The city of Langley’s finances are currently in a precarious state.

During a city council meeting this week, Mayor Kennedy Horstman said the city’s financial position is “not fine” and that there is a likelihood an interfund loan will be needed prior to the end of the first quarter, which is approaching soon.

“We are not in a panic mode, but our finances are necessarily being closely monitored,” Horstman said.

Her comments pertained exclusively to the city’s general fund, which is used for government services such as the mayor’s salary and the council’s stipends and business operations like finance, community planning, police and to some degree, public works.

Horstman explained that the general fund balance was 66% of what was needed for the first quarter of 2023. Expenditures in 2023 exceeded budgeted revenue by $194,000 and actual expenditures were $264,000 greater than revenue.

“Speaking to our current situation, we started 2024 with the general fund underfunded by $460,000 and with a starting balance of $91,000,” she said.

At the 2023 staffing level, the city spent roughly $83,000 per month on payroll and benefits alone.

The mayor said the city is limiting general fund expenditures to “mission critical” items only, and work is being delayed until there are enough funds to cover it. She anticipates that April revenues will bring Langley to a significantly better position.

“However, we have some serious work ahead of us to establish a healthy realistic budget and to make up for significant overspending,” Horstman said, adding that she and Finance Director Wanda Grone are working with the city’s Finance and Personnel Legislative Commission to establish a budgeting process that does not rely on historical and miscalculated budgets.

Officials will attempt to get a healthy financial statement this year where the city spends less than or equal to what it takes in, but Horstman acknowledged it may take more than a single year’s budget to build back up the reserves required, and she anticipates it’s going to require some tough decisions.

The city has had significant turnover recently, with the resignation of City Administrator Mark Rentfrow in January and the election of a new mayor.

In an email to The Record, Horstman said she intends to hire a new clerk-administrator.

“My first several months as mayor have only strengthened my conviction that the city needs an administrator,” she said. “I have delayed hiring to ensure the city is on firm financial footing complete with a healthy and transparent budget.”

Horstman has been taking on the responsibilities of the administrator in the interim, without additional compensation. The mayor receives an annual salary of $12,000.

This is also not the first signs of financial turmoil that the city has experienced. In May 2023, the finance director announced her resignation, highlighting issues such as outdated financial management software, a lack of separation of duties and frequent errors in billing, among other things. A week later, she decided not to quit. Scott Chaplin, who was then the mayor of Langley, granted Grone the authority to hire an accounting clerk.

When asked by The Record about how the city’s finances got into the current position, Horstman said she saw evidence of multiple factors compounded over time: “a flawed, legacy finance system, staff turnover resulting in institutional knowledge loss and past lack of executive fiscal oversight, discipline and transparency.”