PORT ANGELES — The Port Angeles City Council has received a scaled-back $108.28 million draft budget for 2018.
The total budget is the sum of a $98.61 million operating budget, which includes a general fund for day-to-day operations, utilities and other funds, and $9.67 million in planned capital projects.
“What’s noticeable is that [the total budget] is actually 3.4 percent less than the amended 2017 budget,” City Manager Dan McKeen told the seven-member council in a budget workshop Tuesday.
“The 2017 amended budget that we have this year is actually about 16½ percent less than the actual 2016 budget.”
The $19.81 million proposed general fund budget for 2018 is balanced through the planned use of $542,100 in reserves.
That would leave $4.93 million in the city’s rainy day fund and meet a council directive of having a 25 percent reserve fund balance compared to spending.
Council members will consider adopting a final budget after public hearings Nov. 21 and Dec. 5.
The proposed city budget includes $373,500 in one-time savings that staff identified in an 18-month budget process to offset an expected loss in utility tax collections from the curtailment of the mill on Ediz Hook.
McKinley Paper Co. purchased the mill from Nippon Paper Industries USA for $20.6 million in March.
McKinley officials plan to reopen the mill in December 2018, making containerboard from recycled cardboard rather than paper as Nippon had produced.
The mill is by far the city’s largest power customer, accounting for nearly half of its total utility tax revenue.
“We actually went through the 2017 budget and identified savings in 2017 that we could program into the 2018 budget to deal with the mill curtailment,” McKeen said.
“We anticipated a $440,000 shortfall in ’18 alone from the curtailment,” McKeen added, “and we were able to bring $373,000 to the table without having to use reserves for that amount.”
The proposed budget includes the allowed 1 percent property tax increase.
Public hearings on the property tax ordinance are planned for Nov. 7 and Nov. 21.
The budget proposal was developed based on City Council input from strategic planning, financial policies and priorities.
“One of the things that has happened over the past five years is that we have really gone from a staff-recommended budget to a council-guided budget,” McKeen said.
The budget includes a reduction of 2.75 full-time-equivalent (FTE) positions in 2018. Of those, 1.75 are in the water utility and one is in engineering.
City workers have shifted to a lower-cost health care plan and will receive a 3 percent cost-of-living raise in 2018, according to the proposal.
The draft budget adds four firefighter/emergency medical technician positions, transportation projects and “community enhancement” projects like public restroom replacements, wayfinding signs and tables and chairs downtown.
A cost-of-service study was included in the budget to keep utility rates affordable for customers.
The council recently approved a rate reduction for solid waste transfer station customers.
“It’s not very often we can have a reduction, but we did,” McKeen told the council.
“And again, I think you’re going to be extremely pleased as we bring forward utility rates for next year.”
Budget Officer Sarina Carrizosa displayed slides depicting revenues and expenditures for the total budget, general fund budget, individual departments and other funds.
Sixty-six percent of the revenue in the city’s general fund comes from utility tax, property tax and sales tax, Carrizosa said.
“In 2018, the largest expenditure in the general fund is salaries and wages and personal benefits combined, so our employees,” Carrizosa said.
Salaries, wages and benefits account for 64 percent of spending in the 2018 general fund budget.
Several council members asked questions of staff during the presentation. No council member objected to the budget as proposed.
“I want to compliment all of the staff for doing an exceptional job,” Mayor Patrick Downie said. “Very impressive.”
Any savings or unexpected revenue from 2017 above the 25 percent threshold will be used as seed money for a new program to deal with blighted properties and for repairs to City Pier.
“The railing [at City Pier] needs to be improved,” McKeen said.
“The areas that have been caution-taped off, well, we need to fix that. It’s one of our premier areas of the city where visitors go.
“We’re going to be having cruise ships that are going to be showing up at record levels [next] year, and we want to put a good face forward,” McKeen added.
Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 56450, or at [email protected].