Lynnwood’s budget deficit larger than expected, more cuts could be ahead

Published 12:11 pm Wednesday, July 22, 2026

EVERETT — The city of Lynnwood is still facing a budget deficit despite a previous announcement that it had eliminated the gap, Mayor George Hurst said in a statement Wednesday.

Hurst said the city’s deficit is more significant than previously reported, citing “longstanding deficiencies in financial systems and processes.”

The exact amount of the deficit is not yet clear, city spokesperson Nathan MacDonald told The Herald on Wednesday.

At Hurst’s State of the City address in March, he said the city had successfully closed its budget gap, which was projected in 2025 to be $25 million by the end of 2026.

“Given the financial information available to our leadership at the time, we seemed to be on the path to eliminate the deficit for 2026,” Hurst said Wednesday.

In 2025, then Mayor Christine Frizzell said the deficit was largely caused by lower-than-expected revenues from sales tax, development services charges and red-light camera fines. Since then, the city has made cuts, increased taxes and fees, and changed its reserve policy to fill the gap.

On Tuesday, administration notified the City Council’s finance committee of the larger-than-expected deficit. According to data provided in the meeting packet, expenses outpaced revenues by about $1.1 million in the first quarter of 2026. According to the packet, factors contributing to the gap include inflation and the Iran war, which has caused higher gas prices and lower spending.

For the first half of 2026, the city collected only 43% of budgeted sales taxes for the year, similar to when the deficit was announced last year.

Hurst said he has instructed city directors to take a “critical look” at their budgets to find further expenditure reductions while maintaining critical services. The city is also reviewing its contracts and possible redundancies and revising internal processes to “provide more clarity and certainty.”

As the city’s previous cuts and tax increases settle in, the city should see improvements in its financial outlook, Hurst said.

“These shifts will take time to reap those benefits, and we are already seeing improvements,” he said.

Hurst said he will provide the finance committee with regular updates on the deficit. On Sept. 8, the entire City Council will meet for a budget summit, where administration will provide the most up-to-date information, Hurst said.

Jenna Peterson: 425-339-3486; jenna.peterson@heraldnet.com; X: @jennarpetersonn.