PORT TOWNSEND — The city’s 2012 budget, which the Port Townsend City Council considered on a first reading last week, depends upon passage of a proposed property tax levy lid lift that’s still not decided.
If final numbers from the Nov. 8 general election vote, which will be released Tuesday, show that the measure has passed, then the present budget will stand, said City Manager David Timmons.
If the measure fails, cuts making up about $625,000 will need to be implemented, he said.
The Port Townsend City Council approved the budget on a first reading Monday and will consider it for final approval during the second reading on either Dec. 5 or 12, Timmons said.
The present operating budget projects revenues of $19,325,838, with $19,469,176 planned spending.
Although expenditures are projected to exceed revenue, an existing general fund balance is expected to leave $2.3 million in the general fund by the end of the year.
The total budget — including capital, debt and trust funds along with the operating budget — is projected with revenues of $27,274, 554 with expenses of $28,102,470 but still leaving a 2013 beginning fund balance of $9,171,879.
Final numbers for the proposed property tax levy lid lift are up in the air.
The tally of votes from the Nov. 8 general election show the measure passing by seven votes — 2,086 votes, or 50.08 percent, to 2,079 votes, or 49.92 percent.
That margin means the election is too close to call, even though a simple majority will approve it, said Jefferson County Auditor Donna Eldridge.
The outcome of the Nov. 8 election will not be known until Tuesday, when the final votes will be counted just before the election is certified.
The measure would increase property tax at the rate of $2.4868 per $1,000 assessed value to pay for fire and emergency services that the city contracts from East Jefferson Fire-Rescue.
“If the levy fails, there will be no easy solution or simple fix,” Timmons said in the preliminary budget plan presented to the council.
Assuming the $625,000 to be generated by the levy lid lift is a fair assessment, then a revision of that amount will be necessary in order to balance the 2012 budget, he said.
If voters reject the proposed levy, then the first step will be a negotiation with East Jefferson Fire-Rescue to determine the city’s fair share of fire services, Timmons said.
If a successful negotiation can’t be achieved, both parties will need to enter into binding arbitration, he said in his memo to the council.
The proposed budget aims to restore the cash reserve for the general fund in two years.
The reserve has slipped below the policy level of 5 percent to 8 percent of the budget “due to the challenges the city has been facing,” Timmons said in his memo.
“While this worked during the past three years, it is now time to begin a process to restore the fund reserve,” he said.
“This will be a multiyear process and may take up to five years if the economic conditions do not improve and the fire levy fails,” he said.
Other potential savings outlined in the preliminary budget:
■ Stabilizing payroll and benefit costs would save $188,000.
That would require a new health care plan for nonunion employees, reduction of benefit levels and the continuation of the wage freeze that has been in effect since 2009.
Two clerk positions in the police department were also cut as of the end of the year.
Timmons said he does not anticipate any more personnel cuts if the levy lid lift passes.
■ Streamlining the city’s structure through a reorganization that folds eight departments into six is another way to save money, according to the plan.
New departments created would include public services (including development services, community services and planning) and public works (including utilities and streets and trails).
The new structure would result in significant payroll savings, spread the work around departments and pass development review costs onto applicants, Timmons said.
Optimistic
Timmons expressed optimism about the budget, saying it “represented a turning point for the city’s financial picture.”
Timmons said the city’s continued investment in civic improvements has protected it from a harsher economic situation.
Timmons said investment in the city’s maritime core has provided new stimulus to the downtown area, with September’s festivals — the Wooden Boat Festival and the Port Townsend Film Festival — drawing record attendance figures.
“The only downside is that the real estate market has yet to rebound,” he said.
“This market sector may require another two to three years before we see any consistent activity.”
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Jefferson County Reporter Charlie Bermant can be reached at 360-385-2335 or at charlie.bermant@peninsuladailynews.com.