City officials are learning more about Langley’s budget, and where things went astray financially.

During a city council workshop meeting on Aug. 26, Mayor Kennedy Horstman gave a presentation on the city’s current financial state and key takeaways, with assistance from Councilmember Chris Carlson, who delved into expenditures and revenues from the past six years.

As Horstman pointed out, much of the concern surrounds the city’s general fund, which has had the most challenges. She explained that for four of the last six years, the city has planned for a deficit, which means budgeting to spend more than the projected revenue. For the past three years, revenue was inaccurately inflated, and as a result the city has consistently spent more than was made and more than was budgeted.

Councilmember Craig Cyr wondered how Langley planned for a deficit when the city is legally required to pass a balanced budget every year. Horstman responded that the city has been planning to spend revenue plus what was believed to be the starting balance.

“When you couple that with the fact that our revenue was inaccurately projected and we overspent what we budgeted anyway, it’s not a great picture,” she said.

According to a draft spreadsheet of the city’s finances, Carlson showed that in 2018 Langley spent $142,682 more than the revenue that was brought in. There was a stretch between 2019 to 2021 that the city padded its cash reserve, so there was close to $400,000 of net profit spread across those three years.

But then in the following two years, things took a nosedive. In 2022, the city spent approximately $183,000 more than it brought in in revenue, and in 2023, that number was about $265,000. The nest egg created in the last three years was swiftly eaten up.

The intention, Carlson said, is to start a conversation about the big picture trends of the city’s budget.

“We’ve been kind of overly optimistic in projecting our revenue, and we haven’t been keeping to a conservative plan that spends what we’re bringing in and no more than that,” he said.

Councilmember Rhonda Salerno pointed out that American Rescue Plan Act funds also added to the city’s budget.

Horstman said it’s important to base the budget on expenses and revenues, not balances. The city also needs to look at either increasing revenue or reducing service levels, or both. Langley’s highest expense remains employee wages and benefits.

“In theory, if we keep our belt tightened with mission critical purchases only in the general fund, we should end up with about $37,000,” she said. “Now, $37,000 makes me feel better than a negative number, but it doesn’t make me very comfortable.”

The good news, she said, is if spending is kept under control, the city should break even.

As part of an effort to tighten its belt, the city has not spent money on a city administrator, a position which has been vacant since January, or compensated the mayor, who is performing these duties on a mere $12,000 salary. The council acknowledged Horstman’s hard work.

“We have a mayor who is subsidizing our city right now,” Salerno said. “She is doing the role. I know she was very humble about it, but I don’t feel good about this at all. She should be receiving an administrator’s salary.”

The city also hasn’t funded new finance or IT systems to replace outdated software, which would make future financial reports significantly easier to process and access in a modern system.

“I want to point out that if we had a better finance system, we probably would be seeing these trends a lot earlier,” Horstman said, “and I can tell you we could be a whole bunch more efficient with the basic IT services that most people get in their home, that we don’t yet have at the city.”

Possible options to increase revenue include a public safety sales tax which will be on the November ballot, the creation of a transportation benefit district, a levy lid lift and the liquidation of assets and investment of proceeds.

A preliminary budget hearing is planned for Nov. 4.