Sequim council confirms 1.5% general-fund cap, asks staff to gather nonprofit budgets before awarding 2026 municipal grants

Sequim City Councilors confirmed an existing funding cap of 1.5% of the general fund for the city's municipal grants program and directed staff to gather additional financial information from applicants before final award decisions. Councilors and staff said the 1.5% cap currently is estimated to produce $207,700 for 2026 but cautioned the figure could change as revenue projections are finalized.

Councilors said the total requests from applicants substantially exceed the cap. One staff estimate cited in the discussion placed total requests at $464,116. Councilors asked staff to tell applicants that the city received far more funding requests than it can cover and to request each applicant's overall budget and the portion of that budget the municipal request would represent.

Council members discussed short-term steps and a longer-term fix to the program. They set two work sessions: a special meeting on August 11 to review 2026 applications and determine an initial budget approach, and a work session at the first council meeting in September to develop scoring criteria and sub-criteria for future cycles. Staff also agreed to contact KSQM to clarify whether a $109,000 entry on its spreadsheet represented one-year funding or a two-year request that would be split over two years.

During the discussion councilors raised several recurring concerns: how to evaluate applicants that did not submit prior-year reports; whether some applicants rely heavily on Sequim municipal funding; how to treat multi-year requests; and the fairness of awarding significant sums to organizations that report large overall budgets. Councilors asked that future applications include the applicant's full budget, previous annual reports, and a list of other funding sources. Staff said those items were not consistently required by earlier cycles and that record-keeping gaps partly explain the present confusion.

Staff described procedural next steps rather than immediate award decisions. Because the council has already placed the 1.5% cap on the books, staff said they can continue with fall budget presentations and finalize individual awards only after council formally adopts the full city budget (typically in November or December). Councilors emphasized that applicants should not assume funding until the council adopts the final budget.

Councilors and staff agreed to be transparent with applicants. The council requested that staff email all applicants to (1) state the current $207,700 estimate tied to the 1.5% cap, (2) note that final amounts may change with updated revenue projections, and (3) ask applicants to supply copies of their overall budgets and indicate what percentage of their organization's budget the municipal request represents.

Next steps: staff will send the notice to applicants, seek clarifications from KSQM, assemble applicants' budgets for council review, and prepare materials for the two scheduled work sessions. Councilors indicated they want a more robust scoring mechanism in place for 2026 applicants and asked staff to compile examples of scoring systems used by comparable cities as a starting point.