Lynnwood council holds work session on general fund shortfall, considers reserve change and cuts

Lynnwood City Council members and city finance staff met in a special work session to discuss a projected general fund shortfall, options for new revenues and potential service cuts as staff and council prepare for the mid-biennial budget review.

The discussion, led by Finance Director Meyer and Council Member and Finance Committee chair Council Member Hurst, focused on updated forecasts, reserve policy options, personnel implications and a timeline that culminates in a formal mid-biennial process beginning in November. "We were told that the departments had all agreed to this and I've asked for specifics and never received that," Council Member Hurst said of earlier budget management materials. Director Meyer described earlier modeling and said the administration began with a 3% target and has since moved to department cuts ranging from roughly 6% to 10%, depending on department and bargaining-unit considerations.

Why it matters: the council is weighing short-term actions to shore up the fund balance while maintaining essential services into 2026. Director Meyer told the council the city is forecasting a general fund gap that, under the presentation shown July 28, left the city about $4.1 million short of its 2.5-month minimum reserve for 2025 and roughly $10.7 million short for 2026. Meyer said temporarily lowering the reserve policy from 2.5 months to 2 months would reduce the 2025 shortfall to about $1.5 million and the 2026 gap to about $8.0…