The city of Snoqualmie is banking on bond dollars, utility tax hikes and and a dip into reserves to pay for infrastructure costs in its newly approved 2011 budget.

Snoqualmie City Council unanimously approved the $52 million plan on Monday evening, Dec. 13.

Following final discussions, council members chose to drain $600,000 from operating reserves to help pay down City Hall debt. The paydown for city hall leaves about $2.4 million in operating reserves.

With strong reserves a keystone city policy for years, some council members questioned whether the use of reserve funds breaks established city custom.

“We really worked to have those reserves in place,” said councilwoman Kathi Prewitt.

The dip does not break council policy, and City Finance Officer Robert Orton told council members that it shouldn’t affect the city’s bond rating of A+, either.

With 30 percent of its general fund revenue in the fund balance or in reserves, Snoqualmie remains in the median of cities of comparable size and financial structure.

“In this day and age, investors can’t expect municipalities to let those funds sit idle,” Orton said.

The city owes $3 million on its $7 million 2009 City Hall, and will pay down the principal to $2 million using reserve funds as well as a $400,000 unexpended city hall fund balance.

The remainder will be paid of over the next decade through a 3 percent tax rate increase on utilities and garbage. The average homeowner will pay about $8 more per month.

The increase will be implemented by ordinance in early 2011.

Infrastructure bond

The council will float a $5 million infrastructure bond in 2011, which will be paid back through a $1.20 capital facilities surcharge on city utilities, as well as Real Estate Excise Tax and funds from the newly added $20 Snoqualmie car tab fee, which takes effect in March.

Snoqualmie’s 2011 budget is $1.2 million smaller than its 2010 budget. The city made no layoffs, but did freeze several unfilled positions while adding part-time jobs.

The hardest part of the budget process this year, Orton said, was addressing the rising costs of doing business. Health plan costs rose 11 percent this year. Collective bargaining agreements also raised employee costs. Increases in unemployment insurance and retirement pensions also went into the mix.

Rough retail

Meanwhile, revenues aren’t growing very fast, and the business sector remains hard-hit.

“Our Business and Occupation taxes are really declining,” Orton said. One hundred fewer firms reported B&O tax in Snoqualmie this year. The city’s retail tax base is improving, but is still in negative numbers compared with last year. Retail hits were offset by strong infrastructure construction activity.

Following passage of the budget, Snoqualmie council members gave a round of applause to Orton.

“Rob’s been very patient with a lot of different viewpoints and ideas,” Prewitt said. “It’s been a lot of work.”

Orton, who was promoted last month from interim status, is modest about the achievement.

“They have no business giving me that kind of credit,” he said. “I’ve gotten more help from the city than I’ve given.”