Budget and Finance Committee

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. #