Three months after the city of Ashland declared a state of emergency for the Covid-19 pandemic, it finally rolled out its plan to address inevitable revenue shortfalls in the budget. Even before the crisis, the city was grappling with a structural budget deficit and no money for emergencies. With only $39,000 in reserves in a $306 million budget, Mother Hubbard’s cupboards were bare.
But now, the city had to grapple with the loss of an estimated 50% of its lodging and meals tax, a projected $6.3 million for the biennium. With the Oregon Shakespeare Festival closed indefinitely, we have few tourists staying at hotels or eating out.
The plan consists of primarily cutting fire, police and parks and raiding restricted fund balances. Worse, this solution only addresses $3 million of the $6.3 million shortfall and none of the underlying structural budget deficit deficiencies.
Our city leadership never seems to miss an opportunity to miss an opportunity. Instead of addressing the systemic fiscal issues brought on by years of overspending, they propose a short-term solution that doesn’t even address the remaining revenue shortfall in the 2nd year of the budget. Instead of making some difficult but long overdue decisions, they continue to kick the budgetary can down the road, at the same time, providing little to no relief for Ashland citizens and local business.
There is no getting around the need for significant reductions in personnel costs. It’s the largest cost component of the budget and despite claims we can’t cut staff because it will impact services, that argument seems self-serving. The reality is that if staffing and remuneration are not addressed, the city will need to find at least $4 million in new revenues to fill the budget hole to pay for existing city staff next year.
Ashland is overly staffed with each city employee’s salary and benefits costing taxpayers, on average, nearly $140,000 annually. It is not sustainable for our town where the median household income is about $50,000 a year. We applaud the plan’s $1 million reduction in personnel expense within the General Fund and the approximately $500,000 cut in Materials and Service. It’s a start but woefully short of what can and needs to be done.
It’s also noteworthy that the majority of personnel cuts are in essential services while there are no cuts in administration, finance, legal, public works or top-heavy management. Based on the 2017-2019 budget, the top ten paid city staff have an average total annual compensation that exceeds $220,000. The city should, at the very least, follow the example set by Southern Oregon University and lower their salaries by 20%.
In addition, the city continues to draw down fund balances, in this case to pay our debt service and keep the lights on in the city. These funds have been collected from city ratepayers for specific projects or needed city repairs.
In the past few years, the city raided the Reserve Fund to bail out the Health Care Fund and Ashland Fiber Network. They raided the Facilities Maintenance Funds to bail out the Central Service Fund and, as a result, there were no funds left to fix the Community Center and Pioneer Hall.
In the current plan, the city draws upon three more funds rather than address excessive costs or rightsizing departmental budgets:
- The Wastewater Fund to cover the Food and Beverage tax shortfall for the Wastewater Treatment Plant debt.
- A transfer of $553,000 from the Cemetery Trust Fund to pay for current expenses that will increase general fund expenditures in future years.
- De-committing restricted reserves of $900,000 from the Parking Fund meant for future parking supply.
The city has both a short-term and a long-term budget problem. All we can expect of the current administration and Council is to provide minimal short-term solutions to fix the loss of meals and lodging tax revenue. While we would like them to look beyond the current problem, we don’t expect it. In a world where COVID-19 has changed everything, our Mayor and elected officials plod along in typical business-as-usual fashion.
The chief legacy of this administration and Council is going to be the failure to prioritize city programs that we can afford. Solutions to the city’s underlying budgetary problems will be on the doorstep of those elected in this fall’s Mayoral and Council elections and the new City Manager hired as the result of the charter change adopted by voters in May. Change in Ashland is desperately overdue.
Garrett Furuichi, Ashland Citizens for Economic Sustainability (ACES)