PORT TOWNSEND -- The Port Townsend City Council passed the first reading of the first budget supplement of the year, which includes more than $3.57 million in new spending. Including transfers, the total expenditure increased more than $6.74 million.
Of the actual spending, new grants totaling more than $6.1 million will be budgeted for more than $1.08 million this year. Non-grant spending was approved to increase by $2,484,479, according to an agenda document.
Funding from unfinished projects from last year, referred to as carryforward, made up $2,325,157 of actual spending increases, while other new spending made up $1,246,670 of the supplement.
The increased expenses come from several primary buckets: carryover, cost allocation and equipment rental and revolving (ERR) updates as well as newly awarded grants. Carryforward refers to money from projects approved by the council in the previous year that was carried over into the current year.
The supplement was larger than typical because it included a review and update of the city's cost allocation plan and ERR fund methodology, said Jodi Adams, the city's director of finance and technology services, who presented the supplement to the council on Monday.
A total of $1,790,827 in carryforward expenditures is included in the supplement.
"The biggest carryforward is water capital (projects)," accountant Isaac Johnson said. "Of that, about $500,000 is the water meter replacement project. There was a chance that project could have happened by the end of (last) year, but it didn't, so we have to carry that project amount into the current year to finish that project out."
Other carryovers include $245,812 for the Seton Mill Road project and $450,000 for a street sweeper ordered last May that is not expected to be delivered until December.
"When you're doing the budgets in July and August, you're making your best guess at the end of the year. You never know how the year's going to finish out," Public Works Director Steve King said. "It's bad, bad news with the auditor if you don't budget enough and you come in negative, so you always are optimistic about what you're going to get done so you don't have a shortfall in that year."
The finance department updated the city's cost allocation plan, which refers to internal services at the city.
Cost allocation takes into account services from the finance department, like accounts payable and payroll, as well as services from human resources, the mayor and city council, the city clerk and the city manager.
"It is prudent to update our methodology at least every three to five years," Adams said.
It has been about five years since the most recent methodology update, Adams added.
Communications and marketing and the city attorney also provide internal services, but they were not included in the current update and will continue to be paid for by the general fund, according to city documents.
The cost allocation plan allows the finance department to spread the expenses for those services across every department making use of them, rather than relying exclusively on the general fund, Adams said. This update added $200,154 to the budget.
Another component of the supplement is the new Information Technology (IT) ERR plan. Rather than charging based exclusively on full-time-equivalent numbers in each department, the new plan charges based on device units, weighting some units higher than others depending on required maintenance time and storage usage to distribute $560,278 in costs according to city documents.
The supplement also included $467,803 for Lawrence Street water infrastructure and a $268,000 increase for the chip seal program. A $100,000 increase for unemployment insurance was included. Facility safety also was prioritized with funding for city hall elevator and sprinkler inspections and security cameras at the city shops.