PORT ANGELES — Economic development will be key for Port Angeles to stay fiscally solvent in an era of unfunded mandates and declining sales tax revenues, second-year city Chief Financial Officer Byron Olson told a Port Angeles business audience Monday.

Olson and Clallam County Administrator Jim Jones presented overviews of the city and county budgets at the Port Angeles Regional Chamber of Commerce meeting at the The Landing mall.

“It is really a status quo year,” Olson said, “and we are hopeful that revenues — sales tax —will stay at where it’s projected.”

Olson became finance director in August 2012. He said city revenues are “basically flat,” and spending is down a “couple hundred thousand dollars.”

The city’s general fund budget for day-to-day operations is $19.1 million.

Clallam County’s general fund budget is $32.1 million.

“If we don’t build the economy of Port Angeles and Clallam County, we can’t go forward,” Olson said.

“We are taxing at close to, if not at, the limit. So therefore, if we need more money, we need to get more players involved, more business here so the property values go up.

“We really want to focus on economic development as a city priority.”

Olson described Port Angeles as a “very viable place to do business” because of excess Bonne­ville Power Administration electricity capacity that can be sold at a low rate.

“We can sell them power cheaper than they can get almost anywhere else in this state, if not the Pacific Northwest,” Olson said.

“So we need to use that as a marketing tool to attract business here to the city.”

Olson said the city’s 113-mile road system is in need of repair, and delaying short-term chip and crack sealing would result in future expensive projects.

Meanwhile, the city is saddled with unfunded state mandates such as the combined sewer overflow project and cleanup of Port Angeles Harbor, Olson said.

“We have the unpleasant task of seeking additional funds from citizens to pay for those,” he said.

City officials are working on a long-range financial plan to address the economic challenges.

Jones kicked off the hourlong program by outlining the county’s preliminary 2014 budget, which includes a 37.5-hour workweek for nonemergency service employees in lieu of ongoing labor negotiations.

Jones highlighted a precipitous drop in investment interest — down from $2.6 million in 2007 to $366,269 this year.

Clallam County, which collects more than $100 million in taxes on behalf of all junior taxing districts inside its borders, used to earn more than 5 percent in investment interest compared with 0.12 percent now.

“This is problem No. 1 with counties in general statewide, including Clallam County,” Jones said.

“Quite frankly, I don’t believe it’s — not in my working lifetime — ever going to come back, primarily because the federal government can’t afford to let it come back.

“It would just crash our economy to get back to where one-year CDs or five-year CDs or even 10-year T [treasury] bills paid anything.”

Nonetheless, Jones said Clallam County is an “economic engine” that pumps more than $31.1 million into the economy through $58.9 million in salaries, contracts and capital subtracted by the $27.8 million it takes out in taxes and fees.

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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 5072, or at rollikainen@peninsuladailynews.com.