The Ashland Police Department can go ahead and hire an additional two police officers on top of two recent hires, the City Council decided at its meeting Jan. 2, but exactly where the final piece of needed funding will come from remains unsettled.

The City Council unanimously approved the hiring of five more officers last March at an estimated cost of about $110,000 each and later approved funding sources for two of the officers, but failed to come to a consensus of how to fund another two positions. The fifth position was filled by reassigning an officer from a regional partnership to Ashland duty.

Funding for one officer came from a property tax hike. The second will be funded by a fee of 50 cents per month per electric meter, plus a share of marijuana tax proceeds. The 50 cent utility fee is due to take effect July 1.

The additional officers will allow the addition of one additional officer per shift, plus reinstating the school resource officer program, Police Chief Tighe O'Meara said. That will allow APD to respond to more than one confrontational situation at a time without calling for backup from outside the city.

Councilor Greg Lemhouse urged action at the meeting on funding the $220,000 annually for the final two officers, saying the city is “playing with fire” the longer the council postpones its decision.

Mayor John Stromberg reminded the council twice at the meeting of a $1.7 million deficit in the current biennial budget of $286 million. Unless revenues exceed expectations or expenditures come in low, the council will have to tap into the reserve fund or find new sources of funding before the next budget cycle.

Staff presented five funding options, all of which involve raising taxes and creating new fees for either Ashland residents or local businesses and tourists.

'Public Safety Support Fee'

The council ended up passing a proposal from Councilor Rich Rosenthal for a temporary utility surcharge of $2 per month, buying time for staff to produce a more comprehensive report on other options. The $2 fee is separate from the previously approved 50 cent fee.

“I think the object is to reduce the financial impact on residents and homeowners as much as possible,” Rosenthal said while proposing the public safety support fee as a temporary solution.

“We owe it to the residents and taxpayers to look at all possible revenue strings … so we could say we fully analyzed the weaknesses and strengths of all of them,” Rosenthal said.

The $2 temporary surcharge is tied to the city’s property tax collections, Director of Administrative Services Mark Welch said. If the property tax exceeds the budget by 3 to 4 percent, the excess money will completely replace the surcharge. Welch also added the fee could only be reduced and not increased if property tax collections come in below expectations.

This was the staff’s recommended option.

Transient Occupancy Tax

The option to raise Transient Occupancy Tax drew interest from Councilors Lemhouse, Stefani Seffinger, Mike Morris and Traci Darrow. Transient Occupancy Tax is a hotel, motel tax that was established in Ashland in 2003. Staff proposed an increase of 1 percent, up to 10 percent from 9 percent, which would put Ashland’s hotel tax above state average, but still below Bend at 10.4 percent and Portland at 11.5 percent, Welch said.

Seventy percent of the 1 percent hotel tax increase will be restricted to tourist infrastructure and facilities, according to state legislation. The remaining and unrestricted 30 percent could be used to fund an officer, Welch said.

Several councilors were wary as staff said the city hadn’t communicated with the stakeholders of the tourism industry in town, including the Chamber of Commerce, Ashland Visitor and Convention Bureau, Bed and Breakfast Network and Oregon Shakespeare Festival,

“I’m not comfortable with increasing the tax without talking to the industry,” Councilor Dennis Slattery said. His spouse, Sandra Slattery, is the executive director at the Ashland Chamber of Commerce. Slattery clarified with city attorney David Lohman at the meeting that taking part in the discussion is not a conflict of interest for him because the discussion was strictly about police funding.

Darrow, in support of the tax, said the city “over-relies on utility fees again and again,” adding the city instead should tap into the tourism revenue.

“We have the luxury of being a tourist town and we don’t do a very good job collecting revenue to help our city from all the visitors that come through,” she said.

Live entertainment ticket tax

The city could generate an annual revenue of $200,000 by applying 1 percent tax, or $350,000 in revenue with a flat fee of $1 per ticket from live entertainment tickets at larger venues, staff said in its report. The idea is to put a fee on tourists who come to Ashland for live entertainment and have an impact on police services.

The tax has been implemented in other cities in the nation and would be collected the same way as the hotel tax in Ashland. In larger cities and entertainment hubs, the tax reaches up to 14 percent, city Administrator John Karns said.

Oregon Shakespeare Festival would be impacted, but the city hasn’t figured out what other venues and productions would be also defined as “a large venue.”

Lemhouse, Rosenthal and Darrow were interested in the option, while Seffinger and Stromberg said the tax would potentially hurt the local entertainment industry, especially after this year’s “financial crisis” due to the smoke. OSF lost an estimated $400,000 in revenues, about 2 percent of total ticket sales, due to refunds and lost ticket sales, forcing a staff reduction of a dozen employees towards the end of last season.

“I’m afraid of relying on the tourists after this year’s fire,” Seffinger said. “I’d rather like to see a combination of things.”

Karns also warned the Council that the tax will be “a different ballgame” for staff to tackle if the council chooses to approve it at the next regular meeting.

"We don't know much about this tax," Karns said. "It would be ambitious to complete the research by (the next meeting on Jan. 16)."

Parking Meter Fees

Staff presented a plan, included in the approved Parking Management Plan, to implement paid parking spots in downtown area along with a paid parking lot program.

The program would generate $75,000 per year but would also cost the city $25,000 in infrastructure costs, Welch added.

“The issue we discovered is that it could create issues in the neighboring streets,” Welch said. “We would have to explore and analyze the downtown parking plan more thoroughly.”

Staff recommended the council not use parking meter fees to fund the officers but continue to pursue the plan in the future.

Property tax

To fund the first officer, the Council voted in June to increase 2017-18 property tax rate 4.5 cents per $1,000 assessed valuation. Welch said at the meeting that the council could approve the same increase this fiscal year to fund another officer.

No councilors expressed interest in this option at the meeting.

The current budget

Slattery advocated for a more reserved approach — to borrow from the current budget or have it absorb the one-time cost for this year until a long-term solution is found. Slattery said he’s “very reserved in increasing any fees or taxes at this point.”

“Not until we get an idea what we are talking about here,” Slattery said, referring to the lack of information and communication between the city and stakeholders in the tourism industry who will be impacted by increasing taxes.

Darrow, who advocated for more fees on the tourism industry, later also supported Slattery’s approach, saying she believed there’s enough money in the current budget to bridge the city until a fitting solution is chosen.

Welch said Slattery’s proposal would “create a big hole in our budget,” as the city needs a dedicated funding source for the officers instead of a one-time expenditure.

The council voted to ask staff to come back with fully fleshed-out reports on each option before the beginning of the second fiscal quarter of this year.

— Reach reporter Tran Nguyen at 541-776-4485 or tnguyen@rosebudmedia.com. Follow her on twitter @nguyenntrann,