The Escalating Cost of Living in Anacortes: 2015 – 2025

Did you know that Anacortes with a population of approximately 16,189 as of 2015 and 18,270 as of 2025, has seen sharp increases in property taxes, utility fees and cost of building homes from 2015 to 2025? We have discussed property taxes in previous blogs. This blog will focus on utilities fees and cost of building homes.

I Trends in Fees

I-1 Electricity Rates

Electricity rates in Anacortes have consistently exceeded state averages. According to Electricity Local, the average residential electricity rate in Anacortes is 10.36¢/kWh, 21.45% higher than Washington’s average of 8.53¢/kWh. For the past 25 years, Washington’s electricity prices have risen at an annual rate of 4.27%, outpacing the average inflation rate of 3.35% from 1998 to 2022. Puget Sound Energy proposed rate increases, including a 12.9% hike in 2023, though the Washington Utilities and Transportation Commission approved an 8.7% increase. This reflects a broader trend of rising energy costs driven by state policies and infrastructure needs.

I-2 Water, Sewer and Storm Water Rates

Water and sewer rates in Anacortes are managed by the city and not regulated by the UTC. A 2015 Anacortes Retail Water Rate Study emphasized the need for rate adjustments to fund infrastructure maintenance. In 2019, the City Council approved a $3,823 increase in the general facilities charge (GFC) for water and sewer connections for new construction to fund a new water treatment plant and wastewater treatment plant expansion. Contractors and residents have felt the higher GFC impact on their costs to build new homes. Some even came to the City Council meetings to complain about the high cost to hook up to city utilities.

In the past ten years, water rates and storm water fee for single family residents have increased almost 20% annually. Concerned citizens have spoken at the Monday night city council meetings and requested the City Council to help with high water bills. The sewer rates have an average of 5-7% increase annually which is also higher than the average inflation rate.

I-3 Solid Waste and Other Utilities

Solid waste services, including garbage, recycling, and organics, cost approximately $30 per month in Anacortes in 2025, aligning with state averages due to participation in recycling and composting programs. The city imposes a 12% solid waste utility tax, with an additional 3.6% state public utility tax forwarded to Washington. Natural gas prices have also risen, with residential rates increasing 16% from 19.02 $/Mcf in September 2023 to 21.98 $/Mcf in September 2024.

I-4 Development Impact Fees

In 2021, Anacortes raised residential development impact fees for parks, increasing them from $616 to $1,362 for single-family homes and setting them at $981 per multifamily unit. The city also significantly increased transportation impact fees. These adjustments were based on the city’s Comprehensive Plan, which projects a population growth of 5,000 and a need for 3,000 additional housing units. Additionally, a new commercial development impact fee was introduced to support $4 million in park-related capital projects. These increased fees have contributed to higher building costs, home prices, and overall living expenses, exacerbating the demand for affordable housing. This, in turn, necessitates additional taxes and fees to fund affordable housing initiatives, creating a concerning cycle of rising costs and financial burdens.

II Impact on Residents

Rising utility fees exacerbate Anacortes’ high cost of living, 19% above the Washington average and 40% above the national average. Low-income and fixed income households face particular challenges. Recognizing the financial strain on residents, Anacortes offers a Utility Discount Program providing a 30% reduction on utility bills for eligible low-income households. Eligibility is based on income guidelines and property tax exemptions. A $2 discount for Auto Pay and Paperless Billing is also available but require enrollment.

III Conclusion

Building and cost of living in Anacortes have risen sharply from 2015 to 2025 due to infrastructure upgrades and expansion, operational cost increases, state energy policies, population growth and inflation. Energy cost has grown steadily while city utility fees saw significant increases. To address affordability, Anacortes should examine its capital facilities plan against its actual population growth. For the past ten years, the city has an average of 1.3% annual population growth, much lower than its Comprehensive Plan’s growth factor which is the basis for capital projects, policy development and city planning. Building infrastructure capacity ahead of population growth curve significantly burdens its current residents. Additionally, the city should invest in energy-efficient infrastructure to balance service reliability with resident needs. While these increases are essential for maintaining and enhancing service quality, they underscore the importance of transparent budgeting and financial assistance programs to support residents.

Sal Walker

Anacortes, WA

Challenging the Anacortes Budget Planning Process

Did you know that the Anacortes City Budget went up by 44% in 2022 and has maintained that level since then? During the period 2015 to 2021, the city budgets remained relatively stable. However, in 2022 Anacortes increased its budget by a whopping 44% and it has continued to increase since then (Chart 1).

Why the 44% budget increase in 2022 in Anacortes? The most important driver is the city’s adoption of a $250 Million six-year (2022 to 2027) capital project called Capital Facilities Plan (CFP). The CFP identifies “the demands placed upon the city associated with growth”. According to the city’s most recent Comprehensive Plan, the population growth in the next twenty years is expected to be around 5000 people. The city government expects to fund the $250 Million CFP with property, sales and exercise taxes, as well as user and impact fees. Additional funding “could” also come from grants, private developer’s contributions, revenue bonds and public loans. In the 2022 budget, the city included $45 Million for its CFP, which was ~60% of the city’s total revenue in 2021. Therefore, Mayor Gere described the 2022 budget increase over the previous year as “salient”. The result is that Anacortes has become a much more expensive community in which to live.

The population growth in Anacortes for the past 10 years has been around 1% per year (Chart 2). Citizens have requested the city government to provide facts and data to demonstrate the expected population growth and the demographics to support the housing and infrastructure needs. However, the city government only provided historical data which does not support the population growth and household size used in its comprehensive plan.

Let us look at Mt Vernon, the largest city in Skagit. It also developed a six-year Capital Improvement Plan (CIP) but is requesting only $150 Million for a growth estimate of 10,400 more residents during this period. That is $100 Million less funding for 50% more population growth. Mt Vernon government has recognized that the city has finite resources. As a result, the city has incorporated the current residents paying for growth, along with implementing the capital projects as the facilities are required to expand. In fact, the Mt Vernon city budget in 2025 is a 22% reduction from its 2024’s budget because of the funding changes on its capital projects

It is time we do a reality check and answer the hard questions.

Why do we need to execute capital funding projects during the first six years for a potential population growth that would take 20 years to reach?
How much does it cost each year from 2022 to 2045 for the current residents in terms of property taxes, sales taxes, service fees, exercise fees and impact fees?
During the period 2022 to 2025, the population growth and housing requirements in Anacortes have been way under the forecasted growth. This implies that the current funding plan will result in financial inefficiency and waste. The CFP needs to be modified to adjust to the capital needs of a relatively stagnant population.

Sal Walker

Anacortes, WA

Anacortes City Budget

Did You Know Anacortes revises its budget four times a year during its quarterly budget amendment process? Citizens in Anacortes have raised concerns over the city’s 2025 proposed budget. Comments have been submitted at the City Council meetings during budget planning sessions. At the end of 2024, the City Council approved a $124 Million budget for fiscal year 2025. For the 18,270 citizens, that is more than $6,800 per person, the highest rate in Skagit County.

On a per capita basis, Anacortes is 37% higher than Burlington 122% higher than Sedro Wooley, and 135% higher than Mount Vernon as shown in Table 1. For the past 10 years, Anacortes has increased its city budget by $75 Million, an average 15% budget increase per year while is population growth averaged 1% per year (Table 2).

The budget amount for each year in Table 2 was from the “Final Budget File” for each year in the city’s budget archive. It is worth noting that from 2022 to present, Anacortes has been using a quarterly budget review process to revise the city budget throughout the year. For instance, the initial Budget for 2024 was $109.4 Million. However, on December 16, 2024 the city revised the 2024 budget number to $120.6 Million to more closely match the actual amount spent. This is a 10% or $11 Million more than the initial budget. Obviously, Anacortes does not really utilize a budget, instead they revise the budget numbers based on actual expenditures on a quarterly basis.

On December 2, 2024, the city published its 2025 adopted budget of $124 Million, a 3.3% increase from its 4th Quarter revised budget number or a 14% increase from its original 2024 budget number. To balance its 2025 budget, the city council approved a 1% property tax, a 3% service rate increase and transferred $2.6 from its reserves. In addition, the city council approved a $12 Million bond to cover the remaining balance of the fiber project, and a $4 Million loan to make up the budget balance.

The goal of a budgeting process is to allocate revenues and provide guidelines on expenditures. There is no difference between managing a budget for a private business or a city. As citizens of Anacortes, we have to set priorities, trim expenses and live within our means. We require that the city council use the annual budget to hold the city government accountable in managing expenses against the budget. From 2015-2025, Anacortes had an average 15% budget increase per year.

A significant portion of the Anacortes population are retired seniors who are on a fixed income and do not have anywhere near 15% increase in their retirement income. A 15% per year city budget hike is neither reasonable nor sustainable.

Sal Walker

Anacortes, WA

Did You Know?

Your Source for Local Information

Category: City Council

The Escalating Cost of Living in Anacortes: 2015 – 2025

Challenging the Anacortes Budget Planning Process

Anacortes City Budget