|City Staff Acknowledge Financial Challenges |
In two weeks the proposed 2021-23 Ashland city budget will be presented to the Citizens Budget Committee.
We have five words of advice – Be Prepared for Bad News. The city has said utility rates are headed higher again and services are likely to be cut. It will be the city’s toughest budget year since the recession a decade ago.
Two top city officials recently previewed the city’s situation, which has been an ACES concern for years. In seeking candidates to become Ashland’s first City Manager, Human Resources Director Tina Gray warned of “significant financial challenges facing the city.”
In a Feb. 22nd presentation to the Parks Department, Finance Director Melanie Purcell outlined some troubling issues. First, over the past couple of budget cycles Central Service Charges were deliberately under-allocated to various departments. For example, Parks was undercharged by more than $500,000. She made it very clear, this was not a policy decision and staff had no business making it.
Ms. Purcell also acknowledged that the Insurance Fund is upside down, in deficit and being stabilized by the General Fund. Additionally, between 2015 and 2019 “activities took place, like backfilling of funding”. Here are some examples: In a prior budget, pension costs were artificially inflated with the excess funds diverted to cover other city expenses. In the 2017/19 budget, $1.7 million was moved out of the facilities fund to pay salaries and central services costs instead of being used to repair the Community Center and Pioneer Hall. The insurance fund was raided to pay for a City Hall Master Plan Study, Iron Mike repair, System and Network Upgrades, CEAP Action Plan, city voicemail upgrades and other items. Of course, nothing to do with Insurance and unsurprisingly, no one knows who made those decisions. In the 2019/21 budget, $1.7 million had to be transferred to bail out the insurance fund. The Health Benefits fund received a $500,000 loan from the General Fund which was forgiven draining the reserve fund. Taxpayers paid for that too. Exact details of what’s coming won’t be known until the March 30th budget presentation but a recent Public Works Department update to the City Council on the Storm Water Master Plan laid out a clear path to higher costs for Ashlanders. A change in the City’s method of allocating internal charges, utility rate hikes and increases in fees and System Development Charges (SDC’s) are all part of Public Work’s plan to fund Capital Improvement Projects (CIP). 9% yearly increase in Storm Water utility rates, the beginning of a 75% increase over the next 9 years. 363% increase in storm water (SDC) permit cost from $7k to $27k which will discourage building and greatly affect housing affordability 4% annual increase in our water utility bills over the next 8 to 10 years to pay for projects we’re not sure we even need. Meanwhile, the latest CIP update came in at $286 million, an increase of over $40 million in just two years, If actually implemented the cost will come back to you the citizens of Ashland in higher rates, utility bills and fees.
Before the Council now is a proposal to access restricted funds to cover the city’s operating expenses. This is the money put away for special projects that you already paid for through greatly increased utility rates, taxes and fees. Make no mistake, the city is going to claim they need to draw down these fund balances – and we the taxpayers will suffer.
For example, the city just paid off the remaining $3 million for the city’s Waste Water Treatment debt. Payment over the years had come from a majority of the Food and Beverage tax receipts. This saved the city $100,000 in interest but now it appears that plans are underway to divert that Food and Beverage tax income to the General Fund. There are no plans to reimburse the Waste Water Fund so the city will probably seek to replenish it by increasing sewer rates.
For several years, ACES has maintained that our city, with a doubling of the budget over the past 10 years, is in a financial crisis with out-of-control spending, little accountability, no goal setting or prioritization of services and too many employees by any standard. Remember that the average Oregon city our size has 1 employee for every 234 citizens. Our ratio is 1 to 80.
Now city staff seems to be confirming much of this. The challenge before the Budget Committee and City Council will be to bring these operating expenses under control and to make sure our elected officials are better stewards of our tax-resources. Stay tuned and be sure to let your elected city officials know how you feel. Add Somebody to Our Mail List: Click here