by Matt Rosenberg October 25th, 2011
A financial audit on the city of Port Townsend released Monday by the office of Washington State Auditor Brian Sonntag warns elected officials and city staff that the municipality’s finances are badly eroding.
The city of 8,925 is a distinctive and historic Northwest locale about 40 miles northwest of Seattle, known for its Victorian architecture, vibrant arts community, maritime history and as a haven for vacationers and retirees.
Its annual expenditures from 2006 through 2010 have ranged from $6.4 million to $7.6 million. The audit states: “The city is at risk of not being able to meet its financial obligations,” emphasizing that:
- The city’s cash balance declined from $258,408 in 2006 to $40,700 on August 31, 2011.
- In three of the last five full fiscal years (2006-2010) the city has spent more than it has taken in, with deficits of $212,841 in 2006, $64,926 in 2008 and $193,888 in 2009.
- The city’s long-term debt has grown from $14.4 million in 2006 to $21.1 million in 2010, and in 2010 the city agreed to guarantee $625,000 of the regional fire district’s debt.
The audit states that “the city’s tax revenues and financial position have worsened because of “the downturn in the economy, the temporary loss of ferry services in 2007, closure of the Hood Canal Bridge in 2009 and the ongoing stagnation of the real estate market.”
The city hasn’t cut costs enough, according to the audit. It should draft a formal written comprehensive plan to improve its financial standing and city officials should keep a closer eye on the city’s financial performance while ensuring the plan is followed, and successful.
The city replies in the audit report that its 2012 proposed budget, to be deliberated starting in late October, would cut general fund expenditures $906,000; and reduce utility expenses $800,000 by shifting engineering overhead to a capital account, “thereby stabilizing the rates and financing of the utility.” In addition, the city says a special purpose levy vote in November, if approved by local voters, would fund the city’s debt guarantee for the fire district and “remove any further diversion of income from the general fund.” Together, if adopted, these steps will allow the city to replenish its reserves, meet its obligations and “be on a solid road to recovery” in the next three to five years, the city states.
Donate to our parent non-profit.