Edmonds City Councilmember Will Chen said Saturday that he did not mean to imply during a recent interview that the city has unrestricted access to more than $70 million in reserve funds that could be used to address the city’s financial troubles.
During a My Edmonds News interview, Chen provided his take on the impending levy lift vote, the mayor’s recently proposed 2025-2026 biennial budget amendment, and statements he made in his recent interview with Alicia Crank as part of her Candidate Connect 2025 series archived on YouTube. Chen is a licensed CPA and runs his own accounting business.
Since his interview with Crank three weeks ago, Chen’s remarks about the city maintaining reserve fund balances in excess of $70 million have elicited significant public interest. Many people have asked why these funds could not be used to offset or even solve the current budget crisis.
Chen explained that while some of this money might be made available, much of it is restricted by law and/or city policy.
He described the city’s various funds as follows:
- General Fund and Contingency Reserve: These are the primary sources for day-to-day operations. Chen noted that the city currently has about $3.6 million in the General Fund and reserves that could be tapped for operating needs.
- Enterprise Funds (including water, sewer, utility): These are legally required to be kept separate from the general fund and are intended for specific purposes. The city has previously borrowed from these funds (for example, this year’s $6 million loan from the utility fund), but any borrowing must be repaid and is limited by policy and legal requirements to maintain healthy reserve levels.
- Special Reserve Funds: Some of these are restricted by law for specific uses (gas tax revenue, for example, must be spent on roads). Others may have more flexibility, but legal and policy restrictions still apply.
- Internal Service Funds (e.g., equipment and technology rental funds): These are set aside for replacing vehicles or upgrading technology. If there is more money in these funds than needed for their intended purpose, the city could potentially tap the excess for operating expenses, but this would require council action and legal review.
Chen emphasized that while some funds are tightly restricted, others could be accessed with proper legal and council approval, especially if there is a surplus beyond what is needed for their designated use. However, he cautioned that tapping these funds should be done carefully to avoid jeopardizing the city’s ability to meet future obligations.
Chen clarified that he never said the city could easily tap into the entire $70 million-plus in these city funds. He explained that the amount refers to what is in the city’s investment pool, and if monthly operating funds are included, the total cash balance is about $77 million. He stressed that most of this money is restricted for specific uses or required to be maintained as reserves and is not available for general spending.
“I never said we can take the whole $77 million – that is not what I said,” Chen clarified. “While these funds exist, only a small portion is actually available for discretionary use, and the rest is legally or practically committed to other purposes.”
City Finance Director Richard Gould told My Edmonds News during a Friday interview that the total amount potentially available from the $70 million-plus in these special funds is about $1.5 million. Responding to that information, Chen said that “this is probably what we could use freely,” and that to get more would require seeking legal advice from the city attorney and exploring options through council action.
Chen then transitioned into his reasons for opposing the $14.5 million levy lift measure. He started by reviewing the potential tax impact of the proposed levy lift on property owners, putting it in context with the new Regional Fire Authority (RFA) tax that will come due next year. He pointed out that the original 2025-2026 city budget did not include RFA costs because of the voters’ decision in April to approve RFA annexation. As a result, property owners will pay the RFA directly for these services and thereby remove the financial burden from the city. However, Chen pointed out that while the city will no longer be paying for fire protection and EMS in 2026, taxpayers will pick up the bill through a new RFA tax, which will appear on property tax statements due to be mailed in February.
He estimates that by not paying for fire services, the city will save approximately $19 million in 2026 — the estimated annual cost of a new fire contract to replace the $12.5 million existing agreement beyond its December 2025 termination date. But again, because voters approved annexation, the cost of fire protection and emergency medical services (EMS) will be picked up by property owners and paid as part of their annual tax assessment, and not by the city out of its general fund.
Should voters approve the city’s proposed levy lift, they would be agreeing to an additional $14.5 million on their property tax bill.
“I felt and continue to feel that the combined impact of the RFA and the levy lift would be too much for many of our senior and fixed-income residents,” Chen said. “This is the main reason I cast one of the two council votes against putting the levy lift on the November ballot (the other no vote was from Councilmember Michelle Dotsch).
“My concern as a councilmember and as a citizen is for those people who are on fixed incomes, and those people who purchased their house 30 to 40 years ago at a very modest price, and now the value of the house – and the taxes based on that value – have significantly increased,” he said. “And this tax increase is permanent and will rise with inflation for six years”
Chen went on to say that if the levy lift fails, the city needs to “go back to the basics of providing essential services” and not fund many of the “nice to have” things such as Beach Rangers and gymnastics programs.
“We have funding to cover these basics,” he said. “We already have the budget to maintain these service levels through 2025.”
As an alternative, Chen said he would favor a more modest levy lift of $6 million, which he says would allow the city to maintain critical services while repaying the $6 million internal loan from utility fund.
“While a $14.5 million lift would fund many nice things, a $6 million lift combined with the $5 million in new non-levy revenues and savings that the council agreed to find, would be sufficient to operate at a basic level,” he said.
Chen projected that should the $14.5 million levy lift fail at the polls, the council would be able to put a $6 million lift before voters in early 2026 in a special election or in the general election.
If a $6 million lift was approved in 2026, the city would not get this money immediately. The funds would not become available until 2027, when the Snohomish County Treasurer invoices property owners via their annual tax bills. This is like the RFA tax, which was approved in the April 2025 special election but will not be billed to taxpayers until 2026.
To bridge this gap, Chen said that the city would need to rely on a combination of strategies: using available reserves, seeking non-property tax revenue sources, and reducing expenses. He added that the city may have to implement some of the austerity measures outlined in Resolution 1570, which could mean cuts to non-essential services, carefully managing cash flow, and delaying or scaling back certain projects until the new funding becomes available.
And should voters also reject a $6 million lift, Chen predicted that the city would need to take “significant steps” to balance the budget, including reducing services, possibly contracting out some services instead of hiring city employees, and relying more heavily on existing and yet-to-be-determined non-property tax revenue sources.
“Even with these measures, there would likely be a shortfall (about $1 million), which could require tapping into limited reserves or making further cuts,” Chen said. “The city would also need to consider both revenue and expense adjustments, and some of the more severe austerity measures outlined in Resolution 1570 could be implemented, leading to a reduction in non-essential services and a more austere city budget.”
In closing, Chen emphasized the importance of the city and residents working together, and his personal commitment to financial stability.
“I believe that being a good steward of public money means carefully balancing both revenue and expenses, much like running a business or household,” Chen said. “This means going beyond just seeking more revenue. We also need to control and scrutinize spending to ensure the city lives within its means, because even large reserves can be quickly depleted if spending is not managed responsibly. I will always be a strong advocate of thoughtful, prudent decision-making to protect public funds and ensure long-term financial health for the city.”