City of Bellingham seeks 5% cuts amid budget shortfall and dismal revenue forecast

Faced with the end of pandemic-era funding and flat sales-tax revenues, Bellingham joins Whatcom County in taking austerity measures.

In an address to the City Council on Monday night, Mayor Kim Lund warned that Bellingham must tighten its belt to close a nearly $4 million deficit.

“The general fund expenses are exceeding our revenue sources, and we are dipping into reserves in ways that are unsustainable. We began this year with about $41 million in reserves, and we are presently on track to end with about $19 million,” Lund said.

In a letter to staff last month, Lund asked for 5% cuts in departments — except for police officers and firefighters — in an effort to avoid layoffs.

“To close the gap in the general fund budget and better re-prioritize existing resources, I have asked each department to:

▪ Evaluate all open positions to ensure they are still consistent with existing needs and priorities.

▪ Consider how existing resources could be re-prioritized to address new needs and priorities.

▪ Identify how new requests align with priorities listed above and/or the council’s legacies and strategic commitments.

▪ For all non-public safety general fund departments, we are seeking budget reductions targeting 5%.

“We will be looking at many options for reducing the general fund deficit, in addition to possible reductions,” Lund said in the letter, which was shared with The Bellingham Herald.

Bellingham switched to an annual budget this year, away from its former practice of setting a two-year budget cycle.

Lund said that move will help the city keep a better eye on its budget.

Facing similar budget woes, Whatcom County Executive Satpal Sidhu ordered a 90-day hiring freeze Monday in the face of less-than-stellar fiscal news that county officials received in a June 11 briefing.

In a briefing to the City Council during a committee session Monday afternoon, Finance Director Andy Asbjornsen laid out the bad news.

“We definitely see flattening to completely slowing growing growth, and with inflation that means the spending dollar is actually of lower value as well. So our spending ability has not been as high as it has in the past, even though we’re collecting maybe the same amount of revenue,” Asbjorsen said.

He said most cities across the U.S. are experiencing similar issues because of inflation and high interest rates.

U.S. consumer inflation for all goods peaked at 9.1% in June 2022 in the wake of the COVID-19 pandemic, according to the U.S. Bureau of Labor Statistics . Last week the Associated Press reported consumer prices declined 0.1% from May to June, the first monthly decline in overall inflation since May 2020. The overall inflation rate was 3% for June.