On Dec. 2, the Port Townsend City Council approved their 2025 operating and capital budgets, totaling $68 million in expenses, $66.2 million in revenues and a projected ending fund balance of $34.1 million, down from $35.9 million in 2024. 

The budget has been in the works since July. It reflects a 12% increase in expenses and anticipated revenues from the city’s 2024 budget. 

The city will spend $1.8 million of its reserves to balance next year’s budget. City staff didn’t make any significant changes to the preceding budget draft.

“City Council has indicated a preference for spending down some of our reserve on key one-time expenditure priorities, which also brings the general fund reserve down closer to its intended reserve policy range,” City Manager John Mauro, the city’s manager, wrote in an email. “We’re in a fortunate position of having far more general fund reserves than we require in our policies and the rationale, generally, for drawing some of that down is that we should be putting those funds to use to benefit our residents while also ensuring we meet the set policy to be ready for unplanned circumstances.”

Mauro wrote in his budget message to residents that he and city staff “continue to be challenged by macroeconomic conditions beyond our control, like escalating costs of materials and labor or local and regional conditions like seemingly impossible housing affordability.” Despite that,“we’re always up for a challenge and keep a persistent focus on the future of our community. Over time, we believe that by making tough decisions and sticking together, we can make things fairer and better for everyone.” 

The message for residents described the final product as “a smart and forward-thinking budget that reflects the community’s values and sets the city up for enduring success.”

The city’s general fund, primarily made up of tax revenue, is budgeted for $17.1 million in expenses and $16.1 million in revenues for next year. The projected ending general fund balance for 2025 is $3.9 million, down from $5 million in 2024.

The city’s property tax levy is set at $4.1 million, including the 1% allowable yearly increase, which goes into effect in January.

The city also will collect $3.7 million in retail sales tax, $918,000 in business and occupation tax, $650,000 in real estate excise tax and $3.1 million in utility tax next year.

The city’s largest expense and revenue source is its enterprise fund which is used to recover the cost of providing services like water and sewer to the public through user charges. The fund is budgeted for $31 million in expenses and $29.7 million in revenues. 

Personnel costs make up more than 22% of the city’s operating costs, with $15 million allocated for staff wages and benefits, down from 24% in 2024.  Wages and benefits are not broken down further in the budget.

The salary schedule has been updated to include five new staff positions starting next year: a community services director, an arts and culture coordinator, a water maintenance worker, a streets operator and a parks maintenance worker. 

The city will spend $5.4 million on capital projects next year, with the largest amount going to fund street improvements. The capital fund will bring in $4.7 million in revenue. 

The city’s street improvements expenses include $759,994 for generalized street repair, $434,618 for chip seal for pavement overlays, $502,019 for the Sims Way and Boatyard Expansion project and $462,375 for pavement restoration and ADA improvements to Tyler Street. 

Other notable capital projects include a new downtown restroom near the ferry terminal, refurbished restrooms at the Kah Tai Lagoon, new windows at the Port Townsend Library, the reconstruction of the kitchen shelter at Chetzemoka Park, repairs to the Charles Pink House and Pope Marine buildings and new lighting for Seamus Sims Skate Park.

The budget also reflects the remaining balance of the city’s $2.7 million in American Rescue Plan Act funds. In 2021, city staff prioritized using the funds to support staffing and financial sustainability and improve parks and recreation. By then end of 2024, $2 million of the funds will have been allocated. An October reallocation introduced new projects to ensure that all funds were utilized. Those projects include improvements on Kearney Street, boiler repair at the Mountain View Pool and a new excavator. Funds have also been set aside for professional service attorney services.