The Poulsbo City Council passed a 2010 budget Wednesday that will spend almost $700,000 from reserve funds.
Nearly $400,000 would be drawn from the city’s revenue stabilization or “rainy day” fund to cover a possible deficit, leaving $1.37 million in the account. The city will dip into the reserves of various departments to pay for projects like road work and construction projects.
Poulsbo Finance Director Deborah Booher said the city probably won’t have to draw all $400,000 to the general fund, unless revenue is worse than expected.
“The concern is, if it comes in even lower than we are anticipating, what do we do then?” Booher said.
The budget was unanimously approved, though some council members said dipping into reserves was worrisome.
“Reserves are to deal with economic downturns but also real emergencies,” Councilwoman Linda Berry-Maraist said.
Councilman Dale Rudolph said it showed foresight on the council’s part that reserve money was available.
“That’s why we’re not laying people off and cutting major programs, and that’s to our credit, I think, to have laid that money out there,” Rudolph said. “If things don’t get better next year, as many people have said, that’s when the real cuts will be.”
The city’s projection for 2010 is based on this year’s sagging revenue. Sales taxes have come in at about $200,000 less than expected. Real estate excise taxes are down 36 percent, though returns in November were the highest of the year.
The finance committee has adopted a policy for prioritzing 2010 budget cuts, if revenue comes up short again.
Council members will review finances monthly, instead of quarterly. If reductions are needed, the council would start with equipment purchases, then cancel outside consulting contracts, and finally, consider staff furloughs.
“At finance, we really hashed this out, that fourloughing any of our employees will be last on the list,” said Councilwoman Connie Lord.
Not everyone agreed staff should be protected before programs, including Berry-Maraist, who said the furloughs might have only a “small impact” on staff.
The finance committee’s approach would mean continual reevaluation of city spending. The proposal to purchase two new Chevy Tahoes for the police department for $100,000 will be reexamined early in the year. The city can bid on vehicles during windows in March and September.
Booher said city staff already keeps constant tabs on revenue and expenses. The fincance committee’s policy shows a new dedication by the council and incoming Mayor Becky Erickson to keep a closer eye on finances.
Following the passage of the budget, outgoing Mayor Kathryn Quade congratulated the council and staff on a “good budget.”
“This is definitely a difficult time,” she said.
