Finance Committee

City of Lynnwood Finance Committee – Regular Finance Committee Meeting Minutes Tuesday, March 17, 2026 1. Call to Order 2. Roll Call Present at the meeting were: Nick Coelho-Chairperson/Council President, Derica Escamilla-Council Vice President, Robert Leutwyler-Councilmember, Lynn Sordel-Interim Assistant City Administrator, Michelle Meyer-Finance Director and Estee Milburn-Council Executive Assistant. 3. Financial Reports 3.A. Sales Tax Report Director Meyer shared the February sales tax report. Revenues from February 2026 for December 2025 sales remained below budget, reflecting ongoing declines and resulting in a year-to-date shortfall. Note there is a two-month delay on reporting. Revenue trends continue to remain relatively flat, consistent with prior expectations. Retail activity remains strong, while construction and motor vehicle-related revenues have declined or remained flat. Month-to- month comparisons were reviewed, noting February reflects December sales. Staff presented an inflation- adjusted analysis showing that, despite stable nominal revenues, real revenues have effectively returned to 2019 levels, highlighting the impact of inflation on the City’s financial position. 3.B. 4th Quarter 2025 Financial Report Director Meyer reviewed the draft fourth quarter 2025 financial report, which reflects the midpoint of the City’s biennial budget. It was noted that while the report is still being finalized, the General Fund showed expenditures slightly exceeding revenues, resulting in a continued decline in fund balance, though still in compliance with the City’s updated fund balance policy. Several revenue sources, including sales tax, development permits, and fines, came in below projections, while most expenditures remained in line with expectations due to ongoing cost controls. Discussion also highlighted declining capital funding capacity, particularly due to the suspension of transfers to the Economic Development Infrastructure Fund (EDIF) and capital development funds and included interest in revisiting EDIF policies and long-term funding strategies. 3.C. Follow-Up Information: 2025-2026 Budget At the start of 2025, the City faced a $25 million shortfall due to weaker sales tax, permit fees and red-light camera revenue. Through budget cuts, fund transfers and policy adjustments, that deficit was reduced to $3.75 million by year’s end. In 2026, a new Public Safety Enhancement Sales Tax was expected to generate about $1.75 million. Once it became likely the revenue would be collected, the City planned to apply it toward closing the remaining gap, with the rest addressed through targeted departmental reductions, primarily by holding vacant positions rather than cutting current staff. 4. Discussion Item 4.A. General Fund Minimum Fund Balance Policy Update Director Meyer reviewed the amended resolution to remove the December 31, 2026, sunset from the General Fund Reserve policy, continuing the 2.0-month reserve level. It was discussed revisiting the policy in a future work session and planning for long-term reserve restoration.  4.B. Prior Biennial Budget Calendar Review The City of Lynnwood adopted the 2027-2028 biennial budget calendar on January 26, 2026, via Resolution 2026-03. The Lynnwood Municipal Code (LMC) requires the City Council to adopt a budget calendar by the end of January for the upcoming biennium. This calendar establishes formal dates and deadlines for the required budget process, though additional meetings may occur outside this schedule without amending the adopted calendar. It was noted the resolution also corrected a minor clerical error referencing the prior 2025- 2026 budget period. 5. Adjourn The meeting was adjourned at 5:05 pm.