Lynnwood council lowers general‑fund reserve target to two months through 2026; resolution passes 7‑0

The Lynnwood City Council adopted Resolution 2025‑08 on Oct. 27 amending the city's financial policy to lower the general‑fund minimum reserve from 2.5 months to 2 months for the 2025‑26 biennium. The resolution passed in a roll‑call vote, 7‑0.

Director of Finance (Director Meyer) told the council the city's current forecast showed a projected shortfall and that reducing the reserve target to two months would bring the city into compliance with its own policy given current revenue assumptions. Meyer said the change would reduce the projected biennial shortfall for 2026 from about $10.5 million to roughly $8.0 million. She noted the Government Finance Officers Association recommends a 2‑ to 3‑month general‑fund reserve and described the proposed reduction as a temporary management tool.

Councilmember Hurst moved an amendment to make the reduction temporary through the 2025‑26 biennium; council agreed and the amendment passed 7‑0. Councilmember Decker said he favored a sunset clause to force a future council to revisit the policy. After roll call, the amended resolution passed unanimously.

Votes at a glance (items decided at or before this meeting):
- Resolution 2025‑08 (general‑fund reserve): Adopted as amended. Motion by Councilmember Hurst; roll call 7 yes, 0 no. Effect: reserve target reduced from 2.5 months to 2 months through 2026; effective upon adoption.
- Unanimous‑consent agenda (adopted earlier in the meeting): approved claims and payroll; authorized opioid settlement spending plan; adopted the city's annex to the Snohomish County comprehensive emergency management plan. Specifics recorded in the meeting minutes include: claims $1,586,131 (period 10/06/2025–10/19/2025); payroll $1,000,835.14 (dated 10/17/2025); opioid spending plan up to $525,000 from Fund 147 for recipients and administrative overhead (task group to develop notice of funding opportunity); annex adopted.

Why it matters: Lynnwood has faced a multi‑million dollar revenue shortfall; the council said the temporary change gives the city room to manage operations while staff pursues additional budget reductions and revenue updates. The change conforms to GFOA guidance (2–3 months) but lowers the city's internal target to the minimum recommended level.

What happens next: Staff will continue monthly revenue monitoring and report back; council retained authority to restore the prior 2.5‑month target in future action.