Flat revenue and increasing expenses mean the City of Hoquiam may be using more than $2 million in reserves to balance a still-tight 2020-2021 budget.
City officials said the problem isn’t related to COVID-19, rather a general lack of business growth coupled with growing costs.
“The budget is not pretty,” city Finance Director Corri Schmid told the Hoquiam City Council Monday night. “We are using a lot of reserves in this budget.” The budget is preliminary until the council approves a final version by the end of the year.
About $820,000 in reserves will be used to boost the city’s general fund, and about $1.63 million in reserves will be used for water, sewer and stormwater – on top of a rate increase approved by the council later in the meeting.
Schmid said Wednesday the $2 million-plus use of reserve funds drops the city’s total to about $8.12 million, still around a 40-day cash reserve, “so we’re still sitting really good” as far as reserves are concerned.
“We’ve all, the mayor, Brian (Shay, city administrator) and myself have had detailed budget meetings with all the departments and gone through every single line item and made sure the budget is as minimal as possible,” said Schmid, including cuts in some areas. “We’ve made adjustments to where each department is continuing operations as safely as possible with the budgets we have.”
“Throughout this budget we need to take a step back and be cautious,” said Schmid. “We already do an awesome job in watching what we’re spending, we just need to keep doing that. On any little tiny expense we’re making, we need to take a step back and make sure it’s necessary.”
Revenues have not increased to help the city keep up with funding needed for services, and not because of COVID-19.
“So there are some challenges, a lot of flat revenues,” which are “at a complete standstill,” said Schmid. “We keep hearing about revenue shortfalls due to COVID and that’s not really the case, not for the general fund. It’s due to economic development, industries not coming in here, and the economy is not growing. We need that to grow our revenues in Hoquiam.”
Schmid said Mayor Ben Winkelman has said in the past he’s interested in having somebody within the city who could focus on economic development to grow the city’s revenue base.