EVERETT – Planes and potties appear to be two of the biggest factors for Everett elected officials formulating the 2027 budget which involves an estimated deficit just shy of $10 million. The city of Everett released its 2027 revenue forecast which will inform the annual budget, expected to be passed in October. Extra Boeing jets built at the Everett North Line as well as an increase in a city water/sewer tax passed earlier this year are expected to pull in more coin for the city.
Starting with the jet planes, Chris Godwin, Everett Finance Director, expects an increase in the city’s business and occupation–B&O tax–to haul in $3 million more in 2027 than it provided this year.
Examining they city’s chunk of B&O tax, Godwin reported, “The forecast considered continued activity in construction and manufacturing, along with the world airline market conditions. Production started on the Boeing North Line, which will manufacture 737 MAX, and this will certainly change our B&O revenues in the future.” For the tabulation, Godwin says, “We are forecasting growth in 2027 over 2026 by the amount of about $3 million or 15%. Based on some of the (previous) forecasting we’ve seen, we expected that ‘26 would fall short of (B&O) expectations by $1 million or so, but that it would bounce back in 2027.”
For Everett, B&O tax collection dropped by $1.7 million during the course of 2026 from $22.3 million projected to start the year and revised downward mid-way through the year to $20.6 million, but is now projected for 2027 to hit $23.6 million.
Everett’s general fund will get the biggest projected boost from two revenue streams known as PILOT, payment in lieu of tax, which are categorized within the budget process as ‘Other taxes’, or for accounting purposes, fees.
The city PILOT on golfers at the city’s two municipal-owned courses and on a water/sewer utility tax are expected to haul in the biggest increases to Everett coffers next year. The 2026 revenue forecast for the city’s ‘other taxes’ was penciled in at $11.6 million but so much money was coming in to the city treasury during the first half of 2026, it was revised upward to $17.2 million and is now projected to total $23.4 million in 2027.
“The two largest revenue streams in our ‘other taxes’ are Payments In Lieu Of Taxation, and we have two PILOTS that are relevant,” Godwin says to the 2027 revenue forecast. “One is golf (at city owned courses), and then one is in utilities. In Everett, we do have a PILOT on golf revenues in the amount of about 5%. 2027 marks the first year that we will see those golf PILOT revenues coming into the general fund, certainly in quite some time. This is because, heretofore, we have been leaving it in the Parks Department to pay for some debt service on previously issued bonds. Now that those bonds have been paid down, we’re going to start remitting that revenue to the general government fund for inclusion in the budget process.” That shift of fees paid by golfers at Legion Memorial and Walter E. Hall golf courses comes at a time when the city is whittling down what is now projected to be an almost $10 million budget deficit for 2027.
Add that golf money to the general fund with the water/sewer tax the Everett City Council approved in June that raised the rate from 6% percent to 12%, and Godwin says, “It is predominantly the driver that you see from 2025 actuals of $10 million to $17 million in 26 to $23 million in ’27,” more than doubling in size for that revenue category.
Everett’s 2027 General Government Revenue Forecast checks in at $188 million, 2.75% revenue growth. Property tax accounts for 23% of that chunk, sales tax 22.5%, B&O tax, 12.5%, utility taxes 8.2%, and ‘other taxes’ 12.5%.
Property tax in 2027 is projected at $43.2 million, sales tax projected at $42.3 million, B&O tax $23.6, ‘other taxes’ $23.4, and utility taxes $15.4. The city would have an ending fund balance of $43 million, but these numbers, according to Godwin, do not include non-discretionary and discretionary increases in the budget that fall outside of the baseline. An example of that, he cited in his revenue projection, is the city’s cost obligations for jail fees to Snohomish County and indigent defense court cases mandated by the state.
Property tax in 2027 is only expected to rise by about $700,000 from 2026 to 2027. Sales tax in 2027 is expected to jump $1.8 million.
Sales tax, Godwin identified, “Is driven largely by activity in food service and accommodation, wholesale, and healthcare, while the largest drivers of our sales tax are traditionally retail and construction. Both of those sectors are forecasted to be relatively flat from ‘26 to ‘27.”
Godwin noted at the outset of his report that oil prices and inflation are two key factors impacting the 2027 revenue forecast and ultimately the annual budget. “At a local level, we do continue to track inflation and regional job growth. Inflation was higher in 2025 than we anticipated and we are expecting about 4.5% inflation in 2026 again, but all the forecasts at this point indicate that that’s going to start to recede in 2027, back to something more in line with what we’ve seen historically something below 3%. All of the cumulative impact of the inflation…that’s still in our costs. It’s just going to start growing at a slower rate, hopefully.”
Inflation’s persistent impact continues to affect local employment stats, Godwin detailed. “Regional job growth the state has been revising (in) its job and employment data starting in March and looking at what the state has been showing and what we’ve been seeing, we’re expecting that the regional job growth is going to be relatively flat in 2027 over 2026.”
The finance director said it’s a condition that forecasters, unfortunately, have gotten used to confronting, “All that is to say that the that the economic forecast for the region maintains as uncertain as it has been for the last two, five, seven years. So business as usual.”
Inflation has been driving up the city’s sales tax collection, Godwin says, calling it, “A double-edged sword for municipal governments, because while our costs are directly impacted and go up, the price point that consumers pay when they buy things–we also get a slightly higher amount of revenue as a result of inflation–driving those costs up.”
For Everett, “Sales tax is our second largest source of general government revenue,” Godwin listed but noted that only a small fraction of sales tax actually remains in Everett. “The current rate is 9.9%. It is important to remember that most of the 9.9% sales tax that exists in Everett, does not come to the city of Everett. We only get 0.85% of that. The largest chunk goes to the state (6.5%), there’s about 1.4% that goes to Sound Transit, and then the remainder goes to the (Snohomish) county for various services, mental health, criminal justice, that kind of stuff.”
To sum up the projected revenue forecast, Godwin accounted, “We’re starting 2027 with a beginning fund balance of $50.2 million. We’re anticipated to bring in $187.8 million, and our baseline expenses are projected to be $195 million. That leaves us in a place of an ending fund balance of $43 million. We do have a 20% revenue requirement, which is at $37.6 million right now, and that leaves us with $5.4 million above that 20% threshold.
“However, this is only reflective of baseline costs, and there is still a component of additional costs that are coming to the city that aren’t a fat portion of the baseline, but that are inherently non-discretionary. This is going to be things like the jail fees or the fact that our indigent defense costs have to go up significantly because of caseload standards that were passed by the state, and so those and other costs will be reflected in our 2027 budget proposal that the mayor’s going to introduced next month.”
Mayor Cassie Franklin shed light on those additional costs the city is anticipating for courts and jails, saying, “We use a lot of historic data on arrests. We use past history to dictate kind of what we project to be our usage (of the jail for cases originating in city court). But then, the fees themselves are dictated by the county. So they have presented us the new fee rates, although I have joined other mayors in advocating to the County, the jail rates went up exponentially this year. The cost of just simply booking somebody into jail went up, like 130 percent, which is pretty extraordinary. Jail rates went up pretty high a few years back, and because of that, the county agreed to do that over several years, as opposed to all at once.”
Franklin says, “Right now, what’s in Executive (Dave) Somer’s budget is a one-time, pretty significant increase. So I have a letter circulating with all the other mayors in Snohomish County, that will be sent to the County Council for them to please consider first, maybe, perhaps reducing those rates, but if (they) can’t reduce (them), at least staggering them in over a few years to help the burden that is on cities as we’re all doing our budgets right now.”
An Everett city revenue workshop is already scheduled for September 30. Council members and the finance team will evaluate finalized revenue forecasts and expense parameters.
During the first week of October, Franklin’s proposed budget will be unveiled. In late October, the comprehensive proposed 2027 budget document is made public for resident review. November 4, 10, and 18, the City Council hosts a series of official public hearings to gather community feedback. Final budget adoption is expected during on or around December 2.