Bellingham City Council Budget and Finance Committee

**Andrew Asbjornsen, on budget performance:** "This is our budget cleanup amendment, so this is the amendment number three. We've only hit this only our third amendment through 2025, so that's great to see you. We've had very limited adjustments to the budget." **Asbjornsen, on interfund loan recovery:** "These internal service funds that we have these contingency loans, what we want to do is evaluate where we end the year and really evaluate what rates we projected for 2026 so we can write size those rates and not make these contingency loans in these funds." **Council Member Hammill, on jail costs:** "What I'm concerned about is booking restrictions coming back in a way that is going to impede the ability of law enforcement to be able to do anything other than book and release." **Asbjornson, on jail cost increases:** "The increased cost that we're realizing for this year that are included in this budget amendment and also the notice of nearly 30% cost increases for 2026 have insp

# Bellingham Budget and Finance Committee Tackles Year-End Financial Adjustments ## Meeting Overview The Bellingham City Council Budget and Finance Committee convened Sunday morning, December 8, 2025, for a brief but consequential meeting to address the city's final budget adjustments of the year. Committee Chair Lisa Anderson was joined by Council Members Michael Lilliquist and Daniel Hammill, with Council Member Hathman participating online. Despite its 20-minute duration, the meeting addressed nearly $5 million in budget amendments and authorized significant interfund loans totaling $1.1 million. Finance Director Andy Asbjornsen presented the city's third budget amendment of 2025 — a relatively modest number that he noted with satisfaction, indicating the city had maintained good budget discipline throughout the year. However, the adjustments revealed some concerning trends, particularly around jail costs and the financial health of several internal service funds. ## The $4.9 Million Budget Amendment The centerpiece of the morning's business was Ordinance 24769, which would increase the 2025 budget by $4.9 million in expenditures and $400,000 in revenue, while authorizing interfund loans of up to $1.1 million from the general fund to three struggling internal service funds. Asbjornsen characterized this as a "budget cleanup amendment" designed to ensure departments don't exceed their budget authority as the year closes. "Not all of these areas are we hope are not going to go over, but this is They're on the verge when we're trying to project out from October," he explained, acknowledging the challenge of year-end projections. The amendments span multiple departments, each telling a story of unexpected costs or changed circumstances: **Office of the Mayor** received both $350,000 in revenue and expenditures, representing what Asbjornsen called "pretty much a pass-through of funds" for an unbudgeted climate grant. **Hearing Examiner** needed an additional $15,000 beyond the originally proposed $10,000 increase. As Asbjornsen noted, "the hearing examiner will actually be providing a presentation, so it's been very active this year more than we've seen in the last previous years." The small office, with a total budget of only $146,000, required the adjustment due to increased activity. **Museum** required $75,000 for what Asbjornsen described as "the transition of directors that now we're contracting with the foundation for that director position." **Library** faced $150,000 in additional costs because "there was a couple positions that were necessary through the year that we got occupied that were anticipated to have more cost reductions in some of the vacancies." **Parks and Recreation** needed $200,000 primarily for utilities. "They're more impacted by our utilities so water and sewer that was actually a bit under-budgeted for what their needs were for all their different facilities," Asbjornsen explained. ## Fire Department's Million-Dollar Adjustment The largest single departmental adjustment went to the Fire Department: $850,000 for salaries and wages, plus $150,000 for EMS response at Galbraith. Even with this substantial increase, Asbjornsen maintained optimism: "We're really hopeful that's around $550,000 but sometimes it can be hard to predict at year-end when we're looking at a budget the size of the fire department." He contextualized the adjustment, noting it represented "about a 1.5% adjustment to their budget," suggesting it was within reasonable parameters for a department of that size. ## The Jail Cost Crisis Perhaps the most concerning discussion centered on the Police Department's need for an additional $1.625 million, primarily driven by dramatically increasing jail costs. This represented a troubling escalation in what has become a significant budget pressure for the city. Asbjornson laid out the stark trajectory: "we've seen that police budget significantly grown. It was budgeted at 2.8 previously. And then we saw that it had almost 3 million in 24. And now we're projecting that to be about 4 million in 25." Council Member Hammill sought clarification about the nature of these costs, asking whether the figure included both jail booking and bed rates. When Asbjornsen confirmed it covered "jail use and jail booking. All the associated with the jail," Hammill pressed further about the city's ability to control these expenses. The exchange revealed a complex dynamic. Council Member Liliquist noted that "when we first started learning a lot more about the jail, one of things that was interesting is how few of the jail bed days are actually belong exclusively to the city. They're mostly felony charges that stay there for a long time, have long continuances on their cases." This observation highlighted the challenging position municipalities find themselves in when relying on county jail services — paying for costs largely driven by state-level prosecutions and court scheduling beyond local control. Finance Director Asbjornsen acknowledged the severity of the situation: "The increased cost that we're realizing for this year that are included in this budget amendment and also the notice of nearly 30% cost increases for 2026 have inspired a lot of conversation. I'm working on getting a meeting scheduled with Sheriff Tanksley to discuss what some of those cost controls can look like as we move forward." Council Member Hammill expressed particular concern about potential booking restrictions that could hamstring law enforcement: "What I'm concerned about is booking restrictions coming back in a way that is going to impede the ability of law enforcement to be able to do anything other than book and release." He noted the jail operates on a color-coded system — green allowing normal booking, yellow with restrictions, and red accepting only statutorily required bookings like domestic violence and DUI cases. "That number, the 1.625, could easily be close to double," Hammill warned, highlighting the budget volatility this creates for the city. ## The Interfund Loan Strategy Beyond departmental adjustments, the ordinance authorized $1.1 million in interfund loans from the general fund to three struggling internal service funds: - **Medic One Fund**: $300,000 (on top of $200,000 previously approved, bringing total loans to $500,000) - **Workers Compensation Fund**: $200,000 - **Health Benefits Fund**: $600,000 Asbjornsen explained these as temporary cash flow solutions: "So these internal service funds that we have these contingency loans, what we want to do is evaluate where we end the year and really evaluate what rates we projected for 2026 so we can write size those rates and not make these contingency loans in these funds." Council Member Liliquist sought reassurance about the loan structure, asking whether he understood correctly that "those are loans to, are they cash flow fixes to those funds? They will pay them back to the general fund." Asbjornsen confirmed this understanding, explaining that for workers compensation and health benefits, "those are rates that are established to try to recoup that. So those will definitely be paid back through the user rates." The mechanism would essentially mean "these funds will charge the general fund more, the appropriate correct amount. And then when they get those funds in, they'll pay back the general fund." For Medic One, the situation was more complex. The fund had anticipated revenue from selling a station on Smith Road, but "that station has not been sold yet, so that house off of Smith Road could bring some additional cash into the Medic 1 Fund." Additionally, Medic One rates had been increased 3.3%, but "at times that has not been at the same pace as salaries and wages that have grown a little bit higher than our revenue on that side." ## The Bigger Budget Picture Council Member Liliquist pressed for the broader fiscal context, noting that with a projected $4.5 million deficit going into budget discussions, these adjustments represented significant additional strain. His concerns proved prescient. Asbjornsen provided a comprehensive financial outlook that painted a mixed picture. While the city faced challenges, several revenue streams were performing better than expected: **Business and Occupation Tax** had increased year-over-year by about $1.3 million, partly due to improved collection efforts: "We've done a very good job working with businesses, collecting some past due B&O tax and really working with people to get caught up and just current on our B&O." **Investment Income** was stronger due to higher interest rates, though Asbjornsen noted the double-edged nature: "Those are unfortunately good or bad. If you're going to go out for debt, you want low interest rates, but on the investment side you want the high interest rates." **BLS Transport Services** were projected to bring in an additional $1.8 million, though collection challenges remained: "we had switched our BLS transport services for who's been building the billing company. And through that, they're still playing catch up. They're still three months to deposit into the general fund." **Utility Tax** had increased by about $1.3 million due to gains in electric and gas consumption. However, sales tax remained "about flat from what we've seen," providing no relief there. Taking all factors together, Asbjornsen projected the city would end 2025 with approximately a $2 million deficit — better than the originally budgeted $4.5 million deficit, but still requiring reserve draws that would impact the 2026 budget. When Liliquist asked for confirmation that they might be "adding up to 2 million to that number of where we're going to be going forward to try to write the ship," Asbjornsen confirmed: "Yes there'd be 2 million less in reserves." ## Parliamentary Procedure and Final Approval The meeting included a minor but telling procedural moment when Asbjornsen requested an amendment to increase the Hearing Examiner allocation from $10,000 to $25,000 — a last-minute adjustment that had been identified just on Friday. Council Member Hammill moved to make this amendment, and it passed without opposition. The committee then moved to approve the ordinance as amended. Despite the concerning fiscal trends revealed in the discussion, the amendment passed unanimously. Council Member Hammill, after expressing his concerns about jail costs and their potential to escalate further, concluded: "I know we're all over time here, and I think the questions have been answered, spoken with staff members over the weekend, and it all makes sense to me. So I'd go ahead and with the amendment here that's already been passed, I would pass this ordinance here, or move to pass." ## Looking Ahead As the meeting concluded, Chair Anderson noted the ordinance would go before the full council that evening for final approval. The committee was scheduled to reconvene at 1 PM for Parks Committee business, followed by a Committee of the Whole meeting. While brief, this Budget and Finance Committee meeting revealed significant fiscal pressures facing Bellingham as it closes out 2025. The dramatic escalation in jail costs, the need for interfund loans to keep internal service funds solvent, and the overall budget picture paint a challenging landscape for city leadership as they navigate into 2026. The nearly 50% increase in police-related jail costs over two years — from $2.8 million budgeted to a projected $4 million actual — represents the kind of external pressure on municipal budgets that can quickly overwhelm local fiscal planning. Combined with the need to prop up internal service funds and the ongoing structural deficit, the city faces difficult choices ahead about service levels, revenue generation, and operational efficiency. Yet the meeting also demonstrated municipal government functioning as designed — identifying problems early, authorizing necessary adjustments, and maintaining transparency about fiscal challenges while working to address them systematically.

**Q:** What was the total amount of additional spending authority requested in this budget amendment? **A:** $4.9 million in expenditures across multiple city departments, making this Budget Amendment No. 3 for 2025. **Q:** Which city department had the largest budget increase in this amendment? **A:** The Police Department with $1.625 million, primarily for jail booking and home monitoring costs. **Q:** How much money will the General Fund loan to other city funds? **A:** $1.1 million total: $300,000 to Medic One Fund, $200,000 to Workers Comp Fund, and $600,000 to Health Benefits Fund. **Q:** What is the maximum term for repaying these interfund loans? **A:** Three years, with monthly principal and interest payments beginning in January 2026 and full repayment by December 31, 2028. **Q:** Who presented this budget amendment to the committee? **A:** Andy Asbjornson, the City's Finance Director. **Q:** How did police jail costs change from budget to projected actual spending? **A:** From $2.8 million budgeted to nearly $4 million projected actual cost in 2025, representing a significant increase. **Q:** What revenue source performed better than expected in 2025? **A:** Business and Occupation (B&O) tax, which came in about $1.3 million higher than budgeted due to better collection efforts. **Q:** Why does the Medic One Fund need a loan? **A:** A property on Smith Road that was budgeted to be sold to bring revenue into the fund has not been sold yet. **Q:** What amendment was made during the committee meeting? **A:** The hearing examiner's budget increase was amended from $10,000 to $25,000, adding an additional $15,000. **Q:** What was the city's originally projected budget deficit for 2025? **A:** $4.5 million, though better revenue performance may reduce the actual deficit to around $2 million. **Q:** Why do internal service funds charge rates to other departments? **A:** To recover their costs for providing services like health benefits, workers compensation, and equipment maintenance to city departments. **Q:** What additional revenue is included in this budget amendment? **A:** $400,000 total: $350,000 for a climate action grant and $50,000 from Whatcom County for EMS services at Galbraith. **Q:** How many budget amendments has the city made in 2025? **A:** This is the third budget amendment of 2025, which Asbjornson noted was relatively few adjustments for a full year. **Q:** What concerns did Council Member Hammill raise about jail costs? **A:** That booking restrictions might return if costs continue rising, limiting law enforcement's ability to book anyone except those with mandatory bookings like domestic violence and DUI cases. **Q:** What is BLS transport and why is it mentioned? **A:** Basic Life Support ambulance transport services that generate revenue through billing, which came in $1.8 million better than expected. **Q:** What department received $200,000 for utilities? **A:** Parks & Recreation Department, which was under-budgeted for water and sewer costs at their various facilities. **Q:** How does the committee voting process work? **A:** Committee members vote on recommendations to send to the full City Council, which makes the final decisions on ordinances. **Q:** What is the purpose of a year-end budget cleanup amendment? **A:** To ensure all departments have adequate budget authority to cover actual costs and prevent budget overages before the fiscal year ends. **Q:** What will happen to internal service fund rates in 2026? **A:** They will be "right-sized" or adjusted to better match actual costs and reduce the need for future interfund loans. **Q:** What was the Fire Department's total budget increase? **A:** $1 million total: $850,000 for salaries and wages plus $150,000 for EMS response at Galbraith. ---