August Budget Study Session
Ashland ended the 2017-2018 budget year in the black, Mark Welch, city finance director, reported to a budget study session August 20 in the City Council chambers. There was no ending fund balance drawdown, and $1.25 million had been budgeted for this purpose, he said. Therefore, Ashland will be able to utilize those funds moving forward and into the 2019-2021 biennium. However, Welch cautioned, a structural deficit—with budgeted expenditures exceeding budgeted revenues—exists over the long term.
The city achieved savings by delaying or deferring hiring of some staff, although all but one of those positions are now filled, he said. Every time a staff vacancy occurs, the city is taking a hard look at whether that job needs to be filled or could be consolidated with another position, Welch said. Salary and benefits during the fiscal year were $793,681 below budget.
Property tax revenue is above budget, and there is a 6% increase in the transient occupancy tax and a 7% increase in the food and beverage tax. Mindful of the smoke and the damage it is doing to tourism, Welch said his staff is continuing to monitor the summer season, which looks to be flat.
Mayor John Stromberg asked if enterprise funds are dedicated funds. “All services in Central Services should be zero based,” Welch replied. Central Services includes the Administration, Administrative Services, Public Works, Information Technology, and City Recorder departments.
Councilor Jackie Bachman asked why the Electric Department’s 2017-2019 budget contribution, at $2,512,550, was higher than that of any other Central Services department. “The Electric Department has a big impact on billing, IT, and Public Works,” Welch replied.
Councilor Dennis Slattery commented that “part of the problem is budgeted costs may not be real. The enterprise fund just sends out a bill.”
“The main cost in Central Services is people,” Welch replied. “Across the board Central Services costs are down because of personnel changes in Administration. The majority of revenue comes from charges for services. Overall revenue is slightly down but the 17-18 budget is positive,” he said.
“What we can expect is unknown,” Welch cautioned. “What premiums will look like is unknown. When the grandfathering of health insurance ends we can expect premium increases.”
“How do we reorganize to save money?” Welch asked. He cited the example of the police chief, who reassigned an officer and thus was able to reduce his request for five new officers to four.
Public Works Director Paula Brown said, “We’re big because of capital improvements programs—by line item they are huge. The Water Department is our biggest user. We’re looking at a capital master plan and our needs. Perhaps we don’t need to make some capital improvements.”
“All but five capital purchases are complete,” she said, “and we’ve applied for a couple of grants—one for sidewalks. We’re also looking at how to better use TID (Talent Irrigation District) water.”
“The 7.5 million gallon a day wastewater treatment plan phase one is complete and we are starting phase two,” Brown said. Road diet improvements are scheduled for North Main. She said Public Works relies heavily on its master plan—over a period of six years—and will provide a 20-year plan.
“Looking at our budget from an operations standpoint we are right on,” Brown said.
“We may be over-collecting on some of our enterprise funds,” Councilor Rich Rosenthal remarked. “Our water did go up 10% and then 5%.”
“We were very fortunate with the water plant to get a good interest rate. We need to look at our service rates and what service level residents expect,” Brown replied.
“How can people find out the timing of projects?” Councilor Stephen Jensen asked.
“We’ll put it on the Web page,” Brown replied.
“Do you fund all capital improvements out of operating revenues?” the mayor asked an Electric Department representative. The answer was yes.
“Seventy days cash on hand is recommended,” he said. “We have less than 15. We have recommended rate increases to bring this up. A new rate structure was implemented in 2017, with a 4.3% increase next year.”
The department is installing a supervisory control and data (SCADA) program that will sense a power outage and switch to a different power source. When asked why the Electric Department has grown at a faster rate than the city, he said, “We have growth in terms of new developments and upgrades.”
In closing, the city administrator said that the city will know on September 18 what the faith community plans to do for winter shelter for the homeless.