POULSBO — The city’s already conservative budget may have to become even more conservative soon if certain impacts to its 2004 figures take place.
This week, Finance Director Donna Bjorkman told the Finance/Administration Committee that the difference between this year’s carry-forward and needed expenditures will likely be very little.
“It’ll be really close,” Bjorkman explained. “What this does is these new programs or level of service increases that normally come out of the carryover dollars wouldn’t be funded or would have to come out of council reserves.”
Though actual figures are not yet known, Bjorkman said it is estimated that carry-forward will come in at about $600,000 this year. Of that, expected expenditures include:
•Already budgeted expenses — $444,000
•Labor and Industries increases — $6,500 (general fund)
•Bargaining unit health care — $205 per person per month ($113,000 if current mitigation lasts all year)
Besides that potential $563,000, retirement benefits are also expected to increase by a yet-unknown amount and there will be some small miscellaneous expenses from the carry-forward dollars.
Despite the way the figures could stand, Bjorkman said the good news is that budget cuts are not yet expected like last year.
Just before the 2003 budget was passed, departments were forced to trim 4.8 percent of their budgets until carry-forward numbers were known. That cut amounted to nearly $169,000 city wide. In March 2003, an available carryover amount of $121,000 was announced and the Poulsbo City Council decided to redistribute about $83,000 of that amount, leaving almost $38,000 in reserve.
The 2004 situation is not as bleak, especially owing to the fact that those trimmed numbers became the base line for this year’s budget.
Bjorkman said another ray of hope lies with the amount needed for bargaining unit health care costs. She explained that the city council approved budgeting $750 per employee per month for all city staff in 2004, however, the Teamsters local 589 is currently on a health plan that costs the city $855 per person per month. While the city is in mediation with that unit, their contracts must remain at current levels but if the issue were resolved, the city might not have that expense.
“We have gotten a mediator. She has contacted us to set up a time so that could mean we’re not going to need that $113,000,” Bjorkman said.
But if Poulsbo pulls through this financial crisis, there may be still more on the horizon, Bjorkman commented. One such concern is with the streamlined sales tax being proposed by the State Department of Revenue in this year’s legislative session.
The measure, prompted by federal legislation, aims at creating a sales tax payment method for Washington that will have taxes based on the destination of goods, rather than on the origin of sale. Bjorkman gave the example of Nilsen’s Appliance in Poulsbo selling a washer to someone who lives at Island Lake.
“If they delivered it, the sales tax would go to the county but if the person buying it picked it up at the store, the sales tax would go to Poulsbo,” she said.
Bjorkman explained that the system is meant mainly to create one method used by all states and to deal with Internet and catalog sales, which don’t currently charge sales tax.
“The plan is to have a sales tax on all goods sold so there isn’t the unfairness to the local merchants who have to collect sales tax,” Bjorkman said.
But since sales tax is passed on to local jurisdictions, the new system has the potential to have major financial impacts. An estimated $24 million in sales tax revenues could be lost by about 97 jurisdictions. The City of Poulsbo would be among those at a loss, with an estimated $84,000 in revenue going to other jurisdictions.
The Association of Washington Cities is working with DOR to create some sort of mitigation to lessen the impact, however, Bjorkman said it is too soon to tell if and how much cities will be helped.
“Basically, (AWC is) asking, ‘Don’t make any moves until it’s necessary and you have a mitigation plan in place,’” Bjorkman said.
