It’s budget season and Oak Harbor government officials are rehashing old disagreements over tax and spending issues.

Oak Harbor Mayor Scott Dudley presented the City Council with his preliminary version of the two-year budget this week, surprising council members with his renewed call to cut medical benefits for elected officials.

The proposal would save the city about $49,000 a year.

At the same time, Dudley is proposing a new economic development coordinator position which would cost nearly $100,000 a year.

He’s also calling on council members to redirect a 0.25 percent utility tax earmarked for arts projects to general government spending instead, though he didn’t include that in his budget.

Council members voted Wednesday night to continue with the arts funding program; they will make a final decision Nov. 18.

The art fund would be better spent elsewhere, which is a message he’s repeated often, Dudley said.

“I think the public would prefer an arts commission that finds the funds in the community, not by taxing the citizens,” he said.

The 0.25 percent tax on three of the city’s four utilities generated about $33,000 this year and will increase to about $37,000 next year because of utility rate increases associated with the construction of the sewage treatment plant, according to Finance Director Doug Merriman.

The council said it wants to cap the amount dedicated to the arts program to $50,000 a year, but Merriman said it likely won’t reach that high in the next two years; the council must revisit the issue every biennial.

The fund has paid for several art pieces downtown, including the popular bronze “Stumbly Ducks” and the Pioneer Way mermaid.

Merriman said the economy is slowly picking up, which translates into a small uptick in city revenues.

Merriman, known for being conservative, is estimating an annual revenue growth rate of 1.2 percent.

Nevertheless, he said inflation is at 2 percent and the city’s costs are increasing by about 4 percent a year.

The city’s overall budget, which includes general government and utility funds, will see a big increase next year because of the sewage treatment plant project. It will grow from $80 million this year to about $136 million next year.

The general fund, however, will remain stable at about $16 million.

Merriman said the preliminary budget is currently in the red by about $375,000, which he said is typical for this point in the budget process. He said the spending increases are largely due to the proposed economic development coordinator and the reinstatement of three vacant positions that weren’t filled during the recession years.

Merriman explained that the mayor and city administrator will go through the preliminary document and present the council with a balanced budget later this year.

The City Council, however, has the final say.

Council members voted Wednesday to increase the property tax levy by 1 percent, the maximum allowed without a vote of the people.

Councilman Bob Severns cast the sole vote against the increase. Afterward, he said his main concern is keeping tax rates under control.

“It’s an affordability issue in my estimation,” he said. “Being able to afford to live here is really important to me.”

Severns said he heard concerns about taxes and affordability last year when he campaigned door-to-door.

Dudley, however, expressed skepticism.

“He voted for property tax increases every year up until he decided to run for mayor,” he said.

Dudley wouldn’t say whether he plans to run for re-election next year but said he welcomes a challenge by Severns, who also hasn’t announced whether he’ll run for mayor.