Poulsbo council reviews midyear finances, weighs B&O changes and possible public-safety sales tax

POULSBO, Wash. — The Poulsbo City Council received a midyear financial briefing Aug. 20 that showed general-fund revenues and expenditures tracking close to plan through June but warned the city’s reserves and ongoing revenue growth may not be sufficient to cover rising costs without policy changes.

Finance staff told council the general fund is at roughly 52% of expected revenues and 50–51% of expenditures for the fiscal year through June, leaving the city “on target” for the first half of the year. “Not to bury the lead, but this is a great report because we are on target bottom line for, where we wanna be for both revenues and expenditures,” Larissa Campbell, who presented the quarterly variance report, said.

The presentation and ensuing discussion focused on three areas: (1) revenue trends and one-time balances; (2) program costs that now rely on general-fund support; and (3) policy options to shore up long-term sustainability. Debbie (Finance Department staff) and City Administrator Rob Gelder joined Campbell in answering council questions about specific lines such as admissions, development fees, traffic-camera receipts and the criminal-justice sales tax remittances from the county.

Why it matters: Council members and staff agreed the city’s strong cash position today — general-fund cash was described in the meeting as roughly $8–9 million — provides flexibility, but multi-year projections shown to council indicate the city could exhaust planned reserves in the 2027–2029 timeframe if revenue growth remains flat while expenditures rise. That projection drove discussion of near-term revenue choices and spending priorities.

Key figures and trends - Revenues through June: ~52% of budgeted amounts (Larissa Campbell). The sales-tax line for 2025 was budgeted at about $5.6 million; year-to-date collections through activity in May were slightly above last year but generally flat over recent years. - Business-and-occupation (B&O) tax: budgeted at $1.0 million for 2025 and presently trending above that figure based on two quarters of collections. Staff said current collections through earlier quarters amount to roughly $750,000 and will continue to be monitored. - Criminal-justice sales tax and traffic-camera revenue: combined receipts have improved public-safety-related revenue. Council heard the traffic-camera program is producing tens of thousands per month and has supported adding court staffing. - General-fund cash/reserves: finance staff described a roughly doubled cash/investment position compared with five years ago, though a substantial portion sits in utility and other funds; general-fund cash alone was reported as approximately $8–9 million. - Debt and capital: outstanding and planned borrowings include remaining city-hall/refunding balances, a planned $2.5M issue tied to Knoll Road, $2.5M for Nordic cottages (planned to be paid from affordable-housing sales tax), and an estimated $5.6M for the waterfront park project pending final bids. Staff cautioned planned capital work and additional operations (for example, a new recreation/event center) will add recurring operating costs.

Policy options discussed - B&O exemptions and simplification: staff recommended considering one uniform exemption level to reduce complexity for small businesses and for city administration. An internal analysis indicated raising the retail-collection exemption to $125,000 (from the city’s current lower threshold) would reduce B&O revenue by about $40,000 annually based on prior-year activity; staff said the simplification could reduce taxpayer burden and internal workload.

- Public-safety (1/10th of 1 percent) local sales tax: council discussed House Bill 2015 (the state law authorizing a locally imposed, 0.1% sales tax for public safety and related grants) and an associated competitive grant program. Staff said implementing the local tax would open eligibility to apply for grant dollars, but noted many grant awards are one-time and require local matching or have other limits. City Administrator Rob Gelder and Finance staff described a notional revenue estimate around $650,000 annually if a local 0.1% tax were adopted; staff emphasized legal details, stacking rules and county-level decisions remain unresolved.

- Fees and program choices: council questioned passport services (currently provided and partially subsidized by the city), parking-fee strategies downtown and how traffic-camera revenues are being used (camera lease, court staffing and later parking enforcement). Municipal court staffing already reflects the higher workload from cameras and parking enforcement; a full-time court position was added with an expectation that roughly 50% of its cost be supported by camera revenues and 50% by parking enforcement.

Operational and program highlights cited by staff - Marine safety enforcement is increasing and will require midyear budget adjustments; staff said some expense will be offset by marine-safety grant reimbursements collected quarterly. - Recreation and parks: the recreation program’s registration and activity fees offset part of costs but the city currently subsidizes registration-based recreation programs by roughly $600,000 annually. Council discussed whether a future Metropolitan Park District (MPD) could shift the subsidy burden. - Solid-waste contract discussion: splitting solid-waste collection to a private contractor could change utility fund flows and the general-fund impact; staff said the net effect remains under analysis.

Council questions and next steps Councilmembers pressed staff for clearer options and timelines. Several asked for follow-up materials showing: (a) the detailed B&O ordinance options (one-exemption approach and revenue impacts); (b) legal and grant rules tied to the 0.1% public-safety tax and whether county action would preclude or duplicate city action; and (c) a five-year “capacity vs. policy” workshop to match reserves, capital needs and operating choices.

City Administrator Gelder said staff will return with more-detailed legal guidance and timing considerations. Staff noted that to implement a 0.1% sales tax effective Jan. 1, council action and Department of Revenue notification would be required by mid-October; staff said they would bring a focused packet for council discussion at the next meeting.

Votes at a glance - Motion to adopt the Aug. 20 agenda — approved (motion and second recorded; roll call: ayes recorded; outcome: approved). (See actions[] for structure.) - Motion to approve consent-agenda items 8a–8d — approved (motion, second, unanimous aye on record).

What council said Councilman Stern praised the meeting format and urged regular, annual workshops that pair capacity (reserves/revenue) with policy priorities. Councilmembers said they favored simplification of B&O reporting to reduce small-business burden, and several members signaled interest in pursuing the public-safety tax only after staff provided clarified legal and grant information.

Where to look next Staff will return with a shorter, action-focused packet: (1) a proposed, single-exemption B&O ordinance change with revenue sensitivity analysis; (2) legal guidance and a grant-cycle timeline for the 0.1% public-safety tax; (3) a proposed calendar for a “capacity vs. policy” workshop; and (4) any recommended midyear budget amendments for marine safety or court staffing if reimbursable revenue lags. Council did not adopt new taxes at this meeting.

Ending Councilmembers thanked finance staff for the presentation and asked for the additional detail before any decision on new revenue measures.