Did you know that Anacortes went from strong reserves and a stellar AA credit rating to a brutal budget squeeze in record time?

Editor’s Note: This article is the second in a two-part series exploring the city’s sudden budget shifts. If you haven’t yet, we highly recommend reading [Part 1: From Balanced Budget to $2.7M Ask] to see exactly where this money is going and why the timing is raising red flags.

Just months after adopting the 2026 budget, the City Council faces Ordinance 5033: a $2.7 million mid-year amendment. As we uncovered in Part 1, much of this money would come straight from reserves rather than new spending cuts or revenues.

This ask is even more alarming when you look at the backdrop: a brutal 2026 budgeting process where the city had to close a massive ~$9 million general fund gap through employee layoffs (roughly 9 FTEs), program reductions, project deferrals, and modest tax increases.

The Shrinking Deficit Myth

A look at the Finance Department’s website reveals just how heavily this new amendment changes the town’s financial narrative. Currently, the posted city budget numbers show:

• 2025 Overall Budget: $125,584,921
• 2026 Overall Budget: $115,485,921 (A spending reduction of 8.0%)

On paper, it looked like leadership successfully tightened the city’s belt by 8%. However, if the Council approves this new $2,718,453 adjustment, the actual difference between 2025 and 2026 spending shrinks to just -5.9%.

Interestingly, the website headings still label these files as a “draft budget”, leaving taxpayers to wonder if the Finance Department simply hasn’t gotten around to updating the site with the final approved numbers, or if “draft” anticipates the possibility of quarterly budget adjustments.

Either way, the math proves that the “savings” proudly touted months ago are already being eroded by mid-year asks. It makes watching for further adjustments in Q3 and Q4 incredibly vital.

Shifting Patterns

Mayor Matt Miller was blunt in the 2026 budget message: wages and benefits had risen over 20% in four years and construction costs had jumped nearly 50%, while sales tax revenue stayed flat or declined. Reserves were labeled “stable” but cash balances could no longer paper over these structural shortfalls.

The current $2.7M ask highlights a dangerous pattern: using one-time reserves for recurring or foreseeable costs (including water projects already underway before 2026). While the city’s AA rating praised its stable reserves in 2024, repeated mid-year draws risk eroding that foundational financial strength. Rating agencies watch unrestricted fund balances and liquidity very closely. They want to see if management is addressing root structural causes or just kicking the financial can down the road.

Sustainable solutions likely include multi-year forecasting with realistic assumptions, prioritizing core services, economic development that actually grows the tax base, and clear reserve policies with minimum targets and mandatory replenishment rules.

Anacortes built a strong reputation for fiscal prudence. Maintaining it will require honest conversations about what the community can truly afford in 2026 and beyond. Residents deserve budgets that reflect reality, not hope. The current amendment is a test of whether city leadership is learning from the $9M wake-up call or just delaying the next one.

Anthony Lee

Anacortes, WA

Did You Know that just eight months after adopting the 2026 budget, Anacortes wants another $2.7 million? On Monday, July 13, 2026, the Anacortes City Council will consider Ordinance 5033: a $2,718,453 budget increase for 2026.

Budget amendments happen. Priorities shift, grants arrive, and true emergencies occur. But this one deserves sharp scrutiny.

The ordinance itself admits several items “were not included in the 2026 budget” that staff now wants to fund this year. The central question: How much of this spending was genuinely unforeseen – and how much was simply left out of the budget taxpayers were told would cover the year?

Where the Money Goes

• $1,920,000 – Water Treatment Plant North Line Repair Project
• $325,000 – Emergency water line replacement
• $160,000 – Intake pump station condition assessment
• $250,000 – North Star Project (opioid settlement funds)
• Plus staffing adjustments and other smaller items

The North Star contribution supposedly wasn’t known at budget time. That may be fair if the funding truly materialized later.

Far more concerning are the major Water Utility projects. Two of them were already underway at the end of 2025 yet were completely omitted from the 2026 budget – even though the work continues this year. This raises a troubling possibility: Were these massive projects deliberately left off the books to make the initial budget look balanced, temporarily masking a gap that we now see widening?

The $325,000 emergency waterline repair after a main break is exactly what reserves are built for; most residents support handling true emergencies. The real problem is lumping foreseeable, ongoing work into that same “emergency” category to justify pulling from our savings.

Much of this $2.7 million isn’t coming from cuts to lower-priority items. It’s being drained directly from the City’s unassigned and reserved fund balances.

Good budgeting isn’t just balancing the books on adoption day to look good on paper. It’s delivering transparency so elected officials and taxpayers understand the real financial commitments ahead. Before voting on another $2.7 million, the most important question isn’t whether these projects are worthwhile. It’s whether the original budget was accurate and honest in the first place.

Anthony Lee

Anacortes, WA

Did you know that the top item on the City’s list of rising financial challenges has consistently been “Wages & Benefits”? If labor costs are truly the primary driver of our local fiscal strain, then the timeline, handling, and lack of transparency surrounding the City Council’s February 9, 2026 meeting should raise a lot of eyebrows.

At that meeting, the City Council voted to approve the new Firefighters’ labor contract covering 2026–2028. Technically, the Council followed the bare-minimum letter of the law regarding Washington State Public Disclosure rules—holding negotiations in executive session and casting the final vote in a public setting.

However, the late-night procedure used left a great deal to be desired from an open-government standpoint.

The Rushed Timeline

• The Clock: The contract vote was buried as the very last item on the agenda. At approximately 9:01 PM—three hours after the meeting began—the Council adjourned into an executive session.
• The Vote: The Council returned to the public room at 9:31 PM, asked the HR Director for a brief overview, took an immediate affirming vote with zero public debate, and adjourned the entire meeting by 9:35 PM.
• The Slides: The HR presentation detailing the actual long-term financial impacts of this contract was only visible to those watching the absolute tail-end of the meeting video. It is highly unlikely any members of the public were left in the audience at that hour.

What’s Actually in the Agreement?

While competitive compensation for public safety is vital, the public has a right to understand the numbers being approved in the dark. The newly approved agreement includes:

• Structural Increases: Annual salary structure increases of 3.0% in 2026, 4.0% in 2027, and 4.0% in 2028.
• Specialty Bump: A 1% salary bump for training on the city’s new $765,000 fire boat.
• Compounding Steps: It maintains annual step increases averaging 3% for years 1–5, alongside longevity increases and educational incentives (a 2% annual increase for standard degrees).

Transparency Matters

True transparency isn’t just about quietly posting a PDF under the “Labor Agreements” section of the city website after the fact. It’s about ensuring that major spending decisions happen when the community is actually awake to watch and ask questions.

We urge all Anacortes residents to log on, watch the February 9th meeting archives, examine the contract terms, and ask city leadership why backroom timelines are taking precedence over open government.

Anthony Lee

Anacortes, WA

Did you know that the “W 6^th Street Community Park” was absent in the City’s formal budget presentations and long-range capital project lists? While internal city departments and administrative operations enjoy clear budgetary paths forward, long-promised community infrastructure in Anacortes continues to sit on the backburner.

A 20-Year Wait for Action

Approximately 1.5 years ago, a petition signed by 143 neighborhood residents was formally presented to the City, urging leaders to fulfill a park promise that some neighbors note has been pending for nearly 20 years.

The park is technically listed on the City’s online project page, yet it didn’t merit a single mention when accomplishments and future capital project priorities were detailed at a recent City Council meeting. Leaving it completely off the future projects presentation sends a troubling message to the neighborhood that grassroots citizen petitions are an afterthought.

Hold Leaders Accountable

Transparency isn’t just about making documents available on a website; it’s about ensuring that long-standing community promises are honored, not hidden away. We urge all Anacortes residents to ask city leadership why administrative growth is taking precedence over the neighborhood projects we were promised.

Sal Walker

Anacortes, WA

Did you know that the 2026 Anacortes city budget is $6.4 million higher than the actual spending recorded in 2025? Overall, the proposed budget represents a nearly 7% increase over last year’s actual expenditures.

For months, city leadership’s financial messaging has leaned heavily on a narrative of austerity, claiming Anacortes faces “unprecedented financial challenges” due to rising costs and flat or declining revenues. But a closer look at the raw data tells a very different story.

Shifting Priorities, Not Scarcity

Instead of a true crisis of scarcity, the data points to a major shift in the City’s internal spending priorities. While frontline community services like the Library and Planning departments are feeling the squeeze, internal administrative operations and select departments are seeing massive, near or above double-digit budgetary spikes:

• The Finance Department is tracking a budget increase of over 22% compared to 2024 actuals.
• The Human Resources (HR) Department is budgeting for an increase of 17% from 2025 actuals or 26% from 2024 actuals, driven in part by extended labor contract negotiations.
• Other Spikes: Substantial budgetary increases are also hitting the Police, Museum, Parks & Rec, and Cemetery departments.

2024 and 2025 Actual Spendings vs. 2026 Budget

The department reports are a good start, but as citizens and taxpayers, we expect the utmost truth, clarity, and transparency from our local leaders. It’s time for the City’s financial messaging to accurately reflect where the money is actually going.

Georgia Jelec

Anacortes, WA

Did you know that Anacortes City Council has implemented a new rule for citizens to make public comments at the weekly Council meeting? It’s not just the three-minute timer; it’s the new requirement that you identify your voting ward or neighborhood before you even start your comment.

On the surface, it sounds like simple record-keeping. But in practice, it feels like a subtle way for our elected officials to decide whose opinion actually matters.

The Problem with “District-First” Thinking

When you’re forced to lead with your neighborhood, you’re essentially flagging whether or not you can vote for the person sitting across from you. This creates a dangerous precedent where:

• Constituent “Favoritism”: Councilmembers might only truly “listen” when the speaker is from their own district.
• Soft Filtering: It discourages people who live on one side of town from speaking up about issues affecting the whole city (like the budget or the Comprehensive Plan).
• Intimidation: Not everyone is comfortable announcing their specific neighborhood on a public, recorded livestream.

It’s Not a Conversation, But It Should Be Fair

The city’s own rules state that “Public comment is not a conversation”. We get it—they aren’t required to respond. But if we aren’t even guaranteed an equal ear because we live in the “wrong” ward, then the very foundation of public testimony is at risk.

We elect seven councilmembers to lead the entire city, not just their own corners of it. It’s time we remind them that an Anacortes resident is an Anacortes resident, no matter which ward they call home.

What do you think? Have you felt “filtered” at a recent meeting?

Sal Walker

Anacortes, WA

Did you know that the Fidalgo pool measure is broader that it looks?  This November, voters in Anacortes School District No. 103 will see Proposition 1 on the ballot, asking whether to form a Metropolitan Park District (MPD) to support the Fidalgo Pool and Fitness Center. At first glance, the ballot language makes it sound simple: if approved, the MPD would operate the “Fidalgo Pool and Fitness Center Campus.” Many voters will reasonably assume this is about keeping the pool open and funded.

But here’s the catch: both the City of Anacortes and Skagit County resolutions that put Proposition 1 on the ballot go further. They state that the new MPD would not only take over the pool but could also manage “other park and recreation facilities and programs” across the entire Anacortes School District boundaries — which stretch well beyond the city limits to include Guemes, Cypress, and Sinclair Islands.

Why this matters

• No definition of “campus”: The term “Fidalgo Pool and Fitness Center Campus” isn’t defined anywhere in the resolutions. Could it mean the building only? The parking lot? Or could the MPD later declare other parks part of its “campus”?
• Broader authority: The resolutions clearly give the MPD the power to manage other parks and recreation programs, not just the pool.
• Tax implications: All property owners within the Anacortes School District boundaries would be taxed, even rural island residents who may not realistically use the pool or other facilities.

The bottom line

Proposition 1 may sound like a simple plan to save the Fidalgo Pool, but the legal framework paints a broader picture. The MPD could expand to oversee other parks and programs, backed by new taxes affecting every household in the school district.

Before voting, residents deserve clarity. Will the MPD stick to managing the pool, or does it have bigger plans? Contact Skagit County officials to ask about the MPD’s true scope and how it might evolve. Transparency is critical when creating a new taxing district that impacts us all.

Georgia Jelec

Anacortes, WA

Did you know Anacortes is the first city in Washington to become an Internet Service Provider (ISP)? Anacortes launched its municipal broadband vision back in 2015, when the City Council approved Resolution 2013 to pursue a city-owned fiber network. By 2019, crews had installed 30 miles of fiber through existing water pipes from Mount Vernon to Anacortes, creating a backbone designed to eventually serve the entire community. The project was engineered with help from NoaNet, Washington’s wholesale broadband provider, which projected the network could pay for itself in about 15 years if it captured roughly one-third of the local market.

Today, Access Fiber reaches about 75% of Anacortes’ 7,600 households and businesses—roughly 5,700 premises—with full coverage expected by late 2025. As of mid-2025, around 2,600 customers (about 45% of the service area) are connected. Annual revenue is estimated at $1.8 million. Residents are drawn to the service’s competitive pricing and the 30% discount available through Anacortes’ utility discount program for low-income households.

However, the investment has come at a steep cost. The city has poured approximately $22 million into the network since 2019, with $18.9 million in debt still outstanding and annual debt service of about $700,000. Fiber spending, coupled with slower-than-expected revenue growth, contributed to a $3 million general fund deficit in 2023. City leaders remain optimistic, projecting the fiber program will become self-sustaining next year.

Not everyone is convinced. Critics question the use of taxpayer dollars for a service that not all residents use, especially in a competitive market. Private providers like Ziply Fiber, offering multi-gigabit speeds through SkagitNet, and Starlink, targeting rural users with affordable satellite plans, pose significant challenges. Comcast and T-Mobile further intensify competition with cable and 5G options. To stay relevant in this rapidly evolving broadband landscape, Anacortes must continue upgrading speeds and forging strategic partnerships to expand its market share.

The success of this ambitious venture hinges on its ability to grow revenue and capture a larger slice of the market. Taxpayers should pay close attention to the financial results over the next year, as 2026 will be a pivotal moment in determining whether this high-stake investment delivers on its promise or becomes a costly lesson. Stay informed, attend city council meetings, and hold leaders accountable to ensure your tax dollars are driving a sustainable, community-focused future.

Sal Walker

Anacortes, WA