The city faces an estimated $725,000 budget deficit in 2009 for its $8 million general fund budget, the city council was told at its Monday morning work session.
Interim city manager Bob Spinks and administrative services director Karen Goschen said closing that gap could include such steps as enacting new revenue sources and increasing existing ones, postponing the city hall and police station projects, layoffs and switching to a four-day, 38-hour work week.
Other steps could include reducing city services to match reduced revenue, creating a municipal court to save money on district court costs and creating storm water and reuse water utilities that could collect utility fees.
Spinks said an Oct. 6 study session is planned to discuss the "goals, principles and policies" necessary to develop the budget.
Then the preliminary 2009 city budget will be presented at the Nov. 3 study session, he said.
Goschen said the focus of Monday’s two-hour-plus work session was on the city’s $8 million general fund portion of the city’s $23 million budget.
The general fund includes everything that people generally associate with city government, including the police department, parks, building permits and code enforcement, planning, finance department, city attorney, city clerk and the city manager and council.
Goschen said the city’s revenue includes $1 million from property taxes, $2.2 million from sales taxes (down from $2.6 million), $710,000 in utility taxes and $355,000 in development fees.
The city will have a limited number of capital projects in 2009 as it did in 2008, she said.
The city might have to use part of its beginning fund balance, typically used for emergencies or one-time capital purchases, in 2009, Goschen said.
The goal for 2009 should be a $750,000 fund balance, Goschen said.
Spinks said city staff is anticipating the city will follow the general economy in 2009 and then see a surge in new retirees moving here in 2010.
City staff also is projecting a 25-percent increase in the cost of utilities, fuel and chemicals such as those used at the city’s water reuse plant, he said.
"Layoffs aren’t out of the question," Spinks said.
A four-day, 38-hour work week and less overtime for selected employees also is being considered, he said, noting the city’s labor union sent a letter opposing that idea.
The police department has deferred between $300,000 and $500,000 in expenses but the planning department needs to hire at least one more person, Spinks said.
"Across the board budget cuts aren’t strategic, they are stupid," Spinks said.
They also can increase the city’s liability and violate state laws, he said.
Spinks said if the city doesn’t create its own municipal court in 2010, it must wait another four years so a more detailed report will be presented at the Sept. 22 council meeting.
A municipal court would cost $45,000 to start up but save an estimated $78,000 a year in addition to precluding the city’s legal staff and police officers from traveling to Port Angeles, he said.
Goschen said city staff must hear the council’s priorities to finish developing the budget.
Spinks said normally the city manager presents the city budget to the city council in November but this is an unusual situation because of having both an interim city manager and interim Public Works director.
Normally cities with interim city managers go into a holding pattern but this city has a project list that would be extensive even for a long-tenured city manager, Public Works director and council, he said.