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AFN debt burdens police, fire services

ASHLAND — The city's fire and police departments are paying a heavy price for helping to shoulder the Ashland Fiber Network's debt.

Built in the late 1990s to provide television and high-speed Internet service, AFN ran up $15.5 million in debt. The city privatized the money-losing television side of the enterprise in 2006, helping to stem the flow of red ink.

Although a business plan predicted AFN would be able to pay only $200,000 each year toward its debt beginning in 2007, AFN's finances have turned around enough that it has been paying $356,000 annually for almost two years, and will likely do so again for the coming fiscal year that starts July 1.

AFN's total debt payment for the coming fiscal year is $1,431,378. Other city departments are paying $700,000 in the coming year for AFN's debt, including $102,160 from the Fire Department.

"All things being equal, it would be easier to balance the budget without AFN debt," Finance Director Lee Tuneberg said.

Tuneberg said spreading the AFN debt across other departments has an impact on rates, fees and personnel, but he said some departments would have faced staff cuts anyway because of a decline in activity.

For example, Tuneberg said the Community Development Department has seen a decline in its work related to construction. That department had staff reductions in earlier years, including a December 2008 round of cuts, but no additional job losses have been proposed for the coming budget year.

Meanwhile, two firefighters and the coordinator of the popular Community Emergency Response Team are facing the elimination of their jobs. The combined cost of salaries and benefits for the two firefighters is $175,000, while salary and benefit costs for the CERT coordinator total $77,000.

Those jobs will be cut if the Citizens' Budget Committee and the City Council approve a city budget of $80.9 million proposed by City Administrator Martha Bennett. That budget includes no property tax increase. Increasing property taxes to save Fire Department jobs would cost the owner of a mid-value home an extra $30.60 per year.

Meanwhile, the Police Department is contributing $111,896 toward AFN's debt — even as it tries to save $32,300 by cutting a police records clerk to half-time.

A police officer position that cost $85,000 per year in salary and benefits was eliminated in December 2008, along with several other jobs in various city departments.

The Electric Department will pay $252,300 toward the AFN debt, and the Municipal Court will contribute $8,300. Community Development will pay $44,444, and the Public Works Department will pay $180,900 under the proposed budget, Tuneberg said.

The Public Works Department is facing the loss of a water distribution worker and a sewage collection worker.

If the Citizens Budget Committee chooses to save those jobs, customers would see their water bills go up 1 percent and their sewer bills go up 1.6 percent.

Savings from all the jobs that would be eliminated in the proposed budget for the coming fiscal year total about $1 million.

The city is also using $375,378 from a court settlement with the Bonneville Power Administration to help make AFN's coming fiscal year debt payment of $1,431,378. The court case involved BPA electricity overcharges and had nothing to do with AFN, but the City Council previously decided to use the payment on AFN debt.

Tuneberg warned that the BPA court settlement money will be used up and will not be available for the following fiscal year to help pay AFN debt. That could put even more strain on city departments in the future.The proposed budget projects that AFN will earn $1,861,500 in the coming fiscal year, but will spend $2,208,062, including the $346,562 it will pay toward its debt.

Rather than having to finance more debt, AFN will dip into its reserve funds for $346,562, leaving it with a projected $425,135 in leftover money. City policy requires that AFN reserve at least $372,000 as a cushion against unforeseen expenses.

Vickie Aldous is a reporter for the Ashland Daily Tidings. Reach her at 479-8199 or vlaldous@yahoo.com.