Making dollars and sense out of economy

State, Kitsap County, Poulsbo and school districts are bracing for budget cuts.

State could cut Kitsap budgets by $1 million


County Bureau Chief

Kitsap County stands to lose nearly $1 million in law and justice funding if the Locke administration slashes aid to local governments and other jurisdictions as proposed this week.

Washington’s economy, already in a serious slide this year, suffered an even greater setback after the Sept. 11 terrorist attacks. Now state analysts, including Marty Brown, the governor’s budget director, are predicting the state could lose anywhere from $200 to $800 million in revenue.

Gov. Gary Locke and other state officials are trying to brace the state budget against some very grim state revenue forecasts and an economic trend that looks a lot like a recession. They have considered slashing the budget by $1 billion and laying-off state employees.

Also on the chopping block is the $100 million in state aid given out to local governments as a way to offset revenues losses incurred after the state Legislature scrapped the car-tab tax in response to Initiative 695.

Kitsap County is among those governments currently receiving state aid to help replace the lost I-695 revenues.

With state aid, the county was able to authorize hiring eight additional Sheriff deputies to buoy the department, already besieged by as many as 90,000 calls for service annually.

“We could lose out on law and justice funds,” said Kitsap County Commissioner Chris Endresen said. “And there are several deputies who are also reservists. If they are called out, that causes another problem entirely.”

Already in the throes of budget talks, Kitsap County officials aren’t so sure how to approach next year’s budget.

““We just don’t know what’s going to happen,” Endresen said.

you can’t predict what your revenue will be,” Endresen said.

We have to prepare two budgets now — one that includes the effects of I-747 and another that doesn’t.

Poulsbo readies itself to feel the pinch


Senior Reporter

POULSBO — Opting to err on the side of caution, Poulsbo City Council Wednesday night agreed to follow the lead of its advisory finance committee and take a conservative approach to the 2002 budget cycle.

As a result, the city will take what finance director Donna Bjorkman called an “ultra-conservative” approach while setting its figures for next year’s expenditures and revenues.

Not only will Poulsbo hold the line on sale tax for 2002, keeping its expectations similar to those of last year but it will cut its admissions tax to 2000 levels as well.

Although the reduction amounts to about $43,000 it’s the overall message that the city is prepared for any tough times ahead which is most important, finance committee member Ed Stern explained.

“Would it be good for us to keep these numbers and hold the line on the budget?” he asked rhetorically before suggesting, “I’d be more comfortable seeing us be ultra-conservative. We have nothing to lose by being conservative but we do have something to lose by being too optimistic.”

According to Bjorkman, the majority of the reduction — roughly $40,000 — will come through sales tax revenues which will remain at $1.863 million for next year. Admissions taxes, collected from theater ticket sales, make up the additional $3,000.

In 2000, Poulsbo collected about $81,000 in admission taxes and will set the same hallmark for 2002. So far, this year Bjorkman said the city has taken in over $72,000 in admission revenues.

“And Harry Potter comes out in November so it’s going to get even higher,” she added with a laugh.

But for those who think $43,000 out of a $27-28 million budget (the city has yet to set next year’s final numbers) is nickel and dime stuff, Bjorkman pointed out that Poulsbo’s general fund for 2002 is presently at $6,009,000 as opposed to the $6,238,000 set for this year.

“I think the originally proposed figures were conservative and Ed (Stern) wants to be ultra-conservative,” she added. “It’s definitely holding the line. In fact, we’ve been holding the line since 1995.”

With belt-tightening becoming the latest fiscal fashion trend across the United States, the city’s long-running policy is practically worth its weight in gold.

“The (county) commissioners are reducing their budget and Gov. Locke is as well,” Stern explained.

Despite this, he made it clear that the conservative stance would not have a direct impact on city services and improvements next year.

“This isn’t doom and gloom,” he clarified. “This is holding the line.”

Stern said the measures would simply put the city in a better position to assess its financial status next year. While being conservative would not impact existing services, he added, it would keep Poulsbo from having to crystal ball the possible results of the national recession. Instead, the city will be able to look at actual revenues and expenditures from next year before making any decisions for the 2003 budget.

Monetary overruns, he added, will not be viewed as windfalls but rather put into reserve funds.

The economic slowdown is not just something that popped up in the wake of the Sept. 11 terrorist attacks on America, councilman Dale Rudolph pointed out, adding that the nationwide trend had been going on for over a year.

“I’m neither optimistic nor pessimistic,” said Rudolph, noting that Poulsbo is an anomaly of sorts when it comes to finances. “Our revenue doesn’t follow other trends. We should have seen ups and down like everyone else over the last 10 years but we have seen nothing but steady increase.”

Even so, councilwoman Jackie Aitchison said she was a bit concerned about some of Poulsbo’s smaller businesses, which are facing a potentially tough winter season.

“I’m starting to get concerned. The businesses downtown are struggling, and not just the new ones. I’m talking about businesses that have been there for seven or eight years,” she said. “They had a crummy summer.”

Summertime is typically the cash cow for Front Street and the period that ties many over the tourism off-season until the following spring.

After some consideration, Aitchison admitted she had been viewing the Front Street corridor with “rose-colored glasses.”

Lately though, the councilwoman said she was somewhat disheartened to hear that downtown stores were having a tough time.

But its not just the small businesses that are feeling the clench of the fiscal vise. According to councilman Stern, larger corporations — including telecommunications giants and car dealerships — in Poulsbo are also feeling the pinch.

“We don’t want to give the impression that the sky is falling,” Rudolph told his fellow council members. “We just want to err on the side of caution.”

School construction plans safe, so far

Staff Writer

POULSBO — The economic downturn that followed the Sept. 11 terrorist attacks should not delay construction of the North Kitsap School District’s new facilities.

Although Gov. Gary Locke has already put legislators on alert that they may have to slash budgets if the state’s revenues decline as expected, the district’s construction bond, which does include state matching funds, should continue as planned.

“We’re in good shape,” said Terry Heindl, the assistant superintendent in charge of finance. Heindl said that the bond, which includes $60 million of public money and almost $17 million of state matching funds, is not so dependent on the state funds that construction couldn’t be done, then reimbursed by the state later.

Heindl also said there isn’t a risk of the money being slashed from the budget. Because the state already committed to the funds, he said, they will eventually pay them.

“We’ll get them eventually. We’ll just have to wait in line,” said Heindl. “They don’t just forget about you.”

The project which is most dependent on state funds is the new high school in the Kingston area. That project, Heindl said, will need those state funds to be constructed — but that construction’s not scheduled to happen until 2005.

Locke announced this week that state budget cuts could reach $1 billion, including potential government layoffs. He also froze spending on about $400 million of construction projects, including the Poulsbo branch of Olympic College.

While the state’s budget cutting won’t affect the new construction work in the district, it could be felt in other ways, Heindl said. The school district has money invested, and those investments will drop, although not as much as the general economy, due to the stable structure of the district’s investments.

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