Government finance and you: Part 9 — What local governments are up against in 2026

My Neighborhood News Group (MNNG) is publishing a series of stories on how local governments are funded and the financial challenges facing both elected officials and residents. You can read Part 1: Introduction here. Part 2: Where’s the money here. Part 3: Property taxes here. Part 4: Fees and taxes here. Part 5: Federal and state grants here. Part 6: The difference between wants and needs here. Part 7: The color of money here. Part 8: Cities should function more like a business here.

As shown in past stories in this series, local governments have been heading toward a financial cliff for 20 years. With the loss of road funds and property tax funds, local governments add fees, fines and taxes where they can to make up the difference. But it is never enough to cover those large, consistent, reliable, predictable losses.

If governments were financially stressed in 2017, the year 2025 was much, much worse. 

COVID, supply chain problems, inflation and the great resignation contributed to double-digit cost increases. It seems like it happened overnight. 

In 2020, COVID hit, which led to supply chain issues worldwide. The cost of oil, steel, materials and minerals all increased.

“The City has seen a 47% increase in asphalt costs, while steel and gypsum prices have surged by more than 50% during the same period,” said Natasha Ryan, City of Edmonds spokesperson. 

Then there was the “great resignation.” Younger baby boomers with 30-40 years’ experience as teachers, engineers, high-level managers, police officers, nurses and doctors decided to retire. 

Between 2020-2025, millions of boomers (with their pensions, mostly paid-off homes and a solid stock market helping make the decision) retired. In the third quarter of 2020, about 3.2 million more baby boomers retired compared to the previous year, bringing the total retired boomers to about 28.6 million.

This was a record increase for a single year. In 2025, 11,400 Americans turned 65 every day. With medical benefits a driving force for staying in the workplace, 65 seemed like a good time to switch from a costly company plan to government-funded Medicare.

This profoundly affected the workforce. 

Suddenly a lot of jobs were vacant, including government jobs. From teachers to public health nurses to police officers to land-use experts to judges, those veteran employees were all gone – practically overnight.

In Mountlake Terrace, Parks and Property Management Superintendent, Ken Courtmanch, retired in May 2024 after nearly 40 years of service to the city. His first job was groundskeeper for the Ballinger Lake Golf Course in 1986.

In Lynnwood, another longtime (25 years), valuable employee was Development and Businesses Services Director David Kleitsch who retired in August 2025. Kleitsch played an outsized role in developing Lynnwood into the economic powerhouse it is today.

These people provided your government with decades of institutional knowledge. When they leave, it is a brain drain. 

It’s not just the leaders. It’s the everyday workers. 

Your child’s fifth-grade teacher, the school nurse, the permitting tech familiar with local laws and loopholes, human resources staff who knew Washington State law, the city maintenance worker or city traffic engineer able to identify the trouble spots on city streets. The land use expert who was probably there during the last 20 floods (because maybe they started as a maintenance tech back in the day…).

These people cannot be replaced overnight or by artificial intelligence.  

Local governments looked around to fill those really important positions and found few qualified people who wanted to work in government for a government salary. Even if they did, government complexity is a big learning curve. In both the private sector and government, high turnover is expensive.

Mountlake Terrace City Manager Jeff Niten said hiring and keeping staff is a priority, but it’s hard to find and hire good people.

“Public service is a mindset. These days it’s challenging. People seem more comfortable taking their frustration out on us,” Niten said. 

The Millennial who might have gone into civil engineering chose tech instead because it paid more or seemed more future-proof. 

People actually interested and qualified for government jobs were in high demand. The result? Local governments compete with each other to hire qualified staff. 

“As demand for services grows and inflation impacts wages and benefits, the cost of recruiting and retaining qualified staff continues to rise,” said Ryan, the City of Edmonds spokesperson. “This challenge is compounded by a competitive labor market, particularly for specialized positions such as engineers, IT professionals, and law enforcement. Many of these roles are seeing fewer qualified applicants, and the private sector often offers significantly higher salaries, making it more difficult to attract younger workers to public service careers,” she added.

Case in point: In early December, the City of Edmonds lost Jeanie McConnell, a 31-year City of Edmonds engineering program employee. 

She retired after she wrapped up a years-long code revision project, a challenging task even for a veteran. No one can replace McConnell and her deep deep familiarity and knowledge, and it certainly won’t happen overnight. 

Every local government we spoke to said employees who provide services are the single biggest cost increase. Police officers are the biggest slices of pie in a typical budget. 

All employees get health care. And, surprise, health care is the second-biggest general fund increase.  

“Why don’t city workers give up their COLA (cost of living adjustment)? These are tough times,” asked an Edmonds resident during public comment.

These people work just like private sector people do, and no one in the private sector voluntarily gives up a bonus or raise to help the company. These workers also buy things and contribute to sales tax, just like everyone else. 

“Wages continue to rise and we want to retain and attract high-quality employees. We need to pay them what the market demands,”  a City of Lynnwood spokesperson said. 

“We have seen double digit increases to liability insurance and medical insurance premiums as well so it stands to reason that will continue to increase in the future.”

How do smaller cities compete for police officers when the King County Sheriff’s Department has a $40,000 hiring bonus? The answer is, they don’t.

The good news? According to the Association of Washington Cities, the retirement wave is finally starting to flatten out going into 2026.

Then there’s inflation

“Cities are greatly impacted by inflation, from wages/union increases, risk and liability insurance increases, health insurance premium increases, vehicles and equipment, professional services increases, and general supply costs,” a City of Lynnwood spokesperson said. 

“Our ability to raise revenues each year does not match the pace of inflation,” he said.

“Taking a look and comprehending the impact of inflation,” Edmonds City Councilmember Niel Tibbott said during a Nov. 24 City Council meeting. “It’s been devastating.”

In late November, My Lynnwood News reporter Ashley Nash shared the City of Lynnwood’s deep dive on the budget crunch in a piece titled “How did we get here?”. 

In black-and-white balance sheets, the story details what is coming in and going out. It shows the current $8 million budget deficit that must be addressed before Dec. 31, 2025.  Cities and counties around Washington state indicate the same data. 

It is inflation. It is cost. It is competition. 

This recent story about an upgraded wastewater treatment plant in Lynnwood is a textbook case of what’s happened between 2020 and now — aging infrastructure, increasing population, increasing costs, fewer grants and more rules. 

Back to our personal economy: You have little kids at home and want to return to work, so you are looking for high-quality day care. Or maybe you are trying to find an assisted living home for aging parents. Both options are so expensive! 

Experienced teachers and caregivers can’t live on a small salary. They are paid more, so you pay more. Alternatively, you can go with less-experienced caregivers. But inexperience has its own drawbacks. What if something happens and the person caring for your loved one doesn’t know what to do?  

These are your kids and parents we are talking about. This is what local governments face when hiring.

State help?

The state can’t help offset these costs. The State of Washington is in a financial crisis as well. In late October, the state announced new financial shortfalls in the state unemployment fund that might trigger another new tax. 

In the upcoming short legislative session, budget writers are clear: Don’t ask for anything new. They can’t even fund what they are legally obligated to fund. 

Local governments are feeling the pinch now more than ever. In addition to a 25-year financial problem — brought on by I-695 and I-747 — state obligations, rising costs, inflation and once-in-a-generation wave of retirements and endless litigation has put local governments in the financial crosshairs. 

There’s no secret pot of money to dip into. So now comes the hard part. If there isn’t new money coming in, governments have to do things differently to manage the money they have. And virtually no one agrees on what that should look like.

Next: Following the money – where does it come from and where does it go?