PORT TOWNSEND — The Port Townsend City Council has unanimously approved the first reading of the 2018 city budget after a public hearing.
Councilwoman Michelle Sandoval was absent from the meeting.
The council has scheduled final adoption of the budget for Dec. 4.
A public hearing on the preliminary budget was held Nov. 6, and Monday’s public hearing was lengthy due to an in-depth presentation from Nora Mitchell, the city’s finance director.
“Tonight, we’re doing what we call a deeper dive into the budget,” Mitchell said Monday.
There were some changes from the preliminary budget to the one presented Monday.
“Some of those were just minor corrections,” Mitchell said. “Other were changes we discussed previously.”
Changes included a $1,558 increase to the council reserve due to the 1 percent increase in general fund revenues, eliminating a $10,000 transfer from the Affordable Housing Fund to the general fund, adding $50,000 to street improvement expenditures, reducing the water collections operating budget by $20,000 and reducing the storm operations budget by $15,000.
The proposed budget now sits at a balance of $8,710,420 for 2018 with $42,021,292 in proposed revenues and $45,446,768 in proposed expenses.
The balance for 2018 is slightly down from the 2017 estimated balance of $12,135,896.
The general fund — the largest administrative fund, which includes the council reserve, police and mayor’s office — will see a 4.2 percent increase in 2018 because of an expected increase in revenue from sales tax, Mitchell said.
The general fund saw an increase in both revenue and expenses, the largest new expenditure being increased wages, according to Mitchell.
Police wages went up by $35,000 due to the addition of a community services officer a quarter of the way into 2017, and the library will see an estimated $50,000 increase, mostly due to increased wages.
The library has the city’s highest number of minimum-wage workers, and minimum wage went up 5 percent while other city employee wages went up 3 percent, according to Mitchell.
The budget approves a slightly higher-than-minimum-wage rate, $11.50 to $12 per hour, so as not to have to make the same budget adjustment next year, according to Mitchell.
The city street fund is in line for a slight increase, $325,407 in 2018, from the $306,547 estimated for 2017.
“It’s a relatively limited increase — not because there’s not a need for street funds, but that’s what we can afford right now,” Mitchell said.
Mitchell said public works also will see a slight increase in expenditures since the city will have to pay leave time for Public Works Director Ken Clow, who’s retiring at the end of next year.
The city’s debt payments for 2018 are $1,645,656, which will be paid for with $406,000 allocated from property taxes, some of the city’s investment income and general fund, relying mostly on real estate excise tax (REET).
“There are quite a few transfers into this fund to fund that debt service,” Mitchell said.
The capital project budget is looking at $7,715,643 in expenditures in 2018. That number could go up after the Dec. 11 meeting, when the council will discuss the city’s stormwater plan.
“The stormwater capital projects included here are what was included in the six-year CIP [capital improvements plan],” Mitchell said.
“This is not including the proposed projects. There will be more discussion on a future funding strategy for anything that comes out of the stormwater plan.”
The 2018 water/sewer capital fund will see more revenue then expenses in 2018, which is a change, according to Mitchell.
“There is a lot happening in the water sewer capital fund,” Mitchell said. “Probably the most important thing to note … [is] that the revenues are significantly lower than expenditures” in 2017. “The 2018 budget reverses that.”
The budget assumes the state will come through with a capital budget.
“What is happening here is we have a delay with the state capital budget being approved,” Mitchell said. “The 2018 budget assumes that the state capital budget situation gets rectified, that budget gets approved and we receive the dollars as planned for public works trust funds and drinking water loans.”
All in all, city staff said they were “cautiously optimistic” about the 2018 budget.
“We’re cautiously optimistic about what we can fund because of the fact that we don’t know — David [Timmons, city manager] spoke to this last week — how long our construction bubble might continue,” Mitchell said.
Mitchell added that lots of projects are finishing up in 2018 and is confident those projects will be fully funded. Past that, the picture is a little more unclear.
“I think the other indicator, too, is our credit rating,” Timmons said. “We were increased last year and scheduled I think next year for review.
“We’re in a strong position to get another increase.”
Timmons said new private and commercial construction is also a good sign “that the investments that we’re making are beginning to have a return,” Timmons said.
“I think overall we’re doing really well, but we have to be cautious.”
Jefferson County Editor/Reporter Cydney McFarland can be reached at 360-385-2335, ext. 55052, or at [email protected].