Lake Forest Park council debates 90‑day reserve, stabilization and $500,000 strategic fund

Lake Forest Park — City council members spent the bulk of their March 12 meeting debating how to set the city’s budget reserve and how much to place in the budget stabilization and strategic opportunity funds.

The council discussed two broad approaches: keeping the current reserve minimum in municipal code (16% of revenues, described in the discussion as roughly a 60‑day reserve) and creating a separate budget stabilization fund to reach a 90‑day target, or formally changing the reserve policy to require a 90‑day reserve directly. Councilmember Riddle said he favored an informal discussion approach and described the idea as “we’re all comfortable with, sort of a 90‑day reserve.”

Finance staff and the city administrator reiterated that the existing code defines a reserve minimum and that the budget stabilization fund is designed to be used to smooth year‑end variances. The finance director cautioned that if the council sets a new minimum in code it becomes an audited requirement; the director urged careful language and analysis before changing the formal threshold.

Deputy Mayor/finance participants and other council members pressed practical questions: whether to measure a reserve as a percentage of revenue or of expenditures, how funds would be moved into the stabilization account, and how to ensure the reserve is protective in the event of lower revenues. One council member framed the options as either a single 90‑day reserve or a 60‑day statutory reserve plus a 30‑day stabilization buffer.

City staff were asked to produce spreadsheet scenarios showing the effects of different targets and to return with numbers for the council to test. Councilmember (speaker 13) highlighted the city’s six‑year financial forecast and noted a projected biennial structural deficit (about $2.2 million per biennium) to underline the need for clarity about how reserves and stabilization funds are used. Several councilmembers emphasized the importance of public outreach and clear messaging about what portions of fund balance are reserved by policy versus available for policy choices.

On the strategic opportunity fund, one council member proposed a $500,000 target, citing the prior use of a similar fund to leverage county and state funds for the Lakefront Park purchase. Council members agreed that, before finalizing policy, they wanted concrete spreadsheeted scenarios showing how different reserve rules and transfers to the stabilization or strategic funds would affect near‑ and mid‑term fund balances.

The council gave direction to staff to prepare the math and outreach materials and to return with options at a future meeting. That work product was requested to be available in one week to aid continued discussion.

The discussion closed without formal changes to policy; council directed staff to prepare data and outreach for deliberation.