Lynnwood mayor and finance director outline $2025-26 shortfall; council urged to weigh cuts and revenue options

City of Lynnwood leaders told the council Sept. 15 that the city faces a substantial budget gap for the 2025–26 biennium driven by lower-than-expected revenues and a beginning fund balance shortfall. Mayor Christine Frizzell and Finance Director Meyer outlined actions already taken, remaining shortfalls and next steps for council consideration.

"Our 20 25, 20 26 budget was prepared last year and was passed by council in November," Mayor Frizzell said, and noted that actual revenues and the beginning fund balance did not meet earlier estimates. Frizzell described a suite of cost-saving measures already enacted, including a directive to departments to reduce general-fund operating expenses (initially 3%, later increased to a 10% target overall), holding vacancies where possible, reduced seasonal staffing, restricted overtime, professional-service reductions, travel and training cuts, a mayor and director furlough program, and workforce reductions that included nine layoffs last week.

Director Meyer provided a financial summary and timeline. "The beginning fund balance for 2025 was 4,200,000.0 below our estimate," Meyer said. Meyer explained the adopted biennial revenue plan (about $155 million) now compares to a revised current estimate of roughly $134.5 million in revenues, creating a multi‑million-dollar shortfall. City departments identified roughly $11.7 million in expenditure reductions so far; those reductions leave the city below its 2.5-month minimum general-fund reserve target by an estimated $2.5 million for 2025 and by roughly $10.6 million for 2026 under current forecasts.

Meyer explained options before the council: continue to identify further expenditure reductions (which increasingly translate to service-level cuts and staffing impacts), consider revenue changes, or revise the minimum fund-balance policy. Staff presented modeling showing that if council reduced the minimum fund-balance policy from 2.5 months to 2 months, the 2025 shortfall could be addressed but an estimated gap of about $8 million would remain for 2026.

The department-by-department memo packet detailed how managers reached targets: some savings come from vacated positions and vacancy-hold policies; some from reduced contractual services, travel and supplies; and some from recharging staff time to capital projects where appropriate. Meyer noted legal obligations cannot be reduced (for example, transfers to debt-service funds total roughly $8.8 million in required transfers and must be paid). He also said that some of the city-capital projects (e.g., the Civic Center campus moves) are funded from capital funds rather than the general fund.

Council members raised concerns about cuts' impacts on vulnerable populations and essential services. Council President George Coelho and Councilmember Escamilla both said community programs, senior services and equity work face disproportionate impacts; Escamilla requested more detail on categorical impacts, a breakdown of the $5.8 million PFD conceptual expenditures, and a schematic-design cost breakdown for the PFD. Councilmember Hurst sought clarity on vacancy savings and whether some savings were short-term or likely to be a new staffing baseline.

Meyer and staff provided a schedule of follow-up work: a Wednesday work session for a deeper revenue review, a Q3 financial report (Oct. 20), mid-biennial budget amendment and property tax-levy review in early November with public hearings on Nov. 10, and final budget amendments and levy adoption in late November. Councilmembers and staff agreed to continue the discussion and to provide additional department-specific clarifications and revenue-option modeling ahead of the November levy deadline.