Ocean Shores Mayor Crystal Dingler and city Finance Director Steve Ensley presented the 2014 preliminary budget to the City Council last week in an all-day study session that included a few contentious moments but general agreement that revenues and spending will remain fairly flat while the city attempts to build up reserves.
It includes a general fund that begins with an estimated $680,422 balance, about $5.9 million in sources and $5.6 in budgeted uses, for a projected ending balance of $895,932.
It also anticipates a more difficult financial year in 2015, Dingler noted.
“As we went through the year, it seemed to me that council talked a lot about repaying debt, and that was an important issue,” Dingler said of her budget plan. “Building reserves, that is probably the primary issue that we are really interested in doing.”
The mayor said one of the driving forces was paying down the interfund loans passed on from previous city administrations, some of those to satisfy legal debts from the Carillo and Banks lawsuits over city utilities.
“We spent a lot of money and we have debts for those, but we don’t have a building to show for it or new street paving or anything,” Dingler noted of the cost of the lawsuits. “We need to think when we are putting the budget together how we can pay those off as quickly as possible without disturbing the other things we have to do.”
The storm drain utility’s repayment of its 65 percent share on the Carillo lawsuit loan is currently paid jointly with the water fund in $500,000 payments due yearly until 2024, Dingler notes in her budget letter to the council. The storm drain fund also borrowed funds from the sewer fund to pay for the 10-year Banks lawsuit, which the city won while still owing $540,000 for legal costs. The storm drain fund budget includes accelerated repayment of the interfund loan without a rate increase.
In a summary of her budget, Dingler lists the following items:
• $1 million in reserves.
• “Modest raises in staffing levels, bringing back four employees to full-time who had be required to work at 75 percent in 2013 due to budget cuts.” Three staff members would be returned to full-time status, while three summer firefighters/EMTs and one summer employee would be hired on a seasonal basis.
• Purchasing a new ambulance and three new police vehicles “to ensure our safety and protect our persons and property.”
• Replacement of small equipment and computers to increase communications and service.
• A marketing partnership with the businesses and hotels whereby the City will match $20,000 funded by the businesses to join with another $80,000 in script donated by the hotels “to increase tourism and economic development.”
• A $10,000 item to restore spring clean-up as part of the community-wide Firewise effort, as well as money for street edge maintenance, weed spraying and striping of a third of the city streets; “and programs to build fire breaks in the dunes and nourish the beaches.”
Dingler said the money to help with the tourism effort was “an important step … to let people know that Ocean Shores is still here and that we are a vibrant community to come to.”
Another long-term goal is to help build a more walkable and attractive downtown, which Dingler said may hinge on the ability to get grant funding.
“We need to be sure that we have matching money. When we turned down sidewalks from the Senior Center to the Shilo several years ago, we had a grant for that it was like $65,000 or $70,000 for matching, and the city absolutely didn’t have it at the time, so we had to give that grant money back,” Dingler said.
That’s why building reserves is so important, she added.
The Water Fund is the most troublesome area, Dingler conceded, with the city planning in 2014 to build a recommended two new wells.
“Unfortunately, with the lowering of the water rate a few years ago with planned raises in succeeding years that did not take place, the annual payments on the loans for the new water plan, the funds pulled out by the several interfund loans to the General Fund, and water’s share of the Carrillo lawsuit loan, we have literally sucked the water fund dry,” Dingler said in the budget summary.
“Without new raises in the water rate, we will end 2014 with about $10,000 in water fund reserves” and be unable to meet loan payments in 2015 and beyond, the mayor said.
The overall goal, she added, is to build up all the reserves so they “will see us through any other difficulties that arise.”
What’s not in the budget: funding for new parks, design work for erosion control at the jetty, or funds to pay for building costs at the Coastal Interpretive Center.
With all the funds accounted for, the budget lists $24.6 million in estimated sources, and $25.5 million in budgeted uses, with a beginning balance of $11.1 million and an ending balance of $10.2 million.
Ensley noted that about $7 million of budgeted uses go to salaries based on an annual payroll forecast. That represents just over 73 full-time positions, he said.
“For the most part, most of the salaries themselves are flat as to what we have now,” he said.
One upcoming significant retirement is that of Water Supt. Miles Beach, whose salary is still in the budget.
“So the dollars are in there for us to use as a replacement,” Ensley said of the position. There are seven full-time employees associated with the water fund and utility.
The budget maintains the City Council’s contingency fund, established earlier this year, at $147,365.
“We have thought that was a council decision,” Dingler said. “If you want to transfer money from what we consider a reserve fund, that’s fine, too.”
Councilwoman Ginny Hill said she would like to see that contingency raised to $200,000 by the end of 2014.
“It’s a preliminary budget,” Ensley said. “We present it you as the best we can do. It’s all subject to change and subject to council review.”
Speaking for the Coastal Interpretive Center was former City Council member Dick Skewis, who noted he was one of the proponents and citizens who voted in 2011 to remove the center from full city funding. While the center is now run as a non-profit with a lease on the building with the city, it still is running at a deficit, he explained as a board member of the center.
“I notice in your budget this year, the lease states there is funding for the Interpretive Center for two years in the amount of $15,961. To this date, we have used about $9,700 this year. Next year, there is not a line item,” Skewis noted.
The Coastal Interpretive Center now operates with a goal of doing away with city funding by 2015, he said. The city’s funding has helped pay for the building’s operating expenses: insurance, lights, water, and sewer. The center currently has no full-time employees, yet attracted over 20,000 visitors this year, and Skewis urged continued support.
Through the first nine months of the year, the Center has been able to generate $25,754 in donations and $23,204 through the bookstores. Total revenue with all the fund-raising has been $62,837.
“I’m asking to get $10,000 put in the budget, which would be our fixed costs to keep the center open,” he said. “If not, we will be out of our own funds, including the donations we get through the door, and we won’t be able to operate.”
Another former councilman, Bob Crumpacker, appealed on behalf of the Grays Harbor Public Facility District for more money to be earmarked for Convention Center upkeep, noting the city is responsible for the facility’s long-term maintenance. The building is showing signs of rust in places, some of the exterior lighting is not working, and the exterior has not been painted in several years, he said.
Crumpacker, the PFD president, said his board was concerned “that not enough money is being allocated and not enough is being done to maintain the physical integrity of this building. We assume that if the physical integrity of this building is being degraded to a point that its financial viability will also be degraded.”
“You also must invest in the protection of the assets you already have,” he added. “I know that it’s a tough choice and I know it’s hard to get done, but it’s a worthy cause.”
Resident Don Williams said he believed the biggest issue was to take a look at the general fund ending balance.
“Right now, it’s increasing by $215,000, but is that going to be enough given the fact that the beginning balances that Steve (Ensley) said are questionable and other things are questionable? So the big issue is making decisions upon general fund expenditure,” he said.
Any attempt to increase the council contingency fund, Williams said, takes away from the general fund ending balance or reserves. He also questioned why more money wasn’t set aside for more extensive weed control efforts in the canals.
Later, after a second afternoon session, Williams urged the city not to deplete reserves to add funds for something like Convention Center maintenance.
“Don’t come back and say, ‘Take it out of reserves,’ because the reserves are so iffy right now,” he said. “… I hope you come back with some good ideas about what to put in and take out.”
Dingler said cutting services and personnel were no longer options.
“We have cut and cut until this city is barely functioning in some areas,” Dingler said. “So we need to be really careful that we just don’t cut the legs out from under ourselves.”
The City Council and mayor will hold another all-day budget study session Monday, Oct. 21, starting at 10 a.m. at the Convention Center. Public testimony on the revenue portion of the budget was taken this past Monday as this edition of the North Coast News was going to press.