SEQUIM — City Manager Steve Burkett is tightening the city’s belt even more this year as sales tax revenues remain listless in the North Olympic Peninsula’s commercial center for big-box stores.
Burkett is recommending no pay raises for most of the city of Sequim’s staff of 73 — except union police officers who previously bargained for contracted salary increases.
He also recommends a 2 percent increase on bills for water and sewer service to help pay for them.
“There is no money for salary increases for our nonunion employees,” Burkett said Monday after releasing his proposed
$20.5 million 2012 budget document at City Hall.
“It’s pretty much a status quo kind of budget. Revenues are going really slowly.”
While Burkett is laying out the city’s financial issues, City Council members must make the hard decisions.
The city manager is scheduled to present his proposed budget at a 5 p.m. Monday City Council work session in the council chambers at Sequim Transit Center, 190 W. Cedar St.
The council will conduct budget review sessions Oct. 17 and 24, with a public hearing scheduled for Oct. 24.
Burkett said he will not recommend a 1 percent property tax increase, allowed under state law without a public vote.
Expenditures at City Hall are projected to increase to $440,179, or about 5.5 percent over 2011, compared with proposed revenues projected to increase to $318,516, or 4 percent over 2011.
Burkett said he was proposing that the city use $130,000 in one-time expenses from its reserves to pay for a retiring city mechanic who is now training an apprentice as his successor, and for two police officers who were temporarily replaced while they went on tours of duty in Afghanistan.
Even though Sequim has seen two new large chain stores — Ross Dress for Less and Grocery Outlet — plus an expanded Walmart grocery store on the way, Burkett said those stores are not necessarily boosting sales tax revenues.
Grocery Outlet and the expanded Walmart mainly will be selling food, which is tax-exempt to the city.
The 2012 budget projects a sales tax revenue increase to $86,000 over the 2011 forecast, a 3 percent increase based on new stores and 1 percent growth in the base revenues.
“Sales tax is really only over this year’s budget by $18,000,” Burkett said.
The major element of a $440,000 increase in city expenses includes a $369,000 chunk for salaries and benefits for union-represented police personnel.
Unionized police sergeants will see a 3 percent salary increase while unionized officers are getting a 2 percent raise.
The other non-uniformed police bargaining unit agreed to no salary increase.
Another bargaining group of mainly management level union employees agreed to no salary increases.
Regardless, benefits continue to go up, he said, projecting an increase for health insurance premiums of about 11 percent and a decrease of 8 percent for dental insurance.
Burkett also cited a July 2012 rate increase of 20 percent in the city’s required Public Employee Retirement System contribution.
“This steep increase is a result of the state’s reluctance to increase the rate in recent years as recommended by their actuarial studies,” he said.
Despite the salary freeze for 76 percent of our employees, total compensation costs are projected to increase by 7.1 percent — a rate that is not sustainable in future years, Burkett wrote in his budget message.
“The increase in benefit costs actually exceeds the projected salary increases for next year.”
The issue, he said, will be addressed with bargaining units in 2012 since their contracts expired at the end of next year. The contract for non-uniform police personnel expires at the end of 2014.
Two positions will be eliminated — a communications officer for the Police Department and a temporary assistant city attorney position.
“It is likely that our revenue projected growth will continue to lag behind the projected increase in our expenses,” Burkett reported.
“This will require us to carefully monitor our expenses and to continue to make reductions in future years to keep our expenses below the reduced rate of revenue growth.”
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Sequim-Dungeness Valley Editor Jeff Chew can be reached at 360-681-2391 or at jeff.chew@peninsuladailynews.com.
