PORT TOWNSEND — The poor economy has put a severe strain on Port Townsend’s finances that could require additional service cuts, say the two candidates who participated in a radio forum Monday.

“We need someone on the council to ask the tough questions about the money that has been spent and where it has gone, find the solutions and find out exactly where we are at,” said Bob Gray, who is challenging incumbent George Randels for the Position 4 seat on the council.

“If the [Proposition 1] fire levy doesn’t pass, we will need to take a very hard look at our options,” Randels said.

“We will need to talk to our partners and see what we can do.”

Randels is one of three incumbent City Council members seeking re-election, and the only one to draw an opponent.

Of the three, Gray challenged Randels because Randels had been on the council the longest of those seeking re-election he said.

Council members David King and Kris Nelson are also up for re-election and are as much to blame for the city’s problems as Randels, according to Gray.

“I could have run against any of those three since they all voted the same.

“I asked City Hall if I could run against all three but they said that’s not the way it’s done,” Gray said.

“Cities that borrow funds they cannot pay back run into fiscal problems, and they need someone to take a fresh look at the problem.”

“I have legislative experience before serving on the council and the council is a legislative body,” said Randels, who worked for a U.S. congressman before moving to Port Townsend.

“I do believe my experience is important, and I believe we have a good council that works together in a collaborative way that finds compromise and middle ground.

“We do things civilly and don’t have meetings that go to midnight, which has been the case in years past.”

Neither candidate had fully read a state auditor’s report that was released Monday, but commented on some of its aspects.

The report said the city is at risk of not being able to meet its financial obligations with more than $21 million in debt against a 1.1 percent general fund cash flow.

“This is a red flag, and when there is a red flag it means the situation is critical,” Gray said.

“The city borrowed additional money when they knew the red flags were there, and we are going to have to pay that money back.”

“The audit report deals with one fund of many and has to do with our reserves,” Randels said.

“It is my position that reserves are there for a rainy day and the last few years have been a monsoon.

“If there was ever a time to use the reserves, it would have been in the last few years, and compared to some other cities Port Townsend has done well.”

Gray criticized the city for cost overruns in the rehabilitation of the Cotton Building, recommending that it be leased to a permanent tenant to recoup those expenses.

Randels said the space, which is rented to civic and private groups, has shown a 50 percent occupancy rate in its first months of operation and the overruns were a result of unexpected factors.

“We thought we were dealing with one underground fuel tank but there were five,” he said.

Gray and Randels were asked questions by this Peninsula Daily News reporter, by Port Townsend-Jefferson County Leader General Manager Fred Obee and by KPTZ producer Sheila Khalov.

The broadcast date for the interview has not yet been determined.

Ballots for the Nov. 8 all-mail election were mailed to registered voters last week.

For broadcast schedule information, go to www.kptz.org.

For more on the candidates and council race, click on the 2011 North Olympic Peninsula Voter Guide Jefferson County edition at the bottom of the home page of www.peninsuladailynews.com.

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Jefferson County Reporter Charlie Bermant can be reached at 360-385-2335 or charlie.bermant@peninsuladailynews.com.