Edmonds’ Temporary Utility-Tax Increase Remains Central to the City’s Budget Gap

Edmonds is relying on a temporary increase in utility taxes to support its 2026 general-fund budget while officials continue addressing a structural deficit.

The city’s adopted 2025-26 mid-biennium budget assumes $10.852 million in utility-tax revenue for 2026—about $3.26 million more than the earlier assumption. That increase reflects a temporary 10-percentage-point tax increase, from 10% to 20% on specified utility services. It is not a permanent decision to keep the rate at 20%.

What changed for utility customers

The higher tax applies to water, sewer and stormwater services. It does not apply to solid waste. When the increase was approved in December 2025, local and regional reporting estimated that the average household’s bimonthly utility bill would rise by about $26.

The change is a tax on utility services, not an increase in the underlying water, sewer or stormwater utility rates. The added money goes into the city’s broader financial plan rather than being directly earmarked for one department.

How the 2026 budget uses the money

Edmonds’ adopted budget pairs the additional utility-tax revenue with several other actions. It lowers the 2026 retail-sales-tax assumption by about $1.3 million, includes roughly $1.57 million in departmental reductions and accounts for about $3.3 million in interfund-loan principal and interest.

The general fund supports a wide range of city operations, including police, parks and recreation, public works, facilities maintenance, community services, development services and other functions. The adopted budget lists reductions across several departments and service areas, including police, parks, community services, public works and facilities.

That means the utility tax supports the overall general-fund plan, but the city has not presented it as money dedicated to a single department or as a stand-alone solution to the deficit.

Longer-range projections still show pressure

City budget-retreat materials dated May 30, 2026, use a planning assumption that the 20% utility-tax rate applies throughout 2026 and during the first six months of 2027. The same outlook projects utility-tax revenue of $10.852 million in 2026, $9.714 million in 2027 and $8.531 million in 2028.

Those figures are projections under the city’s stated assumptions, not final future budget actions. The decline after the temporary period reflects the modeled end of the higher-rate period; it does not show that the city has voted to extend the 20% tax.

The outlook also continues to show general-fund deficits even while the temporary tax assumption is in place. In practical terms, the higher rate buys time but does not remove the need for additional revenue, spending reductions or both.

What comes next

The May 30 planning schedule identified Aug. 3 and Aug. 11, 2026, for council pre-budget and mid-year presentations by department directors, followed by an Aug. 12 study session. Those dates are scheduled budget discussions, not proof of a final change to the utility-tax rate or a completed replacement-revenue decision.

The city’s current budget and property-tax materials describe the problem as structural: revenue has not kept pace with costs. The city says it has cut staff and programs, deferred repairs, used reserves and borrowed internally while pursuing additional revenue. The page also identifies a proposed $14.5 million property-tax levy measure and approximately $5 million in non-property-tax revenue as part of the broader strategy. Those measures are separate from the temporary utility-tax assumption.

For residents, the immediate consequence is a higher tax component on affected water, sewer and stormwater bills. For the city, the larger question is whether officials can use the temporary revenue, spending reductions and other revenue measures to build a durable plan for police, parks, public works and other general-fund services before the higher tax period ends.

Sources

• City of Edmonds, 2025-26 Budget Modifications — Adopted Mid-Biennium Budget
• City of Edmonds, 2026 Budget Retreat Slides, May 30, 2026
• City of Edmonds, Budget & Property Tax Levy
• The Daily Herald, Edmonds approves 18-month utility tax increase