Ocean Shores finance staff and the three-member finance committee reviewed a condensed cost-allocation plan and agreed to bring the proposal to the full City Council at the council's second meeting in June, with a request that changes be backdated to Jan. 1, 2025 if council approves.

The committee said the rewrite is meant to correct long-standing coding and fund-structure problems flagged by the Washington State Auditor's reporting system (the BARS manual) and reduce the confusion that led the city's annual report upload to return hundreds of errors this year. Finance staff described the work as a mix of compliance, transparency and bookkeeping cleanup that affects transfers between enterprise funds and the general fund.

Finance staff summarized recent revenue and expense trends for committee members. Property-tax revenue rose about 5 percent year over year; utility tax revenue increased roughly 2 percent, building-permit receipts rose about 8 percent and hotel-motel tax receipts rose about 1 percent. Real-estate excise tax receipts were down about 10 percent, sales tax was down about 1 percent (down about 2 percent compared with 2023), and the gas-tax allocation that helps fund streets was down about 16 percent.

Committee members and staff said two technical issues drove much of the confusion: an older cost-allocation plan that included depreciation amounts in transfers to the general fund, and a continuing monthly transfer of about $48,000 from the general fund to the storm fund that staff says should have ended years ago. Finance staff said the depreciation entries were not an appropriate basis for transferring money from enterprise funds into the general fund, and that tracing the historical legal and accounting documents showed the $48,000 transfer was legacy treatment that no longer applies.

The condensed package prepared by CPA Tara Dunford will include a one-page summary for the public and council plus the underlying detail so anyone can see where charges are assessed and where money flows. Finance staff said the consultant's work is much less expensive than prior engagements: the previous cost-allocation consultant had been budgeted at about $25,000, while Dunford provided the current work for about $2,500.

The committee discussed next steps: if the City Council approves the plan, staff proposed backdating accounting changes to Jan. 1, 2025 so the city's biennium accounting would be in compliance for the remainder of the period. Finance staff asked the committee for its agreement to have Dunford attend the second June council meeting to present the plan and answer questions. Committee members indicated support for moving the item to council.

Separately, finance staff said the city is performing a broader revenue-and-expense fund cleanup to reduce the number of unused or redundant account codes in the general ledger; staff estimated the city has dozens of legacy fund numbers with zero balances that complicate reporting. The finance team anticipates continuing work sessions through the summer and expects most cleanup work to be complete by August.

Staff also notified the committee that the city's accounting system is undergoing a major upgrade and will be offline through Tuesday while the vendor migration to a cloud system is completed. Staff asked the committee to relay that notice to residents in case anyone attempts to make payments during the outage window.

"I will petition for this to happen no matter what because I know we are not in compliance," Finance Director (staff member) said of the plan to present the revised cost allocation to council. The committee set no formal vote during the meeting; members signaled support for taking the item to the full City Council and for continuing the fund-cleanup work sessions.

If council approves the packaged changes, staff said they will implement corrected fund coding, stop the legacy monthly transfer to the storm fund, and adjust prior-period entries as needed to reflect the new allocation approach. The finance team said these changes are procedural and accounting-focused rather than new policy decisions about taxes, rates or service levels.