Crash course on Sequim's financial situation shows cloudy future
By Diane Urbani de la Paz, Peninsula Daily News
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Sales tax is down about $400,000 from last year, and building permit and development fees have slid from $800,000 in 2007 to $355,000 this year.
And since Sequim's population has swelled to 5,951, the state no longer sees it as deserving of grants for "small towns."
So went Spinks' speech, a PowerPoint presentation titled "2009 Budget Goal Setting and Strategy," during Monday's council study session.
It was a crash course in budgeting amid an ailing economy.
This session was originally set for Sept. 6, but it was rescheduled since some council members couldn't make it on that Saturday.
As it turned out, three council members, Erik Erichsen, Ken Hays and Bill Huizinga, were absent Monday due to previous commitments.
That left Mayor Laura Dubois, former mayor Walt Schubert and council members Susan Lorenzen and Paul McHugh in Spinks' audience.
Tough questions
Both he and city Administrative Services Director Karen Goschen laid out the tough questions.
With revenues down this far, should the city cut its funding of local social services, such as the $100,000 it pays the Sequim unit of the Boys & Girls Clubs of the Olympic Peninsula to run teen programs?
Should it postpone the construction of a $6 million City Hall?
How far down should the city let its reserves go?
And, Spinks asked, how will Sequim pay for "unfunded mandates" from the state?
Olympia is handing down orders for shoreline management studies, and other "grand report[s] that look really good in a binder," he said — though the money for such work has yet to appear.
Sequim also faces the most painful of cuts: staff layoffs.
But this is not the time to trim personnel, Spinks said.
The city has a plethora of projects on its collective plate: expansion of the sewer and water reclamation systems, planning for a $6 million City Hall, a $4 million Police Department, street, trail and park improvements and a municipal court of its own.
Then there are the state mandates for "carbon footprinting" and other environmental studies, Spinks added.
"It's not that those aren't important," he said.
But since city Public Works Director James Bay retired on April 25 and the former city manager, Bill Elliott, was fired on May 5, Sequim doesn't have the personnel to handle them.
The city is still operating with Spinks as interim manager and Bill Bullock as interim public works chief, and while consultant Lee Walton is lining up manager candidates for October interviews, the search for a public works chief is on hold.
Spinks added that he knows Bullock wants to add workers to his department, while Planning Director Dennis Lefevre needs at least one more staff member.
How much hiring will be done in 2009 is anything but clear. Department heads are worried about keeping the people they have.
How to keep staff
Two ways to "preserve staff," Goschen said, are to dip into the city's fund balance, or general fund reserves, and to put off building the new City Hall.
Sequim has kept $1 million in reserves in recent years, she said.
But the rainy day has come, and while Goschen said she'd hate to see the fund balance go below $500,000, she believes allowing it to dip to $750,000 is prudent enough.
The city can "use a little bit of our fund balance," she said, and hope that the economy will begin to turn around by 2010, to bring sales tax and building-permit revenues back in a positive direction.
Then Lorenzen posed her own difficult question: "When is the economy going to bottom out? I think 2010 is a little bit overly optimistic. I'm not a financial expert, but from what I hear and what I feel, we haven't hit bottom yet."
Goschen replied that it's up to the council to decide how to proceed with the budget.
"This is an iterative process," that starts with the council setting goals for the city, and continues with adjustments throughout the year.
This year's budget started with $7,960,720 in general fund expenses, including salaries for the city manager, city clerk, finance, police, planning and public works departments.
Another $869,744 in revisions have been added.
In 2009, the city could save in the short term by cutting personnel. But hiring new workers later, Goschen said, will cost the city dearly in training expenses and upheaval.
"I think we should do everything we can to preserve staff," she added.
Over the next month, the council and city department heads will continue wrangling over which costs can and cannot be reduced, what the city must fund in order to comply with state laws, and which new projects can be put off.
Preliminary budget
Then, at the Nov. 3 study session, Spinks and Goschen will present the preliminary 2009 budget to the council. The document must be finalized by the end of December.
Throughout the budget-preparation period, Spinks told the council, Sequim officials and staffers will have opportunities to communicate via a city Web log.
Dubois took that as one piece of good news.
"Sometimes somebody comes up with a really good idea," that can circulate fast online, she said.
"We're going to recommend it to the entire state, because once again, Sequim is doing something no one else is doing," said Spinks, though he later revised that assertion to say that if there is another Washington city with a staff-ideas blog, he hasn't heard about it.
On Tuesday, Spinks added that Steve Rose, the city's information technology manager, is "ready to turn on the blog as soon as he trains me how to moderate it."
While the staff blog isn't accessible to the public, the PowerPoint Spinks delivered on Monday is on the city's Web site, www.ci.Sequim.wa.us.
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Sequim Editor Diane Urbani de la Paz can be reached at 360-681-2391 or diane.urbani@peninsuladailynews.com.
Last modified: September 16. 2008 9:00PM