Town juggles its competing spending needs

Like parents or counselors for a 900-member family, Mayor Marna Hanneman, the La Conner Town Council and staff, primarily Town Administrator Scott Thomas and Finance Director Maria DeGoede, are wrestling with short, medium and long term funding needs as they advance the town’s 2025 $8.4 million draft budget. Hanneman reflected on the challenges of the past five years in her Nov. 12 budget message: the COVID-19 “pandemic, flooding, extreme weather events and the highest inflation in half a century.”

Hanneman, Thomas and DeGoede discussed the proposed budget with the Weekly News Monday. They spoke as a team, in agreement as they cited specific examples of increased costs for materials, services and wages. The town primarily “spends money on supplies and labor,” Thomas stressed.

The three praised the town’s staff, “These are the people we want to hang on to,” Thomas said. Non-union employees will get salary adjustments to offset inflation. Union employees 4% raise is set by their contract.

The annual contract with the Skagit County Sheriff’s Office will increase 12% to cover that staff’s labor agreements. Hanneman said that cost is an example of the importance of public safety, her biggest issue, and which she and DeGoede also stressed included the water treatment plant and water main infrastructure.

Insurance coverage increased 16% for property liability and 6% for staff medical, DeGoede noted.

They are conservative. “We have to be,” Hanneman said. “There are too many unknowns.”

The 2024 budget was adjusted to spend $163,500 to start the process of getting a fireboat built. The Port of Skagit has pledged $100,000 in 2025 as the town seeks other sources to complete the purchase. No new town funds are planned.

Replacing the 1970s water treatment plant is their biggest concern. Federal grants will be necessary. The three expressed concerns over the coming Trump administration’s budget philosophy, policies and plans. Fewer funds will be available and tariffs will drive up material costs, they project.

Families have water bills in their operating budget. The town’s aging infrastructure will require major repairs or replacement of the wastewater treatment plant and the water main. The town will not be replacing the Channel Drive water main in 2025: $3.9 million for design and construction has been removed from the budget.

Extending South First Street to Caledonia Street is an example of the need to assemble grant funds and combine purposes. With the Swinomish Channel bordering First Street, the project will integrate transportation and flood mitigation.

That might take years to fund but is an example of council setting priorities based on its strategic planning, Hanneman said.

Hanneman ends her budget letter on an upbeat note: “While our projections for Fiscal Year 2025 are optimistic, we must continue to explore new revenue streams and operate more efficiently and effectively in order to pave the way to long-term fiscal stability.”

The sales tax rate increases slightly, to 8.7% with the addition of a 0.01% transportation benefit district tax. The estimated $30,000 to $45,000 in revenue will go to maintenance of streets, sidewalks and crosswalks, Thomas said.

In her budget message, Hanneman states the sewer utility taxes will remain the same.

Hanneman’s letter was drafted in September. It is clear that the new Trump presidency has changed town officials assumptions for outside revenue sources and upward pressure on costs.

The draft budgets projects slightly higher revenues: the 2025 total is $7.8 million, $338,000 and 4.5% above 2024.

Expenditures are lower by12.6%, down $1.2 million to $8.4 million from 2024’s projected $9.6 million. Actual 2024 costs are trending below $7 million, less than 60% of planned expenses. That has been consistent with recent town budgets, projected like this one to run a deficit, but all of which have finished in the black.

The 2025 budget shows a $634,000 budget deficit that will be covered by the town’s $5.5 million fund balance.

Town policy is to maintain the fund balances equal to 20% of operating revenues. In 2025 that will be $1.6 million. The current fund balance is 7.8 times that amount.