PORT ANGELES — The City of Port Angeles’ financial outlook is doing well, but additional revenues will be needed in the coming years if the budget is to stay balanced, according to the city manager, who referred to the possibility of new fees.
“Our taxes and our revenues are not growing at the pace of our expenditures, and we need to work extra hard to ensure that we’re able to balance the budget at the end of the day,” said City Manager Nathan West.
Speaking to a meeting of the Port Angeles Business Association on Tuesday, West said the city’s $161.9 million budget for 2024 is balanced and that property, sales and lodging tax receipts were doing well. Next year’s budget includes $26 million in capital projects, West said, something the city critically needed.
But looking ahead, West said the city will need to find new revenue areas to continue to balance the budget.
“As we’re looking at our revenue situation and we’re knowing that we have a future to deal with relative to revenues not keeping up with expenditures, we’ve got to get creative,” West said.
One of the ways the city is seeking to increase revenue is by increasing residential housing density.
Tonight, the city council will consider waiving all fees for several denser types of housing such as accessory dwelling units, cottage housing, multiplexes and apartment buildings as a way of incentivizing that kind of construction.
The meeting will begin at 4:45 p.m. with an executive session followed at 5 p.m. with a presentation on wildfire risk and preparation at City Hall at 321 E. Fifth St. The regular meeting will begin at 6 p.m.
“If you were to develop this entire community with single-family residences in our residential areas, it will not pay the bills in the long term for this community,” West said. “We have to see higher densities in the city of Port Angeles to be sustainable in the long run.”
The city also is working on wastewater enhancements that will help accommodate the higher density, West said. Work is nearing completion on a wastewater project along Marine Drive which will help neighborhoods on the city’s west end, he said.
In the coming years, the city’s capital facilities plan outlines a neighborhood-by-neighborhood approach to enhancing the wastewater systems, West said, to support the kind of development the city trying to attract.
However, in order to facilitate all the wastewater infrastructure the city needs to repair its aging systems, the city would have to invest about $2.3 million annually for more than 20 years, something it cannot currently afford, West said.
Few grants are available for wastewater infrastructure, he said, but there are many loans available. However, with the city’s current debt load, Port Angeles can’t afford to take on more, he said.
The city has made progress in tackling its “mountain of debt,” West said, thanks to the hard work of staff at the finance department.
“If you look back 20 years, we have never been in such a good situation relative to debt as we are today,” West said. “We are down to about $84,000 in general fund debt and that is it. Since I have been at the city, we have never been that low in debt.”
About $5.4 million is paid annually toward debt service, West said, which hinders the city’s ability to pay for other services residents need, such as police and firefighters.
New fees
New fees are another way to increase revenues. West said the ones the city is looking at include cemetery-related fees, fire-related fees and development fees, among others.
Most of the city’s expenditures are related to personnel, West said, both salaries and personnel benefits. Port Angeles has been conservative with costs related to communication, travel and training, but personnel costs will continue to grow as the city negotiates with its five different bargaining units.
Fortunately, the city is mostly well-staffed, West said, and has recovered from pandemic years when many people left their jobs.
The majority of the city’s income comes from various taxes, West said, namely property and sales taxes. Property taxes account for about 26 percent of the city’s revenue and sales tax 23 percent, West said.
But West also noted the city receives only a small portion of the taxes paid because much of that revenue goes to the state.
“With property tax, if you look at every $10 that we receive in property tax, the city receives only about $1.73 of each of those $10,” West said.
With the exception of certain designated sales taxes, West said the city receives only about 1 percent of the total sales tax collected.
The city is expecting about $5.1 million from property taxes in the 2024 budget, consisting of about 19 percent of all revenues.
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Reporter Peter Segall can be reached at peter.segall@peninsuladailynews.com.
