PORT TOWNSEND — The Port Townsend City Council approved a $60.8 million budget for 2024 on Monday evening, drawing nearly $2 million in reserve funds to balance expenses.
The budget, approved unanimously by council members, allocates the more than $60 million across the city’s seven funds while total revenues amount to just over $59 million. The city’s total ending fund balance for 2023 was $27.3 million and the projected ending fund balance for 2024 is $25.5 million across all funds.
“Unlike federal budgets, a local budget must be balanced,” said Director of Finance and Technology Services Connie Anderson. “That means we have to have an actual revenue source in order to put an item in the budget.”
Also Monday, the council made permanent two tax increases to the city’s sewer and solid waste utilities that were set to expire on Dec. 31.
The city imposes an 18 percent utility tax on the revenues of the storm and surface water; water system and sewer utilities and 1.5 percent of that tax was set to expire at the end of the month.
Similarly, a 2 percent tax on the city’s 22 percent tax on revenues of the solid waste utility was set to expire at the same time. Rather than extend those tax increases another two years, the council voted to extend the increases indefinitely.
“This is unquestionably a regressive tax,” Mayor David Faber said. “That is unfortunately what we are left with now until the state allows us to adopt a more progressive form of taxation. We are in a bind to pay for basic services, so this is unfortunately the best option.”
The city’s general fund is allocated for $15.9 million in expenses for 2024 with $14.4 million in revenues. An additional $486,000 will be used from the city’s fund balance to put seed funding toward a facilities fund to help the city better deal with maintenance needs.
The city’s largest expenditure was from the enterprise fund, which covers revenue-generating services of the city such as sewer and water. That fund was budgeted for $23.3 million but projected to raise $23.9 million in revenues.
The city’s capital projects fund is budgeted for $6.1 million, mostly for streets, while bringing in $4.8 million in revenues.
The budget also included $1.9 million of the city’s remaining American Rescue Plan Act funding, which gave the city $2.7 million in 2022.
Council members asked few questions regarding the budget at the meeting and no public comment was given.
Council member Amy Howard noted the state law requiring local budgets to be fully balanced means many of the city’s needs do not appear on the annual budget.
“We have a hidden deficit that we cannot account for in this budget,” Howard said. “Critical unfunded needs don’t get a mention like they should.”
The city also raised its property taxes by the allowable 1 percent, but Faber noted that revenue was not enough to keep up with inflation in typical years at an average of 2 percent.
Inflation in the past three years has been particularly high, rising as high as 9.1 percent in 2022 and currently at 3.7 percent, according to the U.S. Bureau of Labor Statistics.
“The city’s revenue as a percentage of your income, of property values, et cetera, is going down over time,” Faber said.
“In the last few years, it’s been particularly problematic for the city even finding the money to keep the doors open and do the things that we have to do as a city, let alone the things that we’d like to do as a city, let alone the things we really should be doing, like our roads,” he said.
Reporter Peter Segall can be reached at firstname.lastname@example.org.