Council reviews draft comprehensive financial policy, fund allocations and reserves in workshop

The council spent substantial time March 3 in workshop reviewing a draft comprehensive financial policy focused on budgeting, reserves, accounting and reporting.

Finance Director Martin described the budgeting section as a first piece of a larger policy that would set council-directed reserve percentages and exhibit tables for budgeting. He presented an illustrative minimum reserve of 25% of operating budget for the general fund (roughly three months of operating cost) and sample calculations. He recommended council review and set the percentages that would govern future budgets.

The draft also proposes an allocated approach that would designate fixed percentages of incoming property and sales tax directly to special funds (parks and recreation, streets, public safety, library facilities, etc.) so those funds receive revenue directly rather than rely on manual transfers from the general fund.

Councilmembers asked for historical-dollar context (a previous-year column) so the proposed percentages can be compared to past budgets, and raised specific points about newly created funds: stormwater (a newly established utility undergoing a rate study), broadband (currently 0% reserve because the utility is not yet operating as an ISP), and criminal-justice fund policy tied to state RCWs. Staff noted that enterprise/utility funds (water, wastewater, stormwater, broadband) are legally required to be largely self-sustaining and cannot simply be subsidized by the general fund.

Council directed staff to prepare historical data showing recent transfers and revenue history for the next workshop and flagged minor editorial and grammar issues in the draft language. Staff said they will return with additional exhibits and the remaining accounting and reporting sections for later review.