PORT ANGELES — The impending shutdown of the McKinley Paper Co. mill possibly through late 2018 could cost the city of Port Angeles $475,000 in lost utility taxes, City Manager Dan McKeen said last week.
The loss in 2017 is estimated at $315,000 and for 2018 would be about $160,000 more, he said Friday.
But although the city should be able to adjust to the loss without increasing rates or cutting services to ratepayers, a more precise reading on the impact on 2018 finances won’t be known until later this year, when the 2018 budget will be put together, he said.
McKeen assured the city council at its meeting Tuesday that a combination of low expenditures, higher-than-expected revenues and built-up reserves will result in status quo rates and no impact on city employment levels at least through 2017.
McKeen said those are his expectations even under the worst-case scenario of McKinley, which purchased the Nippon Paper Industries USA mill March 31, shutting down for 18 months, as McKinley officials have said might happen.
“By far, they are one of our biggest tax providers,” McKeen told council members.
“The good news is, because of how we’ve positioned ourselves, we will be able to adjust the budget in 2017,” he said, adding he’ll be back with a budget amendment later this year to deal with the shortfall without laying off city employees.
Revenue was higher in sales taxes, for example, while spending has been delayed for large pending capital expenditures such as the Laurel Street stairs project, McKeen said.
City officials will employ “a little belt-tightening,” McKeen said, “to weather the storm, and in a very responsible way, and not even dip into reserves.”
McKeen did not know the full impact of the shutdown while McKinley retools the paper mill to manufacture cardboard-box paper “until we actually get into the [2018] budget and estimate our total revenue for 2018 as well as any anticipated expenditures for 2018,” he said Friday.
“At this point, we are optimistic we will be able to adjust for that also.”
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Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or at pgottlieb@peninsuladailynews.com.
