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Council approves ordinance to reorganize Mountlake Terrace fund structure
Summary
Mountlake Terrace council adopted an ordinance reorganizing city fund accounting to improve transparency, moving several special revenue items into clarified fund types and creating new reserve funds; council emphasized the changes do not alter existing spending restrictions.
The Mountlake Terrace City Council adopted an ordinance on Oct. 2 that reorganizes how the city classifies and tracks its accounting funds, a finance initiative staff said will improve transparency and simplify annual reporting to the state auditor.
Finance director Sergei Solomon introduced the proposal and explained staff recommendations to inactivate funds with no activity, reclassify some special revenue funds as capital or general-type funds, add designated reserve funds (fleet reserve, capital reserve), create a separate transportation impact fee fund, and add a custodial fund to consolidate legacy pass-through accounts.
Solomon said the changes are primarily accounting and labeling adjustments that do not change the legal restrictions on revenue use. He repeated that funds such as the strategic reserve and the housing needs fund would remain restricted and continue to be tracked separately; their policy or program restrictions would not be changed by the reclassification. Solomon told the council the reorganization will make annual reporting and audit preparation clearer and easier.
Councilmembers asked clarifying questions. Councilmember Sanmore asked about the strategic reserve and whether reclassifying it would make the money easier to spend; Solomon and the city manager said the move does not remove council controls and that the strategic reserve remains a separate fund and will continue to be governed by council policy, including the target of approximately 5% of the general fund.
Councilmember Murray asked whether the $50,000 annual retention from the solid waste tax (agreed during the RFA process for utility assistance) remains accounted for; staff confirmed the $50,000 remains and said they could return with a separate dedicated fund if council wishes. Councilmember Woodard and others praised the effort to increase granularity and transparency in the city's accounting.
Councilmember Woodard moved to adopt the ordinance amending the city's fund structure; the motion was seconded and passed by voice vote.
Staff noted several specific items mentioned in the presentation: the American Rescue Plan Act (ARPA) funds will be expended next year and then the related account can be inactivated; opioid settlement receipts will be tracked in a separate fund; some legacy permanent and custodial funds with no activity will be inactivated; and certain enterprise loan and bond funds will be renamed for reporting clarity.
The ordinance and a detailed list of fund-number changes are in the council packet. Staff said they will return with any required budget amendments tied to specific projects or reserve allocations.
