SEQUIM — Sequim’s proposed $51.6 million budget for 2026 includes utility rate increases, a new cap on municipal funding and millions of dollars for capital projects.
City Manager Matt Huish wrote in the proposed budget book that it’s a balanced budget that meets the city’s long-term needs while considering current economic realities and financial trends.
“This budget has undergone substantial internal review due to a range of variables that could have an impact, such as federal interest rates, inflation, tariffs, and recession possibilities,” he wrote.
“I also appreciate that this budget includes appropriations to maintain staffing and deliver vital municipal services, while addressing City Council goals and community needs.”
City council members will hold a public hearing on the proposed budget, proposed rates and fees and a proposed property tax increase of 1 percent at 6 p.m. Nov. 10. A final hearing and tentative adoption will be set for Nov. 24.
Utility proposals
Part of the city’s anticipated revenues for next year could include higher utility rates and general facility charges (GFCs).
In the summer, a majority of council members agreed to follow a utility rate study and staff’s recommendation to increase rates each year through 2030 with water rates going up by 5.5 percent, sewer rates by 4.5 percent and GFCs, a one-time charge for new developments to connect to city utilities, by 3 percent.
City staff previously estimated that most households using up to 500 cubic feet of water and sewer services will see about a $5 increase per month starting in 2026, if the rates are approved.
For a new single-family development to connect into the city’s water and sewer systems in 2026, a GFC would cost about $473 more than in 2025.
For the changes to go in effect for 2026, council members must approve the proposed rates and fees as well as the budget for next year.
A low-income utility discount remains available for those who qualify in order to cut base charges in half. Those who receive a senior discount on their property taxes or disability taxes may already qualify, along with those living at 150 percent of the federal poverty level.
For more information, visit sequimwa.gov/440/Low-Income-Utility-Discount.
Staff wrote in the 2026 budget book that the utility increases “reflect the actual costs of providing that municipal service,” “remain grounded in quantitative data” and “avoid major periodic cost increases.”
Utility revenue also helps pay down utility debt service and support major repair, replacement and expansion projects, staff said.
Municipal funding
Council members also agreed in the summer to create and follow a new policy decision to limit Sequim’s municipal funding program to 1.5 percent of the city’s general fund. This year, they approved just less than half the amount of funding requests that were made.
The largest sum will tentatively go to the Sequim Health and Housing Collaborative (SHHC) for $120,000 each year for two years to expand access to shelter options while creating pathways to housing, increasing access to basic needs like food and healthcare, expanding outreach services and establishing a dedicated service hub.
General budget
Staff said the 2026 proposed budget is about 11 percent less than this year’s budget. Next year’s proposed budget in part includes $13.2 million for staffing, $17.4 million for capital improvement projects and $7 million in transfers.
Proposed transfers from the city’s general fund worth $1.2 million include $200,000 to help pay down construction debt on the civic center, $705,000 for street operations, $285,000 for equipment reserves and $46,000 for arts and cultural activities.
Sue Hagener, the city’s finance director, said in a Sept. 22 budget presentation that next year’s sales tax revenue is anticipated to come in at $4.7 million, about 4 percent more than this year’s projected total.
Staffing levels will increase by 1.1 full-time-equivalent employees in 2026 and go up to 101.60 FTEs.
Hagener said salaries and benefits will be $13.2 million, and 5 percent more than this year due to new contracts with three employee bargaining unit contracts, along with cost of living, market adjustments and comparative data for non-represented staff.
Staffing reductions include the retirement of a 0.38 public works continuity adviser for the Simdars Interchange project and an FTE being reduced to part time (0.2). The city tentatively will add an Asset Analyst 1 and two street seasonal employees (0.66) in 2026.
Capital projects
Next year’s capital projects list proposed for $17.4 million is less than this year’s $24.6 million with some sizable projects fully or partially funded.
Sequim’s 2026-2031 Capital Improvement Plan includes 133 projects worth $190 million with more than half (51 percent, or $96 million) unfunded, staff said.
They wrote that many projects getting completed will depend on grants, low-interest loans and/or bonds.
Staff said operational expenses also are projected to increase by 3 percent due to customary incremental adjustments in salaries and benefits, and costs for goods and services.
• For the budgeted $487,000 in parks projects, $410,000 is proposed for new playground equipment at Margaret Kirner Park on South Fourth Avenue. Staff said the playground equipment will have a universally accessible inclusive design with Americans with Disabilities Act (ADA) compliant fall surfaces, an accessible asphalt walking loop, parking improvements, an upgraded restroom and more.
• They’ve also budgeted $77,000 to develop a master plan for the 16.6-acre McCord Park at 764 W. Hendrickson Road. Both are listed as multi-year projects.
• For $1.84 million, city staff plan to start construction on the $4.83 million, multi-year Silberhorn Deep Well No. 4 that will add a new water supply well and control center to increase water capacity.
• West Sequim Bay Corridor improvements for water ($469,000) and sewer ($1.74 million) are anticipated to begin over multiple years to expand services on a portion of the road to anticipated residential developments and Pacific Northwest National Laboratory.
Other sewer projects include $309,000 for rehabilitation of the Doe Run Lift Station.
• City staff are continuing work on sewer and water repairs at the Flaura’s Acres development ($6.3 million) largely through grants to replace the septic system and to connect to the city’s utilities.
• Through a grant worth $949,000, staff will look to improve multiple traffic and pedestrian signals by installing flashing yellow arrows signal phasing, high-visibility crosswalk markings, signing and rectangular rapid flashing beacons at multiple locations, along with other safety measures.
• Staff propose designing and constructing a multi-use path ($546,000 via a grant) on Keeler Road between West Sequim Bay Road and the Olympic Discovery Trail. They also plan to conduct a feasibility study and design of a sidewalk and multi-use trail along East Washington Street from Blake Avenue to Simdars Road for $435,000 via a grant.
• The 2026 budget also includes $309,000 for citywide pavement rehabilitation.
• $984,000 is budgeted but not funded to improve portions of Third Avenue as a “complete street” with hot mix asphalt, bike lanes, sidewalk, traffic-calming measures, landscaping, lighting and drainage improvements.
For more about the proposed 2026 budget, visit sequimwa.gov/1327/2026-Proposed-Budget.
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Matthew Nash is a reporter with the Olympic Peninsula News Group, which is composed of Sound Publishing newspapers Peninsula Daily News, Sequim Gazette and Forks Forum. He can be reached by email at matthew.nash@sequimgazette.com.
