting levels of service analysis to determine adequate staffing needs and funding requirements for public safety services. **Ongoing**: Monitoring of federal funding changes, particularly potential Medicaid reductions that could impact GMT revenues and city services. **Future consideration**: Potential exploration of House Bill 1867 allowing 0.5% real estate excise tax increase for housing funding, if county doesn't implement by January 2027. #
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