City Council Meeting - 2026-01-16
CITY GOVERNMENT
AB 6838: Compliance with the Growth Management Hearings Board Decision
In late 2024, the City of Mercer Island completed the mandatory update of its Comprehensive Plan, which was approved by the City Council in November of that year. An organization called Futurewise appealed to the Growth Management Hearings Board ("GMHB"), arguing that our plan was not compliant with state law. In this discussion, the city will consider how to respond to the ruling in that case.
While the GMHB ruled against Futurewise on many grounds, they did find for Futurewise in a few important ways. Per the ruling, the city did not:
Identify sufficient land capacity for permanent housing;
Make adequate provisions for existing and projected needs of all economic segments;
Adopt adequate anti-displacement measures; and
Adopt a subarea plan for the light rail transit (LRT) station area.
A summary of this ruling can be found at the Municipal Research and Services Center (MRSC) blog.
The city has appealed this ruling. If the ruling stands, the city has a great deal of work to complete before the June 30, 2026 compliance deadline.
Regardless of the outcome of this hearing, Mercer Island is obligated to plan for an increase in housing units over the next 20 years as follows:
517 units affordable to families making less than 30% of AMI. 339 of these must be Permanent Supportive Housing ("AMI" = King County Area Median Income)
202 units for families making 30-50% of AMI
488 units for families making 50-80% of AMI
4 units for families making 80-100% of AMI
5 units for families making 100-120% of AMI
23 other units
Total: 1,239 units
Per guidance from the Department of Commerce, the planned affordable housing must come in the form of multi-family housing.
The dispute was not over the housing targets, it was about the adequacy, specificity, timing, and realism of the plans for achieving these targets.
AB 6839: Budget Basics and Financial Priorities in 2026
AB 6839 is an informational report presented to the Mercer Island City Council to explain how the City’s budget works, what financial pressures are emerging, and how the City will begin planning its next two-year budget for 2027–2028. No decisions will be made at this meeting; the goal is education and early discussion.
City general fund revenues come primarily from property taxes, sales taxes, business and occupation taxes, and utility taxes. Of these, property taxes are the most significant, and, per state law, property tax revenues on existing land and buildings cannot grow by more than 1% per year without voter approval, which creates challenges when inflation exceeds 4%.
The city is managed prudently and carefully. And in recent years the city financial position has been strengthened by a combination of:
Budget savings from the reduction in staffing and services during the COVID pandemic
Federal government stimulus funds
City-manager-initiated operational changes to increase efficiency.
However, continued inflationary pressures are stretching city resources to the limit. The city will have tough decisions ahead that are necessary to match expenditures to revenues, perhaps including reduction or elimination of important city services.
What is the City budget?
Mercer Island adopts a budget every two years, called a biennial budget. The current budget (2025–2026) totals about $222 million and pays for everyday services like police, fire, parks, utilities, and staff, as well as large infrastructure projects such as roads, buildings, and utility systems.
The budget has two main parts:
Operating budget – pays for day-to-day services and staff.
Capital budget – pays for major projects like buildings, roads, parks, and utility upgrades.
How does the City track its money?
The City does not use one big checking account. Instead, it uses multiple funds, most legally restricted by local or state law to specific purposes. For example:
The General Fund pays for most basic city services.
The Street Fund can only be used for transportation.
Utility funds (water, sewer, stormwater) are paid for by user fees and utility bills and can only be used for those services.
Some money is restricted by local or state law, or by voters, and can only be used for specific purposes, while other money (like general property taxes) is more flexible. This system ensures transparency and prevents funds from being used improperly. In addition, using dedicated funds like the Street Fund and Utility Funds would be unwise, even if doing so was not illegal, given material upgrades and repairs that are necessary for our aging infrastructure.
Financial challenges ahead
The city faces growing financial pressure:
The General Fund is projected to spend more than it brings in starting in 2027, with reserves potentially running out by around 2029 if no changes are made. This is primarily driven by revenues that do not keep up with inflationary pressures on cost of operations,
Similarly, the Youth and Family Services Fund, which funds school counselors are other essential city social services, is expected to face ongoing shortfalls beginning in 2027.
Costs for infrastructure, facilities, vehicles, and equipment are rising faster than past projections.
At the same time, the City is managing many large, long-term needs, including park waterfront repairs, water and sewer upgrades, replacement of City facilities, fire equipment replacement, and required updates to the Comprehensive Plan.
What happens next?
In 2026, staff will begin drafting the 2027–2028 budget, working with the City Council to:
Set priorities;
Balance services with available revenue;
Explore long-term funding solutions; and
Engage the community before final adoption in late 2026.
AB 6839 sets the stage for those conversations and emphasizes the need for careful planning to keep City services sustainable over time.
AB 6840: Next Steps for City Facilities
Proposition 1 was on the ballot in November 2025. Had this been approved, this ballot measure would have authorized the city to issue up to $103.9 million in bonds to fund the design and construction of a new public safety and maintenance building. The proceeds of the bond issuance would have been paid off via property tax over 25 years. Per state law, the proposition required 60% of the voters to vote yes, and the yes votes were only 54.61%. The Council will discuss next steps given the failure of this bond measure.
At the last council meeting, on January 6, 2026, the Council approved a statistically valid survey of community members to help guide our decisions over the next few months.
The status quo is not a viable alternative for the city. The Public Works building, constructed in 1981, has multiple building systems that are failing or in need of repair, lacks adequate work areas and support facilities, and does not meet certain codes or industry standards. Our police officers are working out of temporary trailers that do not meet accreditation standards. The age and condition of the facilities mean there is not sufficient return on investment to justify the significant cost of repairing, remodeling, and bringing up to code these critical buildings.
That said, the voters have spoken. Over the next few months, Council will be discussing possible alternatives.
AB 6842: Community Member of the Year
The Community Member of the Year is an annual tradition of recognizing an individual or group (“honoree”) who is otherwise unrecognized for his/her/their contributions to making the Mercer Island community a great place to live and work. Per city rules of procedure, the honoree shall be selected based on the following criteria:
Significant service accomplishments within the past year;
The quality, scale, and duration of the benefits to the community resulting from the accomplishments;
The amount of time and energy devoted to the community beyond the scope of normal responsibilities;
The nature of the challenges faced and overcome by the honoree; and
The extent of previous recognition received by the honoree (e.g., the nominee is an “unsung hero”).
Following the City Council’s selection of a nominee, staff will invite the nominee to an upcoming City Council meeting for formal recognition.
Who do you think deserves this honor?
Recent honorees include:
2024: Jennifer Goodrich — Recognized for her leadership and volunteer service with the Mercer Island Farmers Market, helping the Market recover and thrive after COVID and strengthening its role as a community gathering space.
2023: Doris and James Cassan and Cantor Bradlee Kurland — Honored for their long-standing and generous service to the Island community. Doris and James Cassan supported local organizations and youth services for decades, and Cantor Kurland was celebrated for his 39 years of community involvement through his work at Herzl-Ner Tamid and contributions to community life. The award for James was presented posthumously.
2022: Lola Deane — Recognized for her lifelong and wide-reaching volunteer contributions, including helping found the Mercer Island Community Fund, supporting youth services, and advocating for local parks such as Dragon Park (later renamed Deane’s Children’s Park).
2021: Avi Schiffman — Honored for developing the widely used nCoV2019.live website as a Mercer Island High School student, which provided accessible, up-to-date COVID-19 data globally and supported public understanding during the pandemic.
2020: Mercer Island Community Fund (MICF) — Recognized as a group award for its community-wide COVID-19 relief efforts, organizing support for local residents and nonprofits facing pandemic-related hardship.