City of Hoquiam Finance Director Mike Folkers cautioned the City Council that a tight budget is imminent.
“In the past we’ve talked about doing more with less, but at some point we’ll be talking about doing less with less,” Folkers said.
Last night the council held the first of two public hearings for the 2015-16 spending plan.
Folkers compared budget projections to the year 2000 when the city was dealing with a more sound budget.
Total revenues are expected to be about $6.6 million, up $1.3 from 2000. An important distinction, however, is in the source of the revenue. In 2000, taxes accounted for 62 percent of total revenue and state funds chipped in another 20 percent. In the 2015-16 budget, taxes will account for 73 percent while state funds have dropped to 5 percent.
“You’d like to see a bit more diversity, if this was a business and you were looking at products, but today we’re about three-quarters reliant on taxes in the general fund,” Folkers said.
And while additional revenue is positive, increased expenditures outweigh the gains.
Spending has increased some $2.07 million from 2000 — expected to be up to $6.9 million in 2015 from $4.9 million in 2000.
General government spending decreased from 2000 numbers. Where it once accounted for 51 percent of spending, general government now accounts for 20 percent.
Meanwhile, the public safety budget has ballooned from 25 percent to 61 percent. Physical environment expenditures also increased from 2 percent in 2000 to 7 percent in 2015.
The budget presented Monday was a preliminary budget, Folkers cautions, and included every request from each department. Not every request will be met.
Changes will be made before the second budget hearing on Oct. 27, and that budget will reflect a more accurate picture of the 2015-16 fiscal situation.
A recommended budget will be submitted to the council by Nov. 1, and the council will have the opportunity to accept the budget on Nov. 10.
As the budget currently stands, the city is facing challenges including being limited to a 1 percent property tax increase, previous use of reserves and stabilization funds, a lack of growth in revenues, no growth in investment yields and rising electricity costs.
Factors working in the City’s favor include six full-time employee positions that will be freed by attrition, no cost of living adjustments will be given, any increases in medical costs will be passed on to employees, low inflation and gas costs, additional leasing of city property, the contingency reserve fund, and LEOFF (Law Enforcement Officers and Fire Fighters) medical savings options for those older than 65.
The city would like to build the reserves back to a level totaling more than $800,000.
Reserves were tapped by some $400,000 to survive the closing of the paper mill.
The city also plans to not take on additional expenditures. Folkers is asking the city what it can do without.
“We’re going to look at, not cuts — I don’t exactly like that word, and there’s not a lot left to cut in this budget — but we’re going to look at what can we do without,” he said. “We have some difficult decisions to make.”
Later in the meeting, the council voted on the following agenda items:
• An ad valorem (value of property) tax levy was approved. All but councilman Greg Grun voted for the ordinance. (Council members Kim Simera and Kevin Swope were absent.)
A regular tax levy for 2015 also was approved with all but Grun voting for the resolution.
• A 2015 EMS levy unanimously was approved.
Other business
• Declaration of emergency for Eighth Street Landing repairs unanimously was approved. Declaring an emergency allowed the city to repair the damage immediately, as was needed, so they could avoid the bidding process.
• Approved through the consent agenda, the City of Hoquiam will accept pretreated wastewater from Ocean Protein for an undisclosed monthly fee expected to surpass $2,000.
(The numbers have been disclosed to public works but were not available during the council meeting.)
• The Port of Grays Harbor had been scheduled to give a presentation to the City Council, but due to confusion on the city’s end, the presentation was rescheduled for Nov. 24.
• During his report to the council, Mayor Jack Durney discussed the Class of 1964 reunion and their walk through Hoquiam.
He invited upcoming class reunions to reach out to the city for tours facilitated through City Hall.
Durney also announced preliminary plans to restore the caboose in front of the Hoquiam train station. Details will be discussed during the upcoming Re-vision Hoquiam Meeting at 7 p.m. on Wednesday, Oct. 15, at Timberland Library.
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