State budget impasse creates risk for city

UPDATE: Lawmakers have reached a budget deal, averting a government shutdown, as of noon Thursday.

UPDATE: Lawmakers have reached a budget deal, averting a government shutdown as of noon on Thursday, according to the Everett Herald.

As the state Legislature’s budget session drew closer to the end of the fiscal year, departments sent out forewarnings to municipalities that their grant funding may not be disbursed on time.

Poulsbo’s 6th Avenue improvement project was caught in the state budgetary impasse.

“I’m relieved if thats the case,” said Mayor Becky Erickson on Thursday. “I’m just very glad that the Legislature have got their work done. It does take the uncertainty away … We’re not the only city that this is happening to.”

The project will replace water and stormwater pipes under 6th Avenue, install rain gardens and other stormwater treatment, install handicapped ramps on sidewalks and a raised crosswalk at 6th Avenue and Matson Street. The project is scheduled to begin Thursday.

Erickson called a special City Council meeting Wednesday to discuss the options regarding funding the project. She said she received a letter from the Department of Ecology on Monday, stating that in the “unlikely event the state operating budget is not enacted by July 1,” the department cannot appropriate the grant funding.

The $274,000 Ecology grant comprises 23 percent of the 6th Avenue project’s budget. The rest of the $1.44 million budget comes from city funds.

The state Legislature had not approved a budget as of press time Thursday.

Finance Director Deb Booher said the city has no choice but to sign the letter from Ecology; if Erickson doesn’t sign the letter, Ecology will revoke the grant.

The council discussed its funding options: continue with the project, suspend the contract, or terminate the contract. The city would need to pay the contractors, Primo Construction, between $8,000 and $10,000 a day if the contract is suspended, but up to $230,000 if the contract is canceled.

Erickson said once the state budget is approved, the grant will be included and appropriated. However, Assistant Director of Public Works Andrej Kasiniak also warned of another scenario: Ecology staff said if the project continues while the budget is not set, they could not guarantee those funds would be reimbursed, because the state budget was not set yet.

“This is a $274,000 gamble, effectively,” Erickson said.

Kasiniak said staff recommended the project continue, as it is possible but unlikely the city would not receive the full or reimbursed grant.

The council agreed, and all voted for the mayor to sign the letter, and to continue the project (Councilmembers Musgrove, McGinty, Nystul and Stern by phone, as they were out of town).

“We have the funds to cover [the project], at the worst case,” Councilwoman Connie Lord said. “It’s unfortunate the state can’t get their act together. We’re really fortunate that [the City of Poulsbo has] our financial house in order so we can do this. It would be awful to close down that project.”