PORT ANGELES — The city’s 2019 preliminary budget is balanced, sustainable and maintains funding for City Council priorities, City Manager Nathan West said.
The total city budget as proposed by the staff is $116.1 million, a 1.53 percent increase from this year’s budget, the City Council heard Tuesday.
“The reason that we saw that increase was predominately due to the cost-of-living increase that was passed along to staff,” West told the council in a budget workshop.
The general fund for day-to-day operations is projected to be a shade over $20 million in 2019.
“We were successful in balancing the general fund between revenues and expenditures without the use of reserves,” West said.
Council policy requires that the general fund reserve be at least 25 percent of annual spending.
Budget plans
If the preliminary budget is adopted, the city’s general fund balance would remain at $5.10 million — or 25.5 percent of 2019 expenditures.
Before adopting a final budget, the City Council will hold public hearings Nov. 20 and Dec. 4. Each of those hearings will begin at 6:30 p.m. or shortly thereafter in the City Council chambers at City Hall, 321 E. Fifth St.
City staff identified a $1.2 million shortfall early in the budget process, West said.
West, who was promoted from Community and Economic Development director to city manager Sept. 6, said it was “pretty overwhelming to know that we had that gap.”
“But ultimately, with staff working together, we were able to get there,” West said.
“I think if we had to summarize some of the key categories that we worked on to get there, it was really looking at personnel, looking at revenues and looking at allocated costs.”
Salaries and benefits account for 64.79 percent of the spending in the city’s general fund and 23.62 percent of the total budget. The budget was balanced despite a 2 percent cost of living increase for city employees.
There were 23 staff vacancies at the beginning of the budget process, West said.
“Before we did individual recruitments for those positions, we made sure we re-assessed salary ranges,” West said.
“We made sure that we were hiring at ranges that were appropriate and analyzed for the long term.”
Making moves
The city moved its Information Technology division to the city manager’s office and shifted records management to IT, resulting in cost savings.
Street sweeper functions were moved into the stormwater utility to further cut costs.
While water and wastewater rates are projected to rise by 5.4 and 0.5 percent, respectively, in 2019, no change is being proposed for stormwater, electric, solid waste collections and transfer station rates.
“We’re always heavily considering the ability of our ratepayers to pay their utility rates,” West told the council in a 90-minute work session.
“And I think it’s really important that council be aware that we took the time to go line by line through every utility expense in our budget, and we did a very thorough job of that.”
Thanks to administrative changes at Peninsula Communications, the preliminary budget adds two communications officers for the region’s 9-1-1 dispatch center.
“It was overwhelming how conservative the vast majority of budget submittals were,” West said.
“City staff really did a good job being thorough and being diligent with what they put forward.”
Senior Accountant Sarina Carrizosa reviewed for the council dozens of slides depicting revenues and expenditures for each fund in the city budget.
Council member Jim Moran suggested that budget documents specify what other funds and miscellaneous revenues mean.
“From an accounting standpoint, the use of ‘other’ and ‘miscellaneous’ is really something that I would like to avoid using … especially when they reflect large numbers,” Moran said.
Carrizosa said the budget categories are derived from the Budgeting, Accounting and Reporting System (BARS) that the city is required to use.
A table in the budget document explains what goes into each of the categories, Carrizosa said.
“My message is that it would be helpful for me to know, that rather than just the ambiguous other or miscellaneous,” Moran said.
Moran also questioned the $157,000 in utility tax revenue budgeted for the planned startup of the McKinley Paper Co. mill on Ediz Hook.
McKinley purchased the former Nippon Paper Industries USA mill in March 2017 and plans to manufacture containerboard from recycled cardboard at the re-tooled mill beginning in September.
Flexible future
Moran noted that McKinley is expected to use less electricity than Nippon used to manufacture newsprint and telephone directory paper at the 98-year-old factory.
“Things happen,” Council member Michael Merideth added.
“September’s quite a ways away. If they did have a late start into the next year, is that ($157,000) an amount that the utility can absorb?”
West answered by saying the $157,000 identified in the budget is a “very conservative estimate.”
“I think it’s something that we can certainly assess after the first quarter of the year, see where things stand with permitting and progress at the mill,” West said.
“If we need to adjust, we can certainly do that.”
Council member Cherie Kidd, the council’s senior member with more than 10 years experience, reflected on the significance of a 25 percent reserve.
“When I started on the council, our reserves were at 10 percent,” Kidd said.
“That seemed very thin to me. I was told at the time ‘Well, it’s just swell. It’s just fine. Ten percent’s OK.’ It wasn’t OK.
“I just want you to know I’ve seen the difference, and I feel much more secure,” Kidd told city staff.
“I think that one of the best services we can do for our citizens is have a strong reserve, so I feel much better now.”
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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 56450, or at rollikainen@peninsula dailynews.com.
