Finance director says Sequim finished 2025 with strong revenues, reserves and record capital spending

Finance Director Sue Hagener told the Sequim City Council that the city “performed very well in 2025,” reporting stronger-than-expected revenues, reserves within policy and record capital spending, while noting the figures are unaudited and will be reviewed by the state auditor.

Hagener said the general fund began the year with $3,900,000 and finished with about $3,200,000 in reserves (approximately 91% of the policy maximum). She said overall general fund revenues exceeded budget by roughly $217,000 and highlighted one-time and volatile sources—lodging tax and real estate excise tax—as contributors to the strong result: lodging tax came in about $60,000 over budget and real estate excise tax was nearly $400,000 above expectations.

The presentation emphasized sales tax as the largest single general-fund tax source, with retail making up about 60% of sales-tax receipts; Hagener reported total sales-tax receipts of about $4.6 million for the year. She also said utility-tax collections were about $2.0 million and the certified property tax levy was $1,866,000 for 2025, rising to a projected $1,915,000 in 2026.

On expenses, Hagener said the general fund recorded $14.5 million in expenditures, about $43,000 under budget, and noted wages and benefits were roughly $185,000 under budget—savings she attributed in part to retirement and medical cost reductions tied to the city’s WellCity designation. She presented staffing and population context: general-fund positions rose from 55 in 2010 to 77 in 2025 while the population increased from 6,600 to about 8,400.

Hagener described the capital program as the principal driver of budget growth and volatility: annual budgets have expanded from the $20–30 million range to as much as $55–60 million because of the capital improvement program. She reported 2025 capital expenditures at about $7.4 million, including roughly $3.0 million for street and stormwater projects and $4.4 million for other projects. Specific projects she named included the Reservoir Road booster station, a water meter auto-read rollout, work around West Sequim Bay and the Silverhorn Deep Well, sewer master-plan and digester engineering, a North Swim Avenue sidewalk and bike lane project, and park improvements including work at Carrie Blake Park and Centennial Park.

Operational funds outside the general fund also performed well in Hagener’s summary: street operations recorded $1.3 million in revenues (about 5% under budget) and received an $810,000 transfer from the general fund; water operations brought in about $3.2 million (4% over budget) with expenses roughly $18,000 under budget; sewer operations recorded about $5.6 million in revenues, $5.3 million in expenses and ended with $2.8 million in reserves—above the policy maximum, creating room to transfer funds into capital or debt service in 2026.

Hagener also reviewed the equipment reserve (about $956,000 in expenditures, 2% under budget) and listed major purchases including police vehicles, tasers, a scissor lift, an excavator, message boards and IT projects. She said the lodging-tax fund posted $652,000 in revenues (about 10% over budget) and the rainy-day fund ended with roughly $950,000.

Hagener cautioned the council that the packet materials are tailored to city operations and do not substitute for state-auditor reporting. She reminded members that the city must file an annual report with the state auditor 150 days after the fiscal year end and noted Sequim’s more than 32 years of clean audit history. Hagener closed by saying she would be available Monday night to answer council questions.