2019-2021 Budget: Prepare for Fee Increases: Addie Green Reports
David Runkel, a member of the Ashland Citizens’ Budget Committee, April 24 moved “to encourage the City Council not to increase water, wastewaster, stormwater, and electric fees in the 2019-2021 biennium.” After about 10 minutes of discussion, the motion failed 10-3.
Which means a probable 3.65% rate increase in your electric fees and a 4%, or higher, increase in water, wastewater and stormwater fees.
The motion came after the committee, comprised of the mayor, six city councilors, and seven community members, had discussed the Public Works and Electric Department enterprise funds and Ashland Fiber Network for more than two hours.
Paula Brown, Public Works Department director, stressed that there is no general fund support for her department, which depends on its enterprise funds, comprising 41% of the city’s budget. These are separate entities, she said, that operate similarly to a business. The Water Department has 15 employees and the Wastewater Department 12, she said, which is small number of personnel.
However, comparing Ashland to Klamath Falls, a city of the same size, Ashland had a Public Works budget of $53,080,600 per annum in 2017-18 and 2018-19, while Klamath Falls’s Public Works budget for 2017-18 was $32,718,550, or more than $20 million under Ashland’s. The difference? Ashland had 16.5 public works administrators (including two administrative staff) to Klamath Falls’s three. This makes Brown’s “small number of personnel” claim hollow.
When Councilman Dennis Slattery asked Brown to explain the 4% rate increase, she replied it could be higher. She explained that the proposed water treatment plant would be financed initially by a $16 million loan (which we have to pay back) from IFA but that the city would have to provide funding during the later stages of the project.
“If the budget committee doesn’t approve the 4% increase, then what?” Slattery asked.
“We’d cancel the project,” Brown replied.
Another budget item, proposed Talent Irrigation District (TID) projects, raised concern from budget committee member Shaun Moran. “A quarter of a billion dollars in CIP projects over 20 years doesn’t seem normal,” he said. “It is aggressive,” Brown replied, “but we’ve already taken our holidays for infrastructure projects.”
“We need $7-$8 million in capital projects a year just to keep up,” Brown added. “We’re not like Chicago, where things are falling apart.”
“The more we delay these projects the more expensive they will be,” said Mark Welch, director of Administrative Services who recently resigned. “The cost will be only $8 million a year once the initial work of $243,000,000 is done,” he said.
“We want quality. We need to make these improvements,” Brown said.
“It costs eight times as much to rebuild a street as to restore it,” said Mayor John Stromberg.
“The citizens don’t want another rate increase,” said Councilor Julie Akins. “Isn’t there another solution?”
“We must drop the level of service or prioritize,” Moran said, and asked if private contractors could do the work more cheaply.
A majority of the $15 million in current projects was contracted out, Brown said.
“The $1.7 million shortfall from the 2017-19 biennium is expressed in the 2019-21 biennium increase,” Stromberg explained.
Employee benefits are nearly as great as salaries in this proposed budget, observed budget committee member Paula Hyatt. “When I was starting out 13 years ago, benefits were 40% of personnel costs,” Welch explained. “They’re now 60%.” These costs, he reminded the committee, for medical insurance and retirement (the Public Employees Retirement System), are fixed, and the city has no control over increases. Another committee member reminded the group that there are substantial PERS benefits being paid by the city to those already retired.
Tom McBartlett, director of Electric Utilities, said his department has 17 employees covering three main facilities, and there is no plan to add personnel.
Sixty-eight percent of the department’s budget goes to pay its main provider, the Bonneville Power Administration (BPA), Welch said, and the proposed city 3.65% rate increase will just cover BPA’s estimated increase of 3% and .65% distribution increase. “Your electric bills are 17% lower than rate payers in Talent are paying today,” Welch said.
Forty percent of the city’s property is exempt from property taxes, Welch said, in explaining the proposed rate and fee increases. “Corvalis is proposing a $17 increase,” he said. “If we went to Pacific Power we’d pay $12 more.”
“The city uses the Electric Department to make money for the general fund,” Runkel said. “Utilities should charge return on investment (ROI).”
“We can’t make the assumption that tourism is going to increase,” Akins said.
Donald Kewley, operations manager of Information Technology and the Ashland Fiber Network (AFN), said of his proposed $4.6 million budget, “Revenue is increasing. We’ve put in a lot of new equipment and are offering more service for the same price. We’ve doubled our band width and moved to a seven-day work week without additional cost to the city. All the money for subscriptions stays in the city. We’re getting calls from all over the country—190 municipalities are doing what we are doing.”
“What benefit is AFN to the average resident?” asked Councilor Rich Rosenthal.
“Working from home—how do you quantify that?” Kewley replied.
“Are you trying to include SOU and the hospital?” Rosenthal asked.
Kewley explained that his department has put together several brochures trying to attract local businesses to AFN. “It’s hard to achieve that goal of a 4-6% increase with the small market we have,” he said.
“You’ve taken an unorthodox approach, and I commend you,” Moran said.
At the beginning of the meeting, the microphone was open to citizen comments. “Taking $100,000 in marijuana revenue from the Housing Trust Fund was a mistake,” Carol Voisin said. “Revenues must be obtained by laying off personnel. The $52 million in proposed infrastructure projects is unsustainable.”
“It would take 1.7 earths to accommodate our (resource) spending in 2018,” said Louise Shawkat. That overuse of resources is unsustainable. “We must do more outreach to citizens and lead by example—for instance by lowering our thermostats.”
Addie Greene, Ashland