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Kenmore finance director: first quarter shows expected seasonality, $3 million biennium deficit and healthy reserves
Summary
Finance Director Melinda Merrill told the council the city is $198,000 in the red for Q1 and the 2025–26 biennium started with a planned roughly $3 million deficit due to special projects and reserve use; the city’s fund balance remains about $9.9 million.
Kenmore’s finance director told the City Council Monday that first‑quarter results are consistent with the city’s budget timing, with revenues and expenditures showing seasonal patterns and a planned use of reserves for special projects.
Melinda Merrill said the city was “3 months into the biennium, which is at at 12.5 of the budget spent,” and that Q1 presented roughly $198,000 in the red while the biennium began with an estimated $3 million gap reflected in the adopted budget. Merrill explained that the biennial deficit reflects one‑time choices the council approved, including a $2 million special‑projects line largely funded by ARPA reserves and a $650,000 transfer set aside for the Lake Pointe project.
Why it matters: the report is an early fiscal check‑in showing the city’s reserves, cash flow and where cyclical revenues fall in the year. Merrill said property‑tax collections are seasonal and a large property‑tax payment in April improves the position; the general fund’s actual balance through March 31 was about $9.9 million against a target requirement of roughly $3.8 million.
Merrill walked through other fund conditions: the street fund, impact fee receipts and the new CAPE (parking enforcement) fund noted rising revenues after enforcement began 24‑hour operations; the public works operations center shows large bond proceeds waiting to be spent, and surface‑water fees track timing of property‑tax receipts. Merrill told the council interest income remained strong (around 4%) and development permit revenues were ahead of expectations.
Council members asked clarifying questions about LGIP (Local Government Investment Pool) liquidity and the relationship between heights/density discussions and potential revenue. Merrill said the city would continue to monitor cash needs and take advantage of higher short‑term yields while keeping liquidity for operations.
No budget amendment was adopted; the report was informational and staff will return with periodic financial updates and follow‑up information requested by council members.
