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Sequim council increases reserve level

Eyeing a tight budget and what could be a lengthy national recession, the Sequim City Council decided at its Oct. 13 meeting to put away a little more for upcoming rainy days.

The city's general fund reserve or fund balance will increase in the 2009 budget from $750,000 to $1 million, roughly 12.5 percent of the $8 million general fund.

Administrative services director Karen Goschen said she could use some of the $375,000 the city has been transferring to the city hall fund to increase the reserve amount.

The discussion was one of several during an almost five-hour meeting last week prior to city staff compiling the first draft of the 2009 city budget that will go to the council in early November.

City Councilor Paul McHugh asked how much a 5-percent fund balance would total.

Goschen said for an $8 million general fund, a typical 5-percent fund balance would be $400,000 although cities usually keep 8 percent.

Goschen said a higher fund balance will require deeper budget cuts. The finance department always reminds department heads that just because something is in the budget doesn't mean they have to spend it, she said.

City Councilor Walt Schubert said it might not be a popular view to take but the country is in a recession that won't be over soon.

Goschen first suggested transferring $250,000 out of the $1 million city hall fund to the city's general fund.

But after Mayor Laura Dubois expressed concern about drawing the city hall fund down too far, Goschen proposed just not transferring all the $375,000 from the general fund into the city hall fund as was originally planned.

Goschen said the $375,000 comes from increasing the city's utility tax from 3 percent to 6 percent.

The money is set aside because of bond requirements for the financing of a new city hall but they can delay adding to it because the city hall project is delayed, she said.

City Councilor Erik Erichsen asked if that was "real money" or just money that was being forecast to be collected.

Goschen said utility taxes are fairly stable so that is a realistic amount.

"So we could start the year with $1 million in real money?" asked Schubert.

Goschen said the city could at least end 2009 with $1 million, not start with that much.

City Councilor Bill Huizinga said they should review that quarterly to ensure they have $1 million in "real money" in the general fund balance.

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