Sequim posts strong 2024 finances, spends nearly $10 million on capital projects

Finance Director Sue Hagener presented an overview of the City of Sequim’s fiscal-year 2024 performance to the Sequim City Council, saying the citywide budget finished the year with higher-than-expected revenues and reserves and “a very robust capital improvement program.”

Hagener said the city’s operational funds — including the general fund, street operations, and water and sewer utilities — finished 2024 with strong revenues and expenditures below budget. The general fund reported $13,100,000 in revenues, about $416,000 (3%) over budget, and an ending fund balance of $3,971,000, she said.

The surplus and capital spending matter because they give the city options for paying down debt or advancing projects. Hagener told council members that Sequim’s capital spending accelerated in 2024 after staffing and supply-chain constraints eased: the city expended almost $10,000,000 on capital projects, the largest single-year total she has seen in her time with the city.

Hagener outlined the revenue drivers. Sales tax — the largest tax source for the general fund — generated about $4,500,000 in 2024 and accounted for roughly 53% of general-fund tax receipts. Utility taxes produced about $2,000,000. Other revenues affecting the general fund included intergovernmental grants (about $86,000 over budget, tied to comprehensive-planning work and police-accreditation grants), licenses and permits (182 permits issued in 2024, down 14% from 211 the prior year), and miscellaneous receipts (about $55,000 above budget, largely investment interest, rental income and private grants).

On expenditures, the general fund spent about $12,900,000, approximately $139,000 (1%) under budget. Wages and benefits — roughly 70% of operational expenditures — totaled over $8,000,000 in 2024 and rose 13% year over year, driven by union contract adjustments and market adjustments for staff, Hagener said. She noted there was no increase in full-time positions in the general fund versus the prior year.

Street operations and funding sources were detailed next. Street revenues and expenditures each ran near $1,200,000 in 2024; the street fund receives nearly $700,000 annually in transfers from the general fund, plus Transportation Benefit District tax revenues, state motor-vehicle fuel tax receipts (about $158,000), and smaller sources such as insurance recoveries and property-maintenance income.

Utility operations also performed above budget. Water operations reported about $3,000,000 in revenues (3% over budget) and an ending fund balance near the policy midpoint ($1,200,000; target range $882,000–$1,600,000). Hagener said water accounts grew to 3,125 in 2024, up roughly 30% since 2015, while water staffing remained at about 4.5 FTE. Sewer operations reported about $5,300,000 in revenues (5% over budget) with an ending balance at the policy maximum ($2,500,000; target range $1,400,000–$2,500,000).

Hagener emphasized transfers to capital and debt reserves in both utilities: those transfers explain why expenditures can exceed operating revenues in a given year while still building fund capacity to replace or expand infrastructure. She also noted historical utility-rate increases have been modest: a roughly 10-year average of about 3% per year for water base rates and about 1% per year for sewer base rates; combined, the typical single-family bill rose about $1.20 per year on average over the period she presented.

On equipment and vehicle reserves, Hagener said the city spent about $1,700,000 in 2024 and finished the year about $335,000 (17%) under budget, in part because of delivery delays and some purchases of used equipment. Equipment purchases included IT projects ($65,000), two police vehicles plus a drone, a street roller, snow-plow assemblies, salt-and-sand spreaders, a sidewalk vacuum (“sucker”), two used dump trucks, a jet-vac truck, and utility-locating radar equipment. The equipment fund balance stands at about $2,000,000.

Hagener reviewed notable capital projects: water work (reservoir seismic equipment, Reservoir Road booster station, water-meter auto-read project, Silverhorn Deep Well), sewer projects (water-reclamation facility lab rehab, purchase of a sewer camera van, SCADA improvements, fiber to the WRF, Doe Run lift station), street projects (North Sequim Avenue sidewalk and bike lanes, pavement preservation and signal work), and parks acquisitions/design (Ruth C. McCord Memorial Park purchase, deposit on Cary Blake Park bridges, Centennial Park design). She said the city installed radar equipment and made shop and Civic Center second-floor remodel improvements funded in part by ARPA.

On other funds, Hagener reported lodging tax revenues were “historical” in 2024, real-estate excise tax exceeded budget by $286,000 (reported as 70% over budget), and the ARPA fund expended $1,485,000 on IT projects, city shop and second-floor remodels and now shows a zero unobligated balance. The rainy-day fund retained about $950,000.

Hagener closed by reminding the council that the unaudited reports she presented differ from the schedules the city submits to the Washington State Auditor’s Office (SAO). Those SAO schedules are complex and take roughly five months to prepare; per state law she cited, they are due 150 days after the fiscal year end. She also said the city has had more than 31 years of clean audits and understands the SAO audit cycle is expected to move to an annual schedule beginning in 2025.

Council members did not take formal votes during Hagener’s presentation; the remarks were presented as an informational briefing and Hagener said staff may propose budget amendments in 2025 to reallocate excess reserves toward debt reduction or capital projects.