City Council

CITY OF MOUNT VERNON SPECIAL CITY COUNCIL MEETING AGENDA November 19, 2025, 6:00 p.m. Police Court Campus, 1805 Continental Place To virtually attend the meeting, the public may: 1. Watch the meeting live on TV10: Comcast/Xfinity Channel 10 2. Watch the meeting live, online: https://www.youtube.com/channel/UCUob_hcQUmd4S93YkletdrA 1. OPENING CEREMONIES A. Call to Order B. Pledge of Allegiance C. Roll Call of Councilmembers 2. APPROVAL OF AGENDA 3. COMMUNITY COMMENTS (This is an opportunity for Mount Vernon residents to address their City Council. Please provide your information on the guest sign-in sheet located on the table near the entrance to the Council Chambers prior to speaking, and limit comments to three minutes or less. Under normal circumstances, the Mayor and Council will not respond immediately to Community Comments. If you would like someone to follow up with you regarding the topic of your comments, please leave your name and contact information on the form at the entrance of the Council Chambers. If you are unable to attend the meeting and would like to make your comments via Zoom, please submit a request to speak via email to communitycomments@mountvernonwa.gov or by telephone at 360-336-6211. Requests must be received by 4 p.m. on the meeting date.) Interpretation services for Community Comments are available on request. Please contact the City at mvmayor@mountvernonwa.gov or 360-336-6211 at least two business days prior to the meeting if you would like an interpreter to share your comments with City Council. 4. NEW BUSINESS A. Public Hearing - 2026 City Budget (This is an open record public hearing and request for approval of the 2026 City Budget with the adoption of Ordinance 3927.) (required action – ordinance) (staff contact – Doug Volesky) B. Approval of Resolution – 2026 Property Tax Levy (City staff is requesting approval of Resolution 1087 Fixing the 2026 Property Tax Levy.) (required action – resolution) (staff contact – Doug Volesky) 5. ADJOURNMENT  New Business Item: A DATE: November 19, 2025 TO: Mayor Donovan and City Council FROM: Doug Volesky, Finance Director SUBJECT: PUBLIC HEARING ON THE 2026 CITY BUDGET RECOMMENDED ACTION: The City will hold a public hearing to present and take comment on the 2026 City budget. INTRODUCTION/BACKGROUND: The City of Mount Vernon is required to hold a public hearing to discuss the 2026 proposed budget. Following a public hearing and discussion of the proposed budget, City Council may then adopt the budget which must be adopted prior to the beginning of the ensuing year. FINDINGS/CONCLUSIONS: The attached preliminary budget summary document with the Mayor’s submittal letter summarizes the detailed information the City Council has in their 2026 budget binders. During discussions with the City Council there have been some adjustments to the preliminary budget document. These adjustments are also included in the attached budget summary document These items include: 1. F001 General Fund: o F001 General Fund Revenue:  Increase property tax revenues by $2,978,814 to account for the Levy Lid Lift.  Decrease property tax revenue by $11,000 and move to F104 Library to offset reduction in funding from Skagit County. o F001-06 Human Resources:  Increase in expenditures in the amount of $700 due to an increase in Drug & Alcohol testing through AWC.  o F001-08 Police Department  Authorize 1.00 new Police Officer position, and increase expenditures in the amount of $275,198 for salaries and benefits, operating expenses, and a vehicle and equipment to account for approved Levy Lid Lift. o F001-09 Fire Department:  Authorize 6.00 new Firefighter positions, and increase expenditures in the amount of $932,670 for salaries and benefits, and operating expenses to account for approved Levy Lid Lift.  Increase salary and benefits to fund vacant Nurse Educator in the amount of $151,891.  Decrease expenditures in the amount of $50,032 to reflect decrease in LEOFF premiums. o F001-12 Development Services Department:  Increase salaries and benefits and operating costs in the amount of $165,247 to fund vacant Engineering Technician position. 2. F103 Parks and Recreation Fund: o Increase property tax revenues by $1,500,000 to account for the Levy Lid Lift. o Increase expenditures in the amount of $1,067,243 to account for approved Levy Lid Lift to include:  Authorize and fund 2.00 new Parks Maintenance Workers and 1.00 part-time Rec Lead position in the amount of $256,503,  Fund vacant 1.00 Parks Foremen and 1.00 On-Call Facility Monitor in the amount of $150,555,  Increase operating expenses in the amount of 100,185,  Increase capital expenditures $60,000 for a new field drag and $500,000 for new capital improvements. 3. F104 Library Fund: o Increase property tax revenue by $11,000 moved from the F001 General Fund to offset reduction in funding from Skagit County. o Decrease interlocal library services revenue by $11,000 to account for reduction in funding from Skagit County. 4. F106 Tourism Promotion Fund: o Decrease expenditures by $165,856 to reflect LTAC actions. 5. F121 American Rescue Plan Act Fund: o Decrease interest revenues by $1,000 since no interest will be allocated to this fund at year end. 6. F401 Wastewater Utility Fund: o Increase salaries by $104,030 to account for being missed in the budgeting process. Benefits were budgeted, but salary and wages were missed. o Decreased operating expenditures in the amount of $95,000 to account for missed salary increase. 7. F501 Equipment Rental and Reserve Fund: o Decrease revenues by $39,666 to account for adjustment to the Police ERR contribution. o Decrease expenditures to match equipment replacement budget in the amount of $1,959,847. This line item was not finalized in the preliminary budget. This public hearing will include the updated budget numbers. The City budget as proposed consists of 43 funds and supports 258 full-time and approximately 53 part- time employees. The total 2026 proposed budget for the City of Mount Vernon is $92,979,109 which is a 10.7% decrease compared to the 2025 budget. This decrease is due mainly to large capital projects with corresponding revenues and expenditures. Total governmental operating fund budgets for 2026 total $50,216,252, a 6.1% increase compared to 2025 which includes new expenditures associated with the passing of the Levy Lid Lift in November 2025. The preliminary budget will continue to be adjusted according to the Council’s direction prior to adoption, with a detailed list of these adjustments. RECOMMENDATION: - Staff recommend Council adopt Ordinance No. 3927 to adopt the 2026 Budget. ATTACHED: - 2026 Budget Ordinance No. 3927 - 2026 Preliminary Budget Summary Document  ORDINANCE NO. 3927 AN ORDINANCE OF THE CITY OF MOUNT VERNON, WASHINGTON, ADOPTING THE BUDGET FOR THE YEAR 2026. THE CITY COUNCIL OF THE CITY OF MOUNT VERNON, WASHINGTON DOES ORDAIN AS FOLLOWS: Section 1: The budget for the City of Mount Vernon for the year ending December 31, 2026 is hereby adopted at the fund level in its final form. Section 2: Estimated resources for each fund of the City, and expenditures for all such funds for the year ending December 31, 2026 are set forth in summary form below, and are hereby appropriated for expenditure at the fund level during the year 2026. Fund Estimated Budgeted Budgeted No. Fund/Department Description Revenues Expenditures Fund Balance 001 General Fund City Council $ 136,982 Municipal Court 902,230 Mayor 525,672 Finance 1,328,150 City Attorney 1,075,266 Human Resources 1,100,842 General Facilities 1,404,919 Police Department 15,399,864 Fire Department 11,712,745 Public Works/Engineering 1,229,980 Development Services 3,037,790 TV 10 - Public Access Cable 272,241 CDBG Entitlement Grant 441,365 Information Services 2,247,196 Non-Department 1,199,601 Total General Fund $ 43,787,847 $ 42,014,843 $ (1,773,004) 101 City Street Fund 2,357,921 2,585,973 228,052 103 Parks and Enrichment Services Fund 3,851,673 3,776,967 (74,706) 104 Library Fund 1,848,508 1,838,468 (10,040) 102 Arterial Street Fund 1,105,600 1,105,600 - 105 Paths and Trails Fund 3,724 50,000 46,276 106 Tourism Promotion Fund 263,000 284,500 21,500 107 Little Mtn Improvements Reserve 88,360 85,000 (3,360) 109 Crime Prevention Fund 28,750 25,000 (3,750) 110 Government Access Fund 44,000 79,836 35,836 112 Criminal Justice Assistance 68,090 63,000 (5,090) 113 Municipal Arts Fund - - - 115 Parks Capital Improvements Reserve 300 175,000 174,700 117 TBD Fund 2,646,000 2,379,000 (267,000) 118 Fiber Optic Fund 345,300 235,402 (109,898) 119 Critical Areas Enhancement Fund 75,000 30,000 (45,000) 120 Lincoln Commercial Block 74,800 50,100 (24,700) 121 American Rescue Plan Act (ARPA) - 660,000 660,000 122 Affordable & Supportive Housing (HB1406) 65,029 65,029 - 123 Afford Housing Sales & Use Tax (HB1590) - 40% 470,000 703,160 233,160 124 Afford Housing Sales & Use Tax (HB1590) - 60% 705,000 1,249,995 544,995 Fund Estimated Budgeted Budgeted No. Fund/Department Description Revenues Expenditures Fund Balance 210 LTGO Fire Bond 875,355 875,355 - 301 MV Library Commons Project 1,000,000 1,156,263 156,263 304 Capital Improvements Fund - REET I 816,800 710,650 (106,150) 306 Fire Station Projects 1,944,945 1,213,728 (731,217) 311 Parks Impact Fees 25,000 130,000 105,000 312 Fire Impact Fees 35,000 110,000 75,000 313 Transportation Impact Fees 228,000 - (228,000) 314 REET II - Streets 804,000 700,200 (103,800) 328 PW Facility Fund - - - 401 Wastewater Utility Fund 11,784,229 11,866,412 82,183 402 Solid Waste Utility Fund 8,526,970 8,214,662 (312,308) 403 Surfacewater Utility Fund 3,795,000 4,980,487 1,185,487 411 Sewer Facility Expansion 518,000 597,500 79,500 412 Sewer Capital Reserve 25,000 1,075,000 1,050,000 501 Equipment Rental Fund 4,573,578 3,428,579 (1,144,999) 502 Facility Renewal Fund 150,000 80,000 (70,000) 512 LEOFF I LT Healthcare Reserve 10,300 40,000 29,700 611 Firemen's Pension & Relief Fund 80,000 70,000 (10,000) 600 Managerial Funds 273,400 273,400 - Total 2026 All Funds $ 93,294,479 $ 92,979,109 $ (315,370) Section 3. That the detailed budget for 2026 as set forth in the City of Mount Vernon 2026 Budget, as approved by the City Council on the 19th day of November 2025, subsequent to a public hearing held on November 19, 2025 are adopted by reference and made a part of this ordinance. Section 4. The Finance Director is directed to transmit a certified copy of this budget hereby adopted to the Office of the Auditor of the State of Washington and the Association of Washington Cities. Section 5. This ordinance shall take effect and be in full force five (5) days after its passage, approval and publication. PASSED AND ADOPTED THIS 19th DAY OF November 2025. SIGNED AND APPROVED THIS 19th DAY OF November 2025. ____________________________ Peter Donovan, Mayor Attest: ____________________________ Becky Jensen, City Clerk Approved as to form: __________________________ Kevin Rogerson, City Attorney Published: __________________________  City of Mount Vernon 2026 Preliminary Budget  CITY OF MOUNT VERNON 2026 PRELIMINARY BUDGET Table of Contents Preliminary Budget Summary Page No. Mayor’s Budget Message ....................................................................................................................1 Preliminary Budget Summary ..............................................................................................................2 Budget Development ...........................................................................................................................4 Revenue Property Tax............................................................................................................................5 Sales Tax..................................................................................................................................6 Special Revenue Funds ...........................................................................................................7 Real Estate Excise Tax .............................................................................................................7 Capital Project Funds ...........................................................................................................................8 Debt Service Funds ..............................................................................................................................8 Proprietary Funds ................................................................................................................................9 2026 Revenue Summary by Type ......................................................................................................10 2026 Revenue Estimates by Source ...................................................................................................10 Fund Balance Reconciliation ..............................................................................................................11 Conclusion..........................................................................................................................................12  2026 PRELIMINARY BUDGET NOVEMBER 12, 2025 Mayor’s Budget Message I present the 2026 preliminary (draft) budget for your consideration. The City of Mount Vernon adopts a highly complex and balanced budget by December 31st of each year in accordance with RCW 35A.33. Departmental budgets in many instances are prepared for vastly different services – some services are 24-hour operations, while other Departments work 6 days a week, are on-call, or have a traditional 40-hour work schedule. Our employees are the City’s greatest asset. We budget for several unique services through 21 departmental budgets and a total of 43 different funds. The governmental operating fund budgets total $50,216,252, representing a 6.1% increase compared to the 2025 adopted budget. The 2026 preliminary budget for the City of Mount Vernon is $92,979,109, representing a 10.7% decrease as compared to the 2025 final budget. This decrease is due mainly to changes in funding for large new capital projects like the Mount Vernon Library Commons project and Fire Station #2 remodel project. It is a privilege to serve the City of Mount Vernon. We share responsibility for the “Budgeting is not just a ‘math City’s success through both favorable and challenging fiscal periods. I believe this problem’. The process preliminary budget provides a transparent and comprehensive representation of determines if services will fulfill each department’s needs to effectively support our community’s goals in 2026. the goals and priorities of the community.” 1  2026 Preliminary Expenditure Budget Summary Fund 2025 2026 2025-2026 2025-2026 Dept Adopted Proposed Increase % No. Fund / Department Budget Budget (Decrease) Change 001 General Fund 01 City Council 136,109 136,982 873 0.6% 02 Municipal Court 862,118 902,230 40,112 4.7% 03 Mayor 540,861 525,672 (15,189) -2.8% 04 Finance 1,331,066 1,328,150 (2,916) -0.2% 05 City Attorney 900,029 1,075,266 175,237 19.5% 06 Human Resources 973,236 1,100,842 127,606 13.1% 07 General Facilities 1,238,984 1,404,919 165,935 13.4% 08 Police Department* 14,269,477 15,399,864 1,130,387 7.9% 09 Fire Department* 10,795,756 11,712,745 916,989 8.5% 11 Public Works/Engineering 1,272,202 1,229,980 (42,222) -3.3% 12 Development Services* 3,490,847 3,037,790 (453,057) -13.0% 18 TV 10 - Public Access Cable 262,881 272,241 9,360 3.6% 97 CDBG Entitlement Grant 441,365 441,365 - 0.0% 98 Information Services 1,983,269 2,247,196 263,927 13.3% 99 Non-Departmental 1,725,934 1,199,601 (526,333) -30.5% Total General Fund 40,224,134 42,014,843 1,790,709 4.5% 101 City Street Fund 2,462,815 2,585,973 123,158 5.0% 103 Parks and Enrichment Services Fund 2,874,515 3,776,967 902,452 31.4% 104 Library Fund 1,778,951 1,838,468 59,517 3.3% Total Governmental Operating Funds 47,340,415 50,216,251 2,875,836 6.1% 102 Arterial Street Fund 2,242,000 1,105,600 (1,136,400) -50.7% 105 Paths and Trails Fund - 50,000 50,000 NA 106 Tourism Promotion Fund 450,356 284,500 (165,856) -36.8% 107 Little Mountain Improvements Reserve 200,000 85,000 (115,000) -57.5% 109 Crime Prevention Fund 25,000 25,000 - 0.0% 110 Government Access Fund 76,000 79,836 3,836 5.0% 112 Criminal Justice Assistance Fund 163,000 63,000 (100,000) -61.3% Continued on next page. 2  Fund 2025 2026 2025-2026 2025-2026 Dept Adopted Proposed Increase % No. Fund / Department Budget Budget (Decrease) Change 113 Municipal Arts Fund - - - NA 115 Parks Capital Improvements Reserve* 1,534,135 175,000 (1,359,135) -88.6% 117 TBD Fund 2,285,000 2,379,000 94,000 4.1% 118 Fiber Optic Fund 602,728 235,402 (367,326) -60.9% 119 Critical Areas Enhancement Fund 30,000 30,000 - 0.0% 120 Lincoln Commercial Properties Fund 49,000 50,100 1,100 2.2% 121 American Rescue Plan Act (ARPA) 2,297,991 660,000 (1,637,991) -71.3% 122 Affordable & Supportive Housing (HB1406) 65,029 65,029 - 0.0% Afford Housing Sales & Use Tax (HB1590) 123 40% 982,559 703,160 (279,399) -28.4% Afford Housing Sales & Use Tax (HB1590) 124 60% 1,487,543 1,249,995 (237,548) -16.0% 210 LTGO Fire Bond 876,357 875,355 (1,002) -0.1% 301 Library/Comm. Center/Parking Capital Fund 6,326,332 1,156,263 (5,170,069) -81.7% 304 Capital Improvements Fund - REET I 890,750 710,650 (180,100) -20.2% 306 Fire Station Projects Capital Fund 2,282,433 1,213,728 (1,068,705) -46.8% 311 Parks Impact Fees 100,000 130,000 30,000 30.0% 312 Fire Impact Fees - 110,000 110,000 NA 313 Transportation Impact Fees 71,000 - (71,000) -100.0% 314 REET II - Streets Fund 1,191,000 700,200 (490,800) -41.2% 328 Public Works Facility Capital Fund - - - NA 401 Wastewater Utility Fund 12,573,221 11,866,412 (706,809) -5.6% 402 Solid Waste Utility Fund 7,958,514 8,214,662 256,148 3.2% 403 Surface Water Utility Fund 5,070,683 4,980,487 (90,196) -1.8% 411 Sewer Facility Expansion Fund 322,500 597,500 275,000 85.3% 412 Sewer Capital Reserve 700,000 1,075,000 375,000 53.6% 501 Equipment Rental Fund 5,310,166 3,428,579 (1,881,587) -35.4% 502 Facility Renewal Fund 255,000 80,000 (175,000) -68.6% 512 Leoff I Long-term Healthcare Reserve 40,000 40,000 - 0.0% 611 Firemen's Pension and Relief Fund 70,000 70,000 - 0.0% 600 Managerial Funds 202,200 273,400 71,200 35.2% Total All Funds 104,070,912 92,979,109 (11,091,803) -10.7% *Includes additional expenditures than in the Preliminary Detail Budget to account for expenditures associated with the passing of the November 2025 Levy Lid Lift proposition. 3 Budget Development: The City is presenting a balanced 2026 budget with fund reserves within Fiscal Reserve Policy. Policy states that the City shall maintain a target reserve in the General Fund of 15% of the total operating budget, while the other Governmental Operating Funds (Streets, Parks & Enrichment Services, and Library) shall maintain reserves of at least 10% of total operating budget with a target of 15%. Ending reserves for 2026 are estimated to be 18.3% for the General Fund, 12.7% for Streets, 18.7% for Parks & Enrichment Services and 10.2% for the Library Fund. The City of Mount Vernon strives to maintain a diverse and stable revenue base to mitigate public services from short-term fluctuations in any one revenue source. The following graph depicts the composition of the City’s 2026 revenue sources. It also includes additional property tax revenues to account for the November 2025 voter approved Levy Lid Lift proposition. 4 Funding our Services: Property Tax & Other Revenue The City’s two largest sources of tax revenue are property tax and sales tax. Property tax increases are restricted to the lesser of 1% or the rate of inflation, whichever is lower. Inflation is defined as the percentage change in the implicit price deflator (IPD) for the most recent 12-month period. For the 2026 Levy, since the City is currently levying less than its statutory maximum levy rate of $3.60/$1,000 of assessed valuation, the City chose to put out to vote a levy lid lift proposition. (RCW 84.55.050) A levy lid lift is not a separate property tax, but rather a way of increasing the City’s existing general fund levy above the 1% increase limit. On July 24, 2025, the Mount Vernon City Council adopted Resolution 1078, providing for the submission to the qualified electors of the City to vote on a proposition that would provide funds for increased essential community services and improvements, including City fire and police personnel, fire equipment and parks maintenance and improvements. With voter approval, it will authorize a maximum regular property tax levy for collection in 2026 of $2.2537/$1,000 of assessed valuation (increased approximately $0.6684/$1,000 from 2025). The City Council chose to exempt senior citizens, disabled veterans, and other people with disabilities (as defined in RCW 84.36.381) from the tax increase resulting from this levy lid lift. This will increase the total levy amount for 2026 from $9,475,709 to an estimated amount of $14,168,468 and is included in the revenue numbers presented in this summary document. Property Tax The City of Mount Vernon is one of 8 taxing jurisdictions that assess taxes on our residents’ property tax bills. Each jurisdiction makes decisions on tax rates each year with some taxing jurisdictions requiring voter approval to establish revenue amounts. The combination of these 8 taxing jurisdictions accounts for the total property taxes paid by an individual property owner. Total aggregate tax in 2025 is $10.5767 per $1,000 of assessed valuation. The City currently receives $1.5853 or 15.0% of that total. The levy rate has been decreasing for the last several years. With the passing of the Levy Lid Lift, in November of 2025, the estimated levy rate is increasing from $1.5853 in 2025 to $2.2537 in 2026 per $1,000 of assed valuation. The City of Mount Vernon’s total assessed valuation increased by 5.65% and is estimated to be $6,314,474,956. 5  Year Population Levy Rate Assessed Value Total Levy 2015 33,530 $2.847 2,482,135,352 7,066,195 2016 33,730 $2.694 2,664,071,469 7,177,901 2017 34,500 $2.581 2,825,137,879 7,291,559 2018 35,180 $2.432 3,126,145,191 7,778,774 2019 35,250 $2.224 3,511,928,547 7,810,740 2020 35,300 $2.106 3,798,837,221 7,999,977 2021 35,390 $1.991 4,073,354,832 8,110,167 2022 35,500 $1.773 4,634,225,374 8,215,714 2023 35,590 $1.563 5,457,245,121 8,530,277 2024 35,590 $1.562 5,713,302,967 8,922,529 2025 35,800 $1.584 5,977,031,483 9,475,709 2026 36,050 $2.254 6,314,474,956 14,168,468 Sales Tax Sales tax revenues in 2025 have been coming in just above the estimated budgeted amount of $9,900,000 and closer to the 2024 actual collections of $10,021,797. Currently, it is unknown what will happen in the federal, state, and city economy. After reviewing federal and state economic trends, the City has chosen to maintain the 2026 budgeted numbers at the same level as 2025 projected numbers. Sales Tax revenues included in the 2026 Preliminary Budget are $10,000,000. The chart below breaks out sales tax into major categories and shows variances in activity between 2023 and 2024, the most recent years with complete data. The largest percent dollar gain was in the Wholesale category increasing from $750,191 to $863,541. Retail Sales continue to represent the largest portion of sales tax revenue collected, which decreased slightly from $4,949,872 to $4,674,253. Sales Tax Revenue Category as a % of % $ Change Total Receipts 2023-2024 2023 2024 Retail 49.5% 46.6% -5.6% Construction 13.3% 14.4% 8.2% Food Services/Accommodations 8.3% 8.4% 1.5% Wholesale 7.5% 8.6% 15.1% Information 3.2% 3.4% 6.0% All Other Categories 18.2% 18.6% 2.7% 100.0% 100.0% 0.3% The Retail Sales category can be divided to assess the major sub-categories. Electronic & Appliances showed the largest percentage of gain from 2023 to 2024, and Motor Vehicle & Parts continue to represent the largest portion of total Retail Sales. As mentioned, overall retail sales have decreased by 5.6% from the previous year. 6  Retail Sales Only Category as a % of % $ Change Total Receipts 2023-2024 2023 2024 Health & Personal Care 2.8% 2.7% -10.4% Electronic & Appliances 4.3% 5.1% 13.0% Gas Stations 2.6% 2.3% -16.8% Clothing 1.7% 1.7% -5.9% Motor Vehicle & Parts 33.7% 30.6% -14.1% Food & Beverage Stores 7.6% 8.6% 7.3% Building Materials 11.2% 11.0% -6.8% Furniture & Home Furnishings 2.1% 2.2% 0.6% Sporting Goods, Hobby, etc. 2.4% 2.5% -2.7% Miscellaneous Store Retailers 17.8% 18.9% 0.5% General Merchandise 13.9% 14.3% -2.7% 100.0% 100.0% -5.6% Special Revenue Funds The City has seventeen Special Revenue Funds which account for revenue sources that are restricted for specific purposes. These funds are related to General Government operations. Items of note include: • Revenue numbers for the City’s Tourism Promotion are leveling off from an all-time high in 2023 after the reduction in the COVID years. The City is estimating $260,000 in revenues in 2026 and will make $284,500 in grants available to support and promote tourism within the City. • The Transportation Benefit District (TBD) Fund has a $2,379,000 budget for 2026 to support transportation projects. Revenues are estimated to be $2,646,000. • The Fiber Optics Fund has a $345,300 revenue budget for 2026 to support the fiber needs of the City and surrounding area. This is also comparable to 2025’s actual revenues. • The Arterial Street Fund has a budget of $1.1 million to fund various projects like the Riverside Dr Improvements, 30th Street Improvements, and 15th Street Sidewalk Improvement Projects. • The American Rescue Plan Act (ARPA) has an estimated remaining budgeted amount in 2026 of $660,000. This will fully expend the $9,053,048 that was awarded to the City in 2021. • The Affordable & Supportive Housing (HB1406) and Affordable Housing Sales & Use Tax (HB1590) funds are included in the 2026 budget to account for revenues in the amount of $1.24M and expenditures of $2.02 related to affordable housing. Real Estate Excise Tax Revenue Monthly real estate excise tax (REET) receipts (0.5% of the value of real estate transactions) represent a vital funding source for debt service, various road projects, and other capital projects. The following chart illustrates the revenue collections since 2014. Estimates for 2025 and 2026 are projected to be leveling off and are estimated within a conservative range of $1.6M and do not account for any large sales that could potentially happen. 7  Real Estate Excise Tax Revenue 2,500,000 2,072,553 2,038,199 2,000,000 1,794,496 1,699,748 1,707,553 1,600,000 1,455,195 1,500,000 1,259,116 1,376,704 1,251,390 1,153,308 1,000,000 883,124 500,000 - 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 est. est. Capital Project Funds The total budgeted capital expenditures are almost $12 million for 2026. Major items include: • Equipment Rental and Reserve Fund - $3,460,562 to purchase capital equipment included in the City’s equipment replacement schedule. • Arterial Street Fund - $1.1 million to fund major transportation projects throughout the City. • Transportation Benefit District (TBD) – includes almost $2.4 million also to support major transportation projects. • REET I - $710,650 budget includes $500,000 for the Local Infrastructure Financing Tool (LIFT) program matching funds to help with the funding of the Library Commons project other funding for Parks and facility projects. • REET II – includes $700,200 for City street improvements. • Parks Capital Funds - $940,000 for Parks related capital projects. • Utility Capital Funds - $2.86 million for capital projects related to the City’s Wastewater, Solid Waste, and Surface Water utilities. Debt Service Funds In 2022, the City created Fund 210, LTGO Fire Bond fund. This fund was created to receive and distribute annual payments for the LTGO Fire Bonds in the amount of $875,355. Debt service payments for the Wastewater Treatment Plant upgrade are included in the Wastewater Utility operating budget and are not a separate debt service fund. 8 Proprietary Funds The City has three enterprise funds and two capital sub-funds that are self-supporting and expected to operate like private businesses, as well as two internal service funds that provide vehicle maintenance and repairs for the City’s fleet and for the maintenance of City owned buildings. Items of note include: • The Wastewater, Solid Waste and Surface Water Utilities budget has an overall increase of $484K which included increases of $222K in taxes and insurance. The Solid Waste budget includes an increase of $200K for the pass-through of Skagit County solid waste disposal fees and the Surface Water Utility includes a carry forward from the 2025 budget of $300,000 for a drainage study. • The Surface Water and Wastewater Utility Funds have all had rate study analysis completed in previous years. These utilities now include annual CPI adjustments to service rates. The CPI adjustment to these utilities is an increase of 2.7% in 2025. Solid Waste Utility rates are adjusted for the results of a completed rate study in 2024. • The two Wastewater Utility capital sub-funds have $1.67 million budgeted for 2026 Wastewater projects including $550,000 for an influent bar screen replacement, $100,000 for the Wastewater treatment upgrade, $500,000 for the sewer restoration program, $100,000 for a rotary drum thickener procurement and $100,000 for combined sewer system improvements. • The Equipment Rental and Reserve fund will purchase (replace) 10 vehicles or major pieces of equipment per the equipment replacement schedule. Many of these replacement vehicles were also budgeted in 2023, 2024 and 2025 but could not be purchased due to manufacturing shortages. This fund is also used to accumulate funds to purchase servers, computers and workstations. The total budget for this fund in 2026 is $3,428,579. The Utility departments strive to preserve essential services for their customers and maintain regulatory compliance, while minimizing the cost of service. 9  2026 Revenue Summary: Revenue by Type Revenue 2024 2025 2026 2025 to 2026 2025 to 2026 Source Actual Budget Budget Change % Change Property Tax 8,869,625 9,475,864 14,168,468 4,692,604 49.5% Sales Tax 10,021,796 9,900,000 10,000,000 100,000 1.0% Utility Tax 5,122,944 5,111,000 5,550,524 439,524 8.6% Transportation Benefit District 2,356,650 2,280,000 2,626,000 346,000 15.2% Real Estate Excise Tax 1,376,704 1,550,000 1,600,000 50,000 3.2% Affordable Housing - HB1406 64,744 65,029 65,029 0 0.0% Afford Housing Tax - HB1590 1,175,286 1,175,000 1,175,000 0 0.0% Public Safety Sales Tax 2,156,150 2,150,000 2,171,500 21,500 1.0% Public Safety Sales Tax - HB2015 0 0 650,000 0 NA Criminal Justice 1,105,755 1,100,000 1,111,000 11,000 1.0% LIFT 500,000 500,000 500,000 0 0.0% Hotel/Motel 289,335 290,000 260,000 (30,000) -10.3% Total Taxes 33,038,989 33,596,893 39,877,521 6,280,628 18.7% Licenses & Permits 1,159,531 1,379,188 1,370,900 (8,288) -0.6% Intergov't (State & Local Sources) 24,425,416 10,873,633 8,208,654 (2,664,979) -24.5% Charges for Services 24,837,574 29,710,469 31,600,175 1,889,706 6.4% Fines & Forfeits 139,084 165,579 226,429 60,850 36.7% Miscellaneous Revenue 6,129,595 7,502,480 6,428,551 (1,073,929) -14.3% Other Financing Sources 34,222,222 7,168,781 5,582,249 (1,586,532) -22.1% Budgeted Totals 123,952,411 90,397,023 93,294,479 2,897,456 3.2% Budgeted Fund Balance (15,072,300) (13,673,889) 315,370 13,989,259 -102.3% Total 139,024,711 104,070,912 92,979,109 16,886,715 16.2% 2026 Revenue Estimates $93,294,479 10  Fund Balance Reconciliation – Summary of all Funds ESTIMATED Estimates Budget Fund Bal. Fund Fund Balance 2025 2025 Est Fund Bal 2026 2026 Est. Balance Budgeted Dept No. City Fund Dec 31, 2024 Revenue Expenditures Dec 31, 2025 Revenue Expenditures Dec 31, 2026 in 2026 001 General Fund 6,078,166 38,980,254 39,142,943 5,915,477 43,787,847 42,014,843 7,688,481 (1,773,004) 101 City Street 486,852 2,367,162 2,296,449 557,565 2,357,921 2,585,973 329,513 228,052 103 Parks and Recreation 774,757 2,389,931 2,533,999 630,689 3,851,673 3,776,967 705,395 (74,706) 104 Library 147,011 1,791,531 1,761,523 177,019 1,848,508 1,838,468 187,059 (10,040) Total Gov't Op. Funds 7,486,786 45,528,878 45,734,914 7,280,750 51,845,949 50,216,251 8,910,448 (1,629,698) 102 Arterial Street (1,077,174) 2,252,000 1,139,533 35,293 1,105,600 1,105,600 35,293 - 105 Paths and Trails 96,576 3,877 - 100,453 3,724 50,000 54,177 46,276 106 Tourism Promotion 219,562 263,000 450,356 32,206 263,000 284,500 10,706 21,500 107 Little Mountain Cap Res 414,981 88,299 200,000 303,280 88,360 85,000 306,640 (3,360) 109 Crime Prevention 100,946 12,000 10,500 102,446 28,750 25,000 106,196 (3,750) 110 Government Access TV 56,581 51,509 63,549 44,541 44,000 79,836 8,705 35,836 112 Criminal Justice Assistance 123,735 67,640 163,000 28,375 68,090 63,000 33,465 (5,090) 113 Municipal Arts Fund - - - - - - - - 115 Parks Capital Reserve 96,854 268,883 136,179 229,558 300 175,000 54,858 174,700 117 TBD Fund 2,147,506 2,620,000 786,528 3,980,978 2,646,000 2,379,000 4,247,978 (267,000) 118 Fiber Optics Fund 225,132 333,400 297,879 260,653 345,300 235,402 370,551 (109,898) 119 Critical Area Enhancement 707,940 10,000 - 717,940 75,000 30,000 762,940 (45,000) 120 Lincoln Commercial Block 134,294 75,480 32,488 177,286 74,800 50,100 201,986 (24,700) (ARPA) 121 American Rescue Plan Act 2,628,291 - 1,970,733 657,558 - 660,000 (2,442) 660,000 HB1406 122 Affordable and Supportive Housing 24,550 65,029 65,029 24,550 65,029 65,029 24,550 - HB1590 - 40% 123 Afford Housing Sales & Use Tax 826,547 470,000 904,539 392,008 470,000 703,160 158,848 233,160 HB1590 - 60% 124 Afford Housing Sales & Use Tax 1,926,533 705,000 1,487,543 1,143,990 705,000 1,249,995 598,995 544,995 210 LTGO Fire Bond - 876,357 876,357 - 875,355 875,355 - - 301 MVLC Capital Fund 3,593,143 2,142,801 5,456,264 279,680 1,000,000 1,156,263 123,417 156,263 304 REET I - Capital Improvement 1,456,001 818,800 1,590,616 684,185 816,800 710,650 790,335 (106,150) 306 Fire Capital Projects (1,220,510) 2,916,944 3,609,143 (1,912,709) 1,944,945 1,213,728 (1,181,492) (731,217) 311 Park Impact Fees 345,228 25,000 50,000 320,228 25,000 130,000 215,228 105,000 312 Fire Impact Fees 364,205 35,000 93,842 305,363 35,000 110,000 230,363 75,000 313 Traffic Impact Fees 1,802,703 225,000 - 2,027,703 228,000 - 2,255,703 (228,000) 314 Reet II - Streets 980,779 804,000 867,000 917,779 804,000 700,200 1,021,579 (103,800) 328 PW Facility Fund 31,186 - - 31,186 - - 31,186 - 401 Wastewater Utility (WC) 927,939 11,447,976 12,163,999 211,916 11,784,229 11,866,412 129,733 82,183 402 Solid Waste Utility (WC) (368,396) 8,075,670 7,965,256 (257,982) 8,526,970 8,214,662 54,326 (312,308) 403 Surface Water Utility (WC) 3,019,931 3,698,000 4,448,041 2,269,890 3,795,000 4,980,487 1,084,403 1,185,487 411 Sewer Facility Expansion 252,860 418,000 322,500 348,360 518,000 597,500 268,860 79,500 412 Sewer Capital Reserve 2,913,085 1,030,000 110,000 3,833,085 25,000 1,075,000 2,783,085 1,050,000 501 Equipment Rental (WC) 8,477,471 4,435,233 5,174,205 7,738,499 4,573,578 3,428,579 8,883,498 (1,144,999) 502 Facility Renewal Fund 32,681 362,444 177,444 217,681 150,000 80,000 287,681 (70,000) 512 LEOFF I Health Care Res 496,188 10,300 - 506,488 10,300 40,000 476,788 29,700 611 FR&P 389,176 80,189 70,000 399,365 80,000 70,000 409,365 (10,000) 600 Managerial Funds - 270,400 270,400 - 273,400 273,400 - - Totals 39,633,310 90,487,109 96,687,837 33,432,582 93,294,479 92,979,109 33,747,952 (315,370) 11 Conclusion Our City is grateful for residents’ support and excellent partnerships that help us achieve a higher quality of life for our region. You are encouraged to participate in the budget discussions to include attending the Public Hearing at the City Council Meeting: • Wednesday, November 19, 2025, at 6:00 pm with a formal public budget presentation. As Mayor, I sincerely appreciate all that our City staff have done to work toward fulfilling our mission this past year. A significant amount of staff sacrifices have been made in order to continue to serve our residents, and to operate with fewer resources per capita than any time in recent history. City leadership and staff move forward now with continued commitment to providing the residents of Mount Vernon with professional, efficient services to create a lifetime positive difference for our community. Sincerely, Peter Donovan, Mayor mvmayor@mountvernonwa.gov 360-336-6211 12  New Business Item: B DATE: November 19, 2025 TO: Mayor Donovan and City Council FROM: Doug Volesky, Finance Director SUBJECT: ADOPT A RESOLUTION TO SET THE CITY’S 2026 PROPERTY TAX LEVY AMOUNT RECOMMENDED ACTION: City staff asks Council to adopt Resolution No. 1087 to set the City’s 2026 property tax levy amount. INTRODUCTION/BACKGROUND: A major part of the City’s budget process is establishing revenue estimates for the budgeted year. The City’s revenue policies include: 1. Current revenues will be sufficient to support current expenditures, 2. Calculated using an objective, analytical process, and will be neither overly optimistic nor overly conservative, 3. Estimates will be performed utilizing accepted analytical techniques and shall access the full spectrum of resources available to finance City programs and services. Estimated total revenue included in the 2026 Preliminary Budget is $93,294,479. This is an increase of $2,897,456 or 3.2% from the City’s 2025 budgeted revenue amount. This increase is due mainly to a citizen voted property tax levy lid lift, Proposition No. 1 – Levy for Basic Public Safety, Essential Service and Improvements, which is estimated to be a $4,694,291 increase. Total taxes increased $6,280,628 from the budgeted 2025 revenue amounts. This increase also includes an estimated $650,000 for HB2015 Public Safety Sales and Use Tax that must be used for criminal justice purposes such as the city’s Public Defense contract. Per MRSC, “As part of the budget process, the taxing jurisdiction establishes the amount of property tax revenue needed to fund the budget. That amount needed to fund the budget is called the levy. It is the total amount to be collected from the taxpayers by a taxing district. In Washington, property tax increases are not based on the increasing value of properties. They are based on last year’s property tax levy, which is simply the amount of the property taxes that were assessed in the prior year. By November 30 of each year, the amount of taxes to be levied by taxing districts are certified to the county assessor in a dollar amount. In Mount Vernon, our tax levy amount in 2025 was $9,475,709. The county assessor calculates the levy rate necessary by dividing the total levy amount by the assessed value of taxable property in the district. By law, this number is expressed in terms of a dollar rate per $1,000 of valuation. For example, a rate of $0.00025 is expressed as 25¢ per $1,000 of assessed value. The formula for property tax collections is expressed as: Levy = Levy Rate x Assessed Value (AV)”. The City of Mount Vernon is required by law to hold a public hearing to review revenue sources for the coming year and to set property taxes for the coming year. The City held that public hearing on Wednesday, November 12, 2025 and a budget public hearing on Wednesday, November 19, 2025. The City’s property tax increase is limited to the lesser of one percent (1%) or the implicit price deflator (IPD) for the year. Additionally, a City may capture 100% of all new construction and may take any “banked capacity” if any is available to them. For the 2026 Levy, since the City is currently levying less than its statutory maximum levy rate of $3.60/$1,000 of assessed valuation, the City chose to implement a levy lid lift. (RCW 84.55.050) A levy lid lift is not a separate property tax, but rather a way of increasing the City’s existing general fund levy above the 1% increase limit. On July 24, 2025, the Mount Vernon City Council adopted Resolution 1078, providing for the submission to the qualified electors of the City to vote on a proposition that would provide funds for increased essential community services and improvements, including City fire and police personnel, fire equipment and parks maintenance and improvements. With voter approval, it will authorize a maximum regular property tax levy for collection in 2026 of $2.2537/$1,000 of assessed valuation (increased approximately $0.6684/$1,000 from 2025). The City Council chose to exempt senior citizens, disabled veterans, and other people with disabilities (as defined in RCW 84.36.381) from the tax increase resulting from this levy lid lift. This would increase the total levy amount for 2026 from $9,475,709 to $14,168,468. FINDINGS/CONCLUSIONS: City staff recommends that City Council: - Authorize a voter approved maximum regular property tax levy for collection in 2026 of $2.2537/$1,000 of assessed valuation. - This recommendation would increase the levy rate approximately $0.6684/$1,000 from 2025. - This would increase the total levy amount by an estimated $4,694,291. - The impact for an average home cost of $550,000, would equate to an estimated monthly increase of approximately $30.63, assuming a 0% change in assessed value. RECOMMENDATION: City staff asks Council to adopt Resolution No. 1087 to set the City’s 2026 property tax levy amount. ATTACHED: Resolution No. 1087  CITY OF MOUNT VERNON, WASHINGTON RESOLUTION NO. 1087 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MOUNT VERNON, WASHINGTON, LEVYING THE GENERAL TAXES FOR THE CITY OF MOUNT VERNON IN SKAGIT COUNTY FOR THE FISCAL YEAR COMMENCING JANUARY 1, 2026, ON ALL PROPERTY BOTH REAL AND PERSONAL IN SAID CITY, WHICH IS SUBJECT TO TAXATION FOR THE PURPOSE OF PROVIDING SUFFICIENT REVENUE TO CONDUCT CITY BUSINESS FOR THE SAID FISCAL YEAR AS REQUIRED BY LAW. WHEREAS, pursuant to RCW 35A.33.135, the Mayor and the City Council of the City of the City of Mount Vernon, Washington (the “City”), have considered the City’s anticipated financial requirements for 2026 and the amounts necessary and available to be raised by ad valorem taxes on real, personal and utility property; and WHEREAS, pursuant to RCW 84.55.120, a properly noticed public hearing was held on November 12, 2025, to consider the revenue sources including the 2026 regular property tax levies; and WHEREAS, the City’s actual levy amount from 2025 was $9,475,708.54; and WHEREAS, the population of the City is more than 10,000; and WHEREAS, RCW 84.55.050(1) provides that, subject to any otherwise applicable statutory dollar rate limitations, regular property taxes may be levied by or for a taxing district in an amount exceeding the limit factor if such levy is authorized by a proposition approved by a majority of the voters of the taxing district voting on the proposition at a general election held within the district or at a special election within the taxing district called by the district for the purpose of submitting such proposition to the voters; and WHEREAS, pursuant to Resolution No.1078, the City provided for a submission to the qualified electors of the City at a special election on November 4, 2025, in conjunction with the State general election held on the same date, of a proposition authorizing the City to increase its regular property tax levy above the limit otherwise allowed by Chapter 84.55 RCW to provide for the continual provision of City community services and improvements, including relating to public safety and parks; and WHEREAS, as of November 19, 2025, City of Mount Vernon Proposition No. 1 – Levy for Basic Public Safety, Essential Services and Improvements authorizing a maximum regular property tax levy for collection in 2026 of $2.2537/$1,000 of assessed valuation has passed; and WHEREAS, the results of such proposition will be certified on November 25, 2025. Page 1|3 FG: 104487772.1 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOUNT VERNON, WASHINGTON DOES RESOLVE AS FOLLOWS: Section 1. Regular Property Tax Levy. Based on the voter-approved limitation on annual levy increases, the City Council of the City of Mount Vernon has determined that the property tax levy levied in calendar year 2025 to be collected for the year 2026 is $14,170,000. This property tax levy represents a dollar amount increase of $4,694,291 over the actual levy amount from the previous year. This amount is fixed as established by the levy rate of $2.2537 per $1,000 of assessed valuation. This property tax levy represents a levy rate increase of $0.6684 per $1,000 of assessed valuation and a percentage increase of approximately 49.54 percent from the levy amount of the previous year, excluding the addition of any new construction, improvements to property, newly constructed wind turbines, solar, biomass and geothermal facilities, any increase in the value of State assessed property, any increase in assessed valuation of real property within an increment area as designated by any local government in RCW 39.114.020 (provided that such increase is not already included in one of the other categories listed above), any annexations that have occurred, and administrative refunds made. The exemptions set forth in RCW 84.36.381 shall apply to the additional regular property taxes authorized by Proposition No.1 – Levy for Basic Public Safety, Essential Services, and Improvements and this resolution, and that portion shall be added to the total amount to be collected. Should this calculation of the final amount of the regular levy for 2026 need to be adjusted for any reason in order to maximize the 2026 levy in accordance with the authority provided in RCW 84.55.010, RCW 84.55.092, and RCW 84.55.050, the City Council authorizes the Finance Director of the City to do so in conjunction with the Skagit County Assessor. Section 2. Notice of Skagit County. This resolution shall be certified to the proper County officials, as provided by law, and taxes herein levied shall be collected to pay to the Finance Department of the City at the time and in the manner provided by the laws of the State of Washington for the collection of taxes for non-charter code cities. Section 3. Corrections. Upon approval of the City Attorney, the City Clerk is authorized to make necessary clerical corrections to the resolution including, but not limited to, the correction of scrivener’s or clerical errors, references, numbering, section/subsection numbers, and any reference thereto. Section 4. Severability. If any one or more sections, subsections, or sentences of this resolution are held to be unconstitutional or invalid, such decision shall not affect the validity of the remaining portion of this resolution and the same shall remain in full force and effect. Section 5. Effective Date. This resolution shall take effect immediately upon its adoption. Page 2|3 FG: 104487772.1 ADOPTED by the City Council of the City of Mount Vernon on this ____ day of November 2025. Signed in Authentication this ________ day of November 2025. ______________________________ Peter Donovan, Mayor Approved as to form: Attest: _______________________________ ___________________________ Becky Jensen, City Clerk Kevin Rogerson, City Attorney Published: _______________________ Page 3|3 FG: 104487772.1