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Committee warned reserves could meet ending balance in 2031–2032; levy options and one‑time funds discussed
Summary
Committee members reviewed a six‑year forecast showing reserves declining toward the city’s minimum by 2031–2032, discussed use of one‑time funds and personnel cost drivers, and received legal guidance that a levy must state a first‑year rate rather than staged year‑to‑year increases.
City Finance staff presented a six‑year forecast and a set of budget challenge handouts that showed Lake Forest Park’s unallocated funds shrinking and the forecast meeting the city’s reserve target around the 2031–2032 biennium.
Finance Director Anne Vaughn told the Budget & Finance Committee the projection assumes current adopted budgets and noted several clarifying factors: the Guild collective bargaining agreement (CBA) costs exceeded earlier estimates, Teamsters negotiations remain unresolved and therefore cost‑unknown, and the city expects multiple police retirements in the 2025–2026 biennium that affect one‑time payout liabilities. Vaughn summarized the effect: using one‑time funds to cover recurring operating costs leaves the city vulnerable later in the forecast.
Committee members examined staff calculations that removed one‑time revenues from the general‑fund picture. Using figures in the back of the adopted budget, a committee member presented an adjusted general‑fund view in which revenue was $25,505,000 and expenditures $26,388,000 for the biennium — a gap consistent with staff’s operating shortfall assessment. That member said removing transfers to internal service funds and one‑time funds reduced the usable cash balance to about $23,000,600 — a figure the presenter used to illustrate the city’s reliance on one‑time monies and transfers to balance ongoing functions.
Vaughn and council members discussed retirement payout mechanics. Vaughn explained police retirement payouts differ from unrepresented employees: police receive a percentage payout for accrued sick leave. She told the committee, “Police are different. They get a portion of 50% of their sick time where unrepresented employee gets 0% of their sick time paid out,” and that long‑tenured retirements can create large one‑time costs.
The committee discussed possible revenue tools. Staff circulated guidance from MRSC and relevant RCW sections about levies: staff advised that a levy must state its first‑year rate and that you cannot simply present a ballot measure that says “10¢ first year, 20¢ second year” without specifying the year‑one rate and allowable escalation (for example, CPI escalation provisions). Vaughn said cities commonly present a multiyear temporary levy with a defined first‑year rate and built‑in CPI or percentage adjustments and then seek voter renewal at the end of the term.
Deputy Mayor Fieratani previously provided council a draft list of priorities that could be funded by a levy (public safety and parks maintenance were included in the materials); staff emphasized council must reach consensus on scope and rates before public messaging. Staff and council members agreed next steps include clarifying the levy term, the precise first‑year rate to present to voters, and what services the levy would fund.
No levy proposal was adopted at the meeting; members directed staff to return with clarified options and more granular lists of the functions to be funded and the budget shortfall analysis that ties the levy request to service levels.
Less critical detail: staff flagged other cost pressures such as jail costs, solid‑waste contract renegotiation expected next year, and the City’s previous reliance on one‑time CARES/other funds to smooth operating results.
