HomeMy WebLinkAbout09City of Port Townsend
(360) 379-5047 (email: citycouncil@ci.port-townsend.wa.us) www.ci.port-townsend.wa.us September 2004 From City Manager David Timmons This is a critical year for many municipalities in Washington. In discussions with many of my
counterparts, I have learned that numerous cities are pursuing ballot measures to address their
community’s finances. Unfunded mandates and referenda have taken their toll and many public
entities are facing very difficult challenges. Recently Jefferson County issued its annual State of the County
in which they describe their financial situation as a “Budget Train Wreck,” citing the growing gap between
revenues and expenses combined with the difficult challenges ahead. The City is no different. The follow-
ing chart shows the current trend.
Financial challenges “trickle down” to the City of Port Townsend from federal, state and county levels.
While the County struggles with the loss of federal and state aid to fund core services, it seeks out ways
to maintain a balance without loss of services. A recent example of this is the County’s decision to ask the
City if it would assume liability for the uptown Community Center. This would relieve the County of a finan-
cial burden, but at the expense of the City’s finances. Added to this are repeated efforts by the County to
have the City pay a portion of the County Health Department budget.
The County’s situation is reflected in the partnerships between the City and County. The pool is an exam-
ple of a service the City inherited and now supports. A number of years ago a decision was made to trans-
fer liability of the pool from the schools to the County to the City. Rather than face pool closure, the City
agreed; however, this asset did not come with full funding. The excess operating costs of the pool were ab-
sorbed within current funding and came at the expense of other city services.
Initiative-695 removed capital funding available to
parks and roads. This initiative was not approved
locally, yet we now have to defer much needed
capital projects as a result.
The chart, “City Recreation, Pool and County Con-
tracted Services”, shows the City’s rising costs due
to the pool and county services. Preliminary esti-
mates show the City paying 32% more for county
services next year.
In 2001 the funding for “City Recreation, Pool &
County Contracted Services” was $1,000,000. The
total property tax levy for city services that year was
$1,500,000 which meant the City only had $500,000
left to allocate to all other services.
6-YEAR SUMMARY GENERAL FUND RESERVES
-$600,000
-$400,000
-$200,000
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
2002 2003 2004 2005 2006 2007
The above chart represents a "do nothing" scenario
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
19901991199219931994199519961997199819992000200120022003
City Recreation, Pool & County Contracted Services
City Recreation & Pool Services County Contracted Services
Citizens have inquired about options for a levy rate increase. The following are alternatives for consideration:
•Cut costs. Many measures have been implemented to cut costs. One is forming partnerships to achieve
economy of scale. The County is a principal partner in providing Jail, Court, Animal Services and Technol-
ogy services, but there are many others. Fire services are being consolidated where feasible. Recreation
opportunities are being expanded with the YMCA while capping the City’s cost for five years. More recently
the Police have begun partnering with the County Sheriff’s Department in joint ventures.
•Alternative taxes. Currently the only non-utilized taxes available are the Admission Tax, Gambling Tax and
Cable Tax. It is estimated they would raise $1,700, $75,000 and $65,000 respectively - not enough to bring
a resolution to the overall deficit; however, they are being evaluated for specific programs.
•Local Improvement Districts (LID). LIDs are a useful capital construction financing tool and should not be
used to address maintenance concerns. LIDs have a high overhead cost and are a special assessment to
benefiting properties. LIDs are often used for larger capital projects. The City is pursuing this model for the
Howard Street extension.
•Bond for street improvements. Bonds are debt, carry interest, are time limited and are best used to ad-
dress long term capital projects. They also require an organization that can manage a massive program as-
sociated with a bond. It has been suggested that the City go for a bond for deferred maintenance improve-
ments. Much of the City’s deferred maintenance affects city streets. This will require careful coordination
with underground and overhead utilities. Bonds would provide all the money at once but the City’s utilities
are not staffed to manage coordination of the magnitude which a bond would require.
•Reduce staff and have them pay more for benefits. Current staffing is lower than it was in 1998. Since
staffing is geared to programs, reducing staff means reducing programs. Since 1998, staff has been reduced
in general services departments, but increased in public safety. Calls for service in public safety have grown
an average of 10% per year for the last five years. There are currently three Firefighter positions that are va-
cant and require funding before they can be filled. Employees are paying more for their benefits since the
City switched to a co-pay plan for health insurance in response to rising costs. The City has binding arbitra-
tion with three bargaining units - Police, Fire and General Government - and each round of contract negotia-
tions with the employees has brought more cost conscious agreements.
•Special district overlays. With voter approval, we could overlay a special district with its own tax rate and
governance for either parks, fire or library. This would result in additional revenue for the district and less
revenue and expense for the City; however, it would also result in giving up control to a separate governing
board.
•Cancel the Annex project. Canceling the Annex project would repeat the decisions that have brought the
City to its current situation. Process is good, but when process leads to indecision, there is a price to pay.
Long-term neglect of the City’s assets has had a price and City Hall is just one example of the cost associ-
ated with neglect and indecision. In addition, property taxes are not paying for this project. It is being paid
for by restricted funds. Canceling the project
hobbles the City with escalating rent.
•Follow the County’s lead. In an attempt to
find a way out of its current predicament, the
County proposes to borrow money from its
street fund. The City has evaluated its
growth factor and for us, expanding our
sales tax does not pencil out. In addition,
the City has been waiting for years for a so-
lution from Olympia, but ironically Olympia
has greatly contributed to our problems.
While waiting, the City has “borrowed” from
its street fund only to now find the streets in
a desperate state. It seems only appropriate
we look to you, the citizens, for a solution
that can be locally agreed upon and imple-
mented.
General Fund Taxes by Category
Property Tax - General
28%
Property Tax - EMS
7%
Retail Sales Tax
30%
Retail Sales Tax - Criminal
Justice
2%
Public Utility Tax - Water
3%
Public Utility Tax - Sewer
5%
Public Utility Tax - Garbage
2%
Public Utility Tax - Storm
1%
Private Utility Tax - Cable
Franchise
1%
Private Utility Tax - Telephone
4%
Private Utility Tax - Electric
7%
Business & Occupation Taxes
8%
Leasehold Excise Taxes
2%