PORT TOWNSEND — Misreported sales tax allocations prompted a series of drastic budget actions for the city of Port Townsend, including the layoffs of 10 people, the city manager said as he outlined to the City Council earlier this week steps the city can take to minimize their effects.
The accounting error, which was discovered in late September, led to a city allocation of sales tax receipts that was about $200,000 less than the projected budget, which led to an announcement of 10 layoffs
Oct. 5.
“What we are feeling is the same as many cities throughout the country,” City Manager David Timmons said at a City Council budget workshop Monday as he related specific instances of layoffs elsewhere.
“We were fighting the battle, but the [negative economic] systems have outlasted us, and we don’t have any options left.”
Timmons said the tax shortfall made it clear that immediate action was necessary.
“Last week, we had to slam on the brakes,” Timmons said.
“The people who lost their jobs were our friends, and we are dejected and broken by the decision we had to make last week.
“There is a chance that we can turn things around and reinstate these people and their positions but it will depend on the policy decisions that are made by the council.”
Since the meeting was a workshop, no action was taken during the 90 minutes that Timmons made his presentation and answered questions from the council.
Timmons offered several specific cost-savings examples that already have been implemented, while suggesting others that can be taken over the next few months.
One is to recover the costs of police overtime that was incurred during festival season, which can be billed to the lodging tax fund.
Another is to defer the purchase of new police vehicles and enter lease agreements instead.
Private consultants also can be hired, giving the city a 100 percent reimbursement from the state, which is not available if a staff member performs the same task, Timmons said.
The city had projected receiving $1.7 million in sales tax revenue, but two vendors had misreported the destination for the funds, miscoding their remittance as belonging to the city of Port Townsend, when in fact these sales-deliveries to Port Townsend Paper Corp. were taking place outside of the city limit.
So the city revenue for the year was readjusted to $1.5 million, with the $200,000 going to Jefferson County.
That led to layoffs.
The Public Works and Engineering department was hardest hit by the layoffs, with three positions eliminated.
The Water Department loses one position, the Parks and Recreation Division was trimmed by two, and the public pool at 1919 Blaine St., loses one position.
The Development Services Division loses one position, while another worker is reduced to part-time status.
The city prosecutor job has been eliminated and will change to a contract for service position.
Timmons said the Public Works and DSD positions are being reduced because there are fewer small projects in the works, and the one project to be completed is the development of a new water system which will require less staff support than multiple projects.
The parks position elimination leaves two workers to maintain about 100 acres of park property.
Timmons said that volunteers could be a labor source and that a lot of maintenance projects will be postponed.
“We can defer some of these projects, but they compound over time,” he said.
“We can get by doing nothing for one season, but after two seasons it will start to show.”
Even though the real estate numbers have shown a slight increase, that industry hasn’t yielded any additional revenue, Timmons said.
Timmons characterized the new measures as “damage control” in reaction to the accounting misallocation, saying that the immediate action will have a long term effect.
“I decided that if I had to make adjustments, it would be better to do it now than wait,” Timmons said.
“The actions we take now will have a direct bearing on what happens in 2013.”
Jefferson County Reporter Charlie Bermant can be reached at 360-385-2335 or at charlie.bermant@peninsuladailynews.com.