Port Angeles cuts costs after mill sale in light of reorganization

Dan McKeen

Dan McKeen

PORT ANGELES — In response to the sale and re-tooling of the former Nippon paper mill in Port Angeles, city officials are pinching pennies to balance the books in 2018.

The Port Angeles City Council voted 6-0 Tuesday to approve a budget amendment that reflects $373,500 in one-time savings that staff identified to offset the loss of utility tax revenue from the city’s largest power customer.

“If it were not for the wonderful work of our staff,” Mayor Patrick Downie said, “we’d be in a big hole.”

McKinley Paper Co. purchased the mill on Ediz Hook from Nippon Paper Industries USA for $20.6 million on March 31.

McKinley officials plan to reopen the mill in December 2018, producing containerboard made from recycled cardboard rather than paper as Nippon had produced until it shut down in April.

City Manager Dan McKeen has said the re-tooling of the mill, while necessary for its future viability, will cost the city about $315,500 in revenue this year and another $440,000 in 2018.

When operational, the mill consumes nearly half of the electricity used in the entire city, providing tax revenue for services such as public safety, parks and streets.

“We wanted to be proactive in dealing with this issue,” McKeen told the City Council at its Sept. 5 meeting.

“One of the goals were we wanted to maintain the same levels of service that we currently provide the citizens.”

Savings from last year were used to balance the 2017 budget in a previously approved amendment.

Each department was then asked to identify one-time savings — such as delayed rehiring and deferred travel and training, office supplies and vehicle purchases — to help balance the 2018 budget through a second budget amendment.

“I’m very pleased to say that we were almost able to cover the entire amount,” McKeen said at the Sept. 5 meeting.

“But I need to stress that a lot of the things we did are not sustainable.”

The City Council approved the second budget amendment after a brief staff report Tuesday. McKeen and Councilman Dan Gase were absent.

“This is a very impressive list of budget costs savings,” said Deputy Mayor Cherie Kidd, a third-term council member and former mayor.

“In fact, I think it’s the most impressive list that I’ve seen since I’ve been a member of the Port Angeles City Council.”

Port Angeles Community and Economic Development Director Nathan West said McKeen and city staff worked “diligently” on the budget amendment.

Acting Finance Director Tess Agesson said the budget amendment was “just the first step in the process.”

“When we get into 2018, we’ll have more items to discuss,” Agesson told the council.

“But this sets us up so that we can meet that gap without cutting services or impacting any of the departments or divisions or employees within the city so that we can continue to operate as we do, just watching our pennies for the next 18 months so that we can get through this period of time.”

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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 56450, or at [email protected].

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