Chehalis council commits fund balances, amends budget and reassigns two RCO grants to Ecology; finance report shows 2024 carry-forwards

The Chehalis City Council on March 10 approved an ordinance establishing year-end fund balance designations required by the Washington State Auditor's BARS manual and passed a first reading of a budget amendment that revises multiple funds by a combined $3,830,222.

Cassie, the city's finance director, told the council the general fund closed 2024 with about $2.1 million, of which roughly $1.9 million is unrestricted. "That remaining $1,900,000 is, unrestricted. And this is where we meet with the budget committee and we talk to them about what we wanna do with that fund balance," Cassie said, explaining the difference among nonspendable, restricted, committed and unassigned balances.

Cassie said the budget committee recommended keeping a 10% operating reserve for the general fund and leaving approximately $500,000 of excess fund balance unassigned to help stabilize the 2025 ending balance. The council voted to adopt the fund-balance designations on a single reading.

On the budget amendment, Cassie said much of the change reflects carry-forward dollars for projects that were budgeted in 2024 but not completed; carry-forward items on the amendment total about $3.2 million. New items include grant revenues for transportation and airport projects, a previously discussed FAA-funded hydrogen fueling grant at the airport, and $500,000 in loan proceeds for water capital. "In total, revenue is increasing 4,700,000 and expenditures $8,500,000," she said, and councilors were told the net amendment amount shown in the ordinance text is $3,830,222.

Councilors approved the budget amendment on its first reading and directed staff to provide a corrected document for the second reading that fixes several header dates and clarifies figures.

On routine business the council approved the consent calendar, which the agenda packet listed as including vouchers and transfers and several project closeouts and appointments. The packet showed an accounts-payable amount of $323,363.43 for vouchers; the payroll figure in the printed packet appears garbled in the transcript and was not clearly readable in the meeting audio.

The council also approved reassignment of two Recreation and Conservation Office (RCO) grants to the Washington State Department of Ecology, authorizing the city manager to sign new contract documents. The grants are identified in the agenda as RCO grant numbers 23-1481 (derelict wastewater treatment plant demolition environmental design) and 23-1221 (flood strategy investment plan). Staff said the program management is transferring from RCO to Ecology because of administrative capacity at the state level; councilors were told the projects' deliverables will not change.

In a separate presentation, Cassie reviewed the city's year-end financials for 2024. She said the city ended the year with roughly $35 million in cash and invested balances—about $8 million more than the year-end projection used in the 2024 budget—primarily because capital projects and grants did not spend on the 2024 schedule and are carrying forward into 2025. On the operating side, Cassie said the city showed roughly $8 million in favorable variances in operating expenditures (largely due to unfilled positions and delayed projects) and about $1.1 million shortfall in other fund resources tied to timing of grant receipts.

Councilors also heard operational updates: the water utility will begin hydrant flushing in about a week (expected to take four to six weeks), and the manager introduced a new capital improvement project manager, Sheena, hired last month. No council action was required on those items.

All formal votes recorded during the meeting were taken by voice; motions passed by voice vote with no roll-call tallies provided in the transcript."