PORT TOWNSEND — The Port Townsend City Council approved a balanced 2026 budget, which reports more than $88.6 million in expenditures. Actual spending for the year is projected at almost $58.56 million, with the balance being internal transfers.
“I am thrilled with this budget. I am thrilled with the presentation and the fact that it’s balanced and that we are setting aside money for rainy day, that we’re using our reserves appropriately,” council member Owen Rowe said. “This is very personal in the sense that my day job I work for (Jefferson County) as a staff member. I know exactly how difficult those budget discussions can be when there are constraints on what the fund can be and how to maintain a balanced budget.”
Rowe’s comment referred to Jefferson County’s recent budget discussions wherein staff and commissioners have been working through how to address a $5.2 million deficit in the general fund.
The positive state of Port Townsend’s budget is a result of years of staff work and council policy setting, Rowe said.
“I’m not sure how we’ll do even better next year, but I’m sure we will,” Rowe said.
City Manager John Mauro said that, in conversations with colleagues around the state and country, a recurring theme is how hard municipal finance is.
“I don’t say this gloating,” he said. “I say this with concern for our municipal colleagues, but a lot of city budgets are in deep trouble, really drawing on all of their reserve funds to fund operations. This is not uncommon in every state in the nation, especially right now.”
Mauro said that while the city of Port Townsend could be in that position at some point in the future, it isn’t now, and it hasn’t been recently.
“We need to keep on working on this,” Mauro said. “But we find ourselves in an unusually stable position compared to pretty much every municipal colleague I have to talk to every day, around the state and around the nation.”
Revenue is expected to be more than $89.75 million, with about $30 million coming from internal transfers. Revenue expected to come in from external sources is more than $59.67 million.
The city expects revenues from fees for services and utilities to exceed $19.75 million.
Taxes should generate almost $16.9 million while grants are expected to bring in more than $10.1 million in funding in 2026.
A budget document posted in the city’s Nov. 10 council meeting agenda lists 24 grants that will fund mostly roads and transportation projects, but grant funding also will include golf park projects, a housing project and library funding.
The city estimates it will spend $8.5 million on its sewer systems, $8 million on streets, $4.4 million on its water system and $2.3 million on parks, according to Mauro’s budget message.
Salaries and benefits for the city’s 113.1 full-time-equivalent employees are expected to cost almost $15.8 million, but the council’s budget approval included salary ranges for each of the filled positions, which allows for mid-year raises for staff.
“We are very close to being fully staffed entering 2026, and it’s something the city is looking forward to,” Jodi Adams, the city’s director of finance and technology services, said in an email.
The highest-paid position is Mauro, who is contracted to make $244,311 in 2026.
Enterprise funds are planned to take in almost $31.56 million while spending more than $30.48 million. The largest categories being water and sewer, which are expected to generate more than $21.4 million and spend more than $20.85 million, and the Olympic Gravity Water System, which could generate almost $5.58 million while spending more than $5.21 million.
Capital projects funds are expected to see more than $23.77 million in revenue, with the city spending almost $24.57 million.
Mauro said the high number for capital projects has received a lot of questions.
“Part of it is we’re getting a lot done,” Mauro said. “If you compare our capital budget, proposed for $24 million with 2019, the capital budget in 2019 was about $5 million. That’s a five-times increase in the capital fund, which is really about rates funded and grants-funded projects building real infrastructure. It is big, but I feel like there could be a little bit of pride with getting a lot more done, particularly with federal and state dollars reflected in the capital budget.”
Council member Monica MickHager commented on the notable expansion in securing grants since she joined the council in 2020. Staff have gone out year after year and won grants, she said, and that allows for work that had previously been neglected to get done.
“I’m really proud of the work that’s going on and has been for the last six years, and it reflects in our budget,” MickHager said.
The Nov. 10 document listed 55 projects that the city plans to work on in 2026.
The general fund is expected to see almost $16.74 million in revenue and is planned to spend the same.
Special revenue funds, which are restricted in their purpose, are projected to take in almost $9.4 million in 2026, with the city planning on spending more than $9.89 million from the funds.
Internal service funds revenue is listed at almost $5.96 million and expenses are listed at more than $4.2 million.
The city plans to spend more than $1.68 million on debt service.
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Reporter Elijah Sussman can be reached by email at elijah.sussman@peninsuladailynews.com.
