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Lynnwood warns of multimillion‑dollar shortfall; mayor orders 10% department reductions, hiring restrictions and director furloughs
Summary
Mayor Mary Frizzell and Finance Director Michelle Meyer told the council on July 21 that Lynnwood faces a worsening budget outlook. Preliminary second‑quarter financials show an additional $5.2 million gap between general fund revenues and expenditures through Q2, and an estimated beginning‑of‑biennium shortfall of about $4.2 million.
Mayor Mary Frizzell and Finance Director Michelle Meyer told the Lynnwood City Council on July 21 that the city faces a substantial and worsening budget gap and must take immediate steps to preserve core services.
Meyer presented preliminary second‑quarter financial statements showing an approximately $5.2 million gap between general fund revenues and expenditures through the second quarter of 2025. That development compounds a previously identified $4.2 million shortfall at the end of 2024 and a projected $3.0 million deficit by the end of the biennium under prior assumptions, the mayor said.
The drivers identified by staff include a national economic slowdown that has reduced sales tax receipts (which Meyer said account for about 44% of the general fund), lower construction and permit revenue, and a drop in photo‑enforcement (red‑light) revenues. Meyer told council the city had budgeted for growth in sales tax and construction receipts that has not materialized; sales tax is roughly $1.5 million below budget assumptions and is about 9% behind the forecast.
Meyer also explained an earlier budgeting error tied to fines and forfeitures: a four‑month spike in ticket counts during 2024 led staff to assume the higher level was the new normal when preparing the budget; ticket counts have since returned to lower levels and the resulting revenue assumptions did not materialize.
Immediate actions and targets: the mayor said she has asked departments to identify reductions and set an initial target for general fund operating reductions of 10%; police was directed to target a 6% reduction and municipal court a 3% reduction (court is an independent branch). Measures already enacted include a hiring restriction that leaves 20 general‑fund positions vacant except for critical functions, reduced seasonal staffing, travel and training cuts, restricted overtime, reduced professional services and program reductions. The mayor and directors will take unpaid furlough days in 2025–2026.
Labor and next steps: the mayor said the city has notified bargaining units and will honor collective bargaining agreements; some negotiated steps may take up to 30 days to finalize. The mayor said the council will be asked after the summer recess to provide policy direction on priorities and revenue options and that staff will continue to prepare more detailed scenarios at the finance committee and for future council discussion.
Why it matters: the city’s revenue mix is heavily dependent on sales tax and on construction‑related receipts. When those sources are flat or declining, the general fund has limited flexibility without raising other revenues or cutting services. The mayor said preserving public safety, code and regulatory compliance, transportation and frontline customer service are priorities in any restructuring.
