Despite a year of lower-than-expected revenue, Hoquiam is financially stable, said city officials at a Monday Hoquiam City Council meeting, but the city’s two-year budget will have to be changed to make up for lost revenue due to the Harbor Paper shutdown.
The city had budgeted $500,000 in business and occupation taxes form Harbor Paper for the 2013 through 2014 biennium, but the mothballed paper mill has only accounted for about $100,000 in revenue to the city, said Hoquiam Finance Director Mike Folkers. And with no sign of a mill restart, any additional revenue from the company is unlikely.
“Obviously, we’ve lost our biggest employer, and that’s had a big impact on us,” Folkers said. “So that’s my problem today, trying to figure out how we’ll make up that $400,000 in 13 months.”
But Folkers said the city is well on its way to making up for the budget deficit, with savings in various departments. The city will save about $187,000 over the course of the biennium with new health care plans for current city employees and retired police officers and firefighters.
Hoquiam now uses a self-insurance model for current employees and a Medicare Advantage plan for retired police officers and firefighters.
Folkers said an additional $50,000 can be found by using real estate excise taxes. The city currently collects a 0.25 percent tax on real estate sales, and the money is placed in an account that funds new buildings, sidewalks and streets. The state Legislature allows cities to use some of this money for maintenance, and Folkers said Hoquiam will do so in 2014.
The city also received about $30,000 more than expected in utility taxes this year, Folkers said. Some Hoquiam departments have surplus money, which will be moved into the city’s general fund.
To make up for the remainder of the deficit, three empty city positions will remain unfilled: deputy fire chief, parks foreman and a police officer position.
“I’ve used the phrase ‘I’m not ready to panic yet,’ and I’m still not ready to panic,” Folkers said. “I’m still here and we’ll work it out.”
Besides the Harbor Paper revenue loss, the city’s finances have been stable this year, Folkers said. Despite the recession, Hoquiam hasn’t lost much money in sales tax revenue.
“Throughout this economic downturn, for the first nine months of the year we’ve remained at about $30,000,” Folkers said. “And that’s pretty astounding considering the way the economy has gone.”
Folkers also thanked Hoquiam employees for their fiscal responsibility. He said all of the departments are on track to stay within spending projections this biennium.
“I’m still impressed today and proud to work with these people, the way they control the money they spend,” Folkers said. “It would be a whole different conversation if we had department heads that overspent money, which I’ve seen at other places I’ve worked. But these guys are phenomenal.”
“The expenditure control is not the thing we have to fix, it’s the revenue that we have to fix,” he added.
The Hoquiam City Council will vote on budget changes during a Nov. 25 meeting.
Meetings are hosted at Hoquiam City Hall and begin at 7 p.m.
Amelia Dickson: 360-537-3936 or firstname.lastname@example.org and @DW_Amelia on Twitter