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Council looking at budget for past and future finances
POULSBO The estimation that blue skies are ahead for Poulsbos financial future swayed council members last week to dip into reserves.
But they also agreed a review of how they balance the checkbook was also in order.
In a 5-2 vote March 16, the Poulsbo City Council approved a plan that will cover a $72,700 gap between beginning balance funds and the recommended Level of Service (LOS) and New Program requests in the 2005 budget. The measures, a combination of transfers from savings and increasing estimated revenue line items, came from Finance Director Nanci Lien with additions from council members.
Poulsbo estimated a beginning balance of about $450,000 in the 2005 budget and excess revenues came in at $512,000, leaving $62,115. Nearly $49,000 of the excess was already spoken for, leaving nearly $13,500 to cover $83,300 in tentatively recommended LOS and New Program requests.
In order to counter this issue, council approved:
Reducing the general fund expenditure for insurance by $20,000 in accordance with an Association of Washington Cities re-assessment
Increasing revenue for Zoning-subdivisions by $15,000
Increasing revenue for Building Permits by $10,000
Increasing transfer from Revenue Stabilization by $13,500
Transferring $11,420 in LID excess funds
On paper, council has dipped into its savings this year but Councilman Jeff McGinty reminded fellow council members that a true transfer may not be needed. Each year, Poulsbo ends up with excess revenue such as this years $512,000 carryover number. McGinty said if extra revenue is generated in 2005, that amount could cover the transfer from reserves instead.
In reality, we shouldnt have to touch the reserves. But by law, we have to designate where that money is coming from, McGinty said.
In addition to Liens above suggestions, council also approved cutting $650 that was earmarked to be carried over for a council retreat and a recommended $2,750 expenditure for a city newsletter.
Councilwoman Kathryn Quade and Councilman Jim Henry cast the two dissenting votes. Before the question was called, Quade expressed distaste for axing the retreat and newsletter funding since they would not make a large difference in the budget and were things she felt were needed.
Councilman Ed Stern countered while the additional cuts were not a large amount, they showed a good faith effort on behalf of the council to hold itself to the same strict budget it was requiring of departments.
The root of the budget problem, Lien explained last week, is the issue that Poulsbo departments have been held to flat budgets for 10 years and yet revenues consistently exceed expenditures each year. The situation was what prompted an across-the-board cut in the 2003 budget. But carryover numbers, which come in during the first quarter of the new year, are typically the saving grace. In the case of the 2003 cuts, most of them were able to be restored once carryover was known.
Weve been just happy to spend that extra revenue and not dip into the reserves but now were dipping into reserves, Councilman Mike Regis commented of the situation. Were getting too close to our reserve pocket.
A compounding issue this year is that many LOS requests were for things like fuel, electricity, phone service, maintenance and other basic necessities. The request process is meant to address additional budget needs department heads cannot absorb into their current budgets without affecting the current level of service. During last Wednesdays Finance/Administration Committee meeting, McGinty questioned whether requests for necessities, which he did not feel comfortable denying, belonged in the LOS process.
I dont remember seeing anything on this before that was, Were going to shut down the city without them, McGinty said.
Stern added he felt council needed to undertake a review of the current zero-based budget to determine whether it is working or not. The Finance/Administration Committee will be leading the charge, which he hopes will point to areas where Poulsbos budgeting processes could be strengthened.
We havent had a discussion like this before because weve always had a positive carryforward but we should have had this discussion, Stern said.