City budget numbers raise concerns
With consideration of a two-year budget for the city of Ashland approaching, here are some major issues.
First, the city is sitting on a pile of money, $49.2 million, mostly from overcharging utility customers for the past half dozen years. Alarmingly, of the $49.2 million, almost $20 million is in “unassigned” fund balances.
What intention does the council have in building up what can only be described as a huge slush fund? These numbers come from a recently published 18-month report on the current two-year budget. So, these funds will collect even more cash by the end of the biennium in June.
During this year’s budget discussions, the talk should be about how to return this money to utility customers — either through a massive cut in rates or a water bill holiday.
In addition to increases in revenue from utility charges, the city is continuing to see increases in revenues from the property tax, partially due to the rate increase enacted by the City Council two years ago over the objections of the Budget Committee. However, income from tourism related taxes, which make up a third of general fund revenues, is facing a downturn and the city’s general fund is facing three major cost increases:
- Retirement: City payments to the state PERS retirement fund have been going up 25 percent per biennium and won’t peak until 2036.
- Health Insurance: With payments for care exceeding estimates again, rate hikes for insurance are almost guaranteed. To control costs, the benefit structure needs to change where employees pay more for deductibles and co-pays.
- Salaries: Most of general fund spending goes for salaries and benefits. Full funding for recently hired police officers, firefighters and other first responders will increase personnel costs, as will recently-negotiated labor contracts. Smarter communities have turned to outsourcing services to avoid these massive personnel liabilities.
Not only will these costs strangle any new city initiatives, they will challenge continuation of existing city programs.
This will make for a challenging year for the Budget Committee as it reviews the general fund covering most of the city’s non-utility related services. We wish them good luck. All 14 members of the Budget Committee — Mayor Stromberg, our six elected council members and the seven citizen members selected for their financial knowledge – must be fully engaged in the process.
Susan T. Wilson is a member of Ashland Citizens for Economic Sustainability (ACES).