SEQUIM –– Despite declining revenues, the city reduced expenses to end 2012 with a $275,000 surplus to bump its general fund reserve account to $1.755 million.

Elray Konkel, the city’s administrative services director, reported final results from the city’s 2012 financial statement to the City Council at its regular meeting last week.

“In spite of the continuation of the difficult economy, the city of Sequim is in very good shape,” he said.

The statement has not yet been audited by the state.

Revenues in the general fund were $103,009 under budget for a total of $8,176,141.

Konkel said city departments held spending $378,212 under budget, a total of $8,035,140.

That resulted in an end-of-year surplus of $141,001 to bring the reserve account to $1,755,778, which equates to 2.63 months of the city’s average expenses.

Spending, Konkel said, was held 4.5 percent below budget, mainly by departments waiting to hire vacant positions.

Property tax revenues returned $85,000 more than budgeted.

Konkel said that was due to prior year defaults in property taxes being finally paid after a number of foreclosed properties sold.

He added that the city had planned conservatively when estimating its property tax take.

Sales tax revenue was the big hit to the city’s coffers, coming in at 9 percent below expectations.

Most of that decline was due to the slumping construction market.

Last year, the city took in $139,557 in sales tax revenue from construction, only about one-fifth of the $608,061 it received in 2006.

Retail sales generated $1,434,724 in sales tax revenues in 2012, close to par with the past several years.

Konkel said sales tax revenues through the first two months of 2013 are coming in ahead of projections.

Sequim-Dungeness Valley Editor Joe Smillie can be reached at 360-681-2390, ext. 5052, or at jsmillie@peninsuladailynews.com.