Council presses forward on budget strategy
Ashland City Council forged ahead on a strategy to address vulnerabilities in the city’s general fund Monday during a study session.
City Manager pro tem Adam Hanks said the crux of the city’s financial issues lies in the general fund, which primarily covers public safety, parks and community development activities. The approved biennial budget for 2021-2023 delineates strategies to address the latter half of the budget and ensure it “works as planned,” he said.
“The city of Ashland really needs to set its priorities and it needs to focus on some really tough decisions coming forward,” said Finance Director Melanie Purcell. “Sooner or later, you reach a crossroads and you have to decide whether the package that you have is the package that you can afford and are willing to live with.”
Purcell said the city must avoid “Band-Aids” on critical financial decisions that have been in discussion for several years. The general fund is projected to face significant pressure, property tax revenue growth is capped at 3.5% by state law, and the city has no control over growth rates for the majority of its expenditures, she said. The enterprise fund is not at risk and remains in an “excellent position,” she said.
Revenue from the food and beverage tax and transient occupancy tax are projected to grow at 10% to 15% annually assuming economic recovery, and salary, benefits and other costs associated with market behaviors are projected to increase by varying degrees between 2% and 6% annually, according to Purcell’s council report.
Fiscal year 2021 is returning slightly higher revenues over expenditures than expected, Purcell said.
“We balanced 2022-23 knowing that at the end of 2023, something had to change,” Purcell said. “Once we start crossing through ‘23 at the end of the biennium, there’s a problem — a pretty significant one.”
Monday’s study session was the first of a series of meetings City Council approved to prioritize budget items and develop a long-term strategy.
Thus far, city staff have focused on identifying ways to deliver services as required by state law, such as fire protection, street coverage, certain community development activities and law enforcement. As a result, staff made about $3 million in reductions to “streamline and create more efficiencies,” Purcell said.
City Council retains responsibility for making choices about the “culture and character” of the city on behalf of the community — decisions that are linked to general fund services and cannot be decided upon by staff, Purcell said.
Remaining costs that can be cut without affecting services represent a “very, very small pocket,” Purcell said.
“What are you willing to live with less of, and what are you willing to live without, or what are we willing to pay to get what we have?” Purcell summarized. “You also don’t have a huge array of options for the magnitude of the problem you have to solve. You are talking about a $3 million to $5 million need to adjust and it needs to be a structural adjustment.”
On the table for council consideration: regionalizing services through special districts or intergovernmental agreements, reducing or divesting programs and services, increasing revenues, decreasing expenses and consolidating city-owned properties, such as moving staff to temporary offices and selling the community development building downtown to provide a one-time income boost for the general fund.
Council decisions regarding the general fund have implications for affordable housing initiatives, the parks budget, staff time, community engagement, fire regionalization and police services.
“I applaud you because you picked the quintessential term to be elected,” Purcell told councilors.
She recommended the council hold a joint meeting with the Ashland Parks and Recreation Commission, which accounts for the largest discretionary portion of the general fund budget.
“There are minimal legal mandates required for the disbursement of parks funds, and Ashland has made a values commitment to put a lot more money toward parks than most other cities in the state of Oregon,” Purcell said.
Councilor Paula Hyatt recommended four three-hour meetings once per month — the first being a joint meeting with APRC — to discuss general fund mandatory versus discretionary expenses, revenues and the food and beverage tax, and a final meeting setting direction for general fund structure with a specific focus on critical decision points.
Hyatt said the additional meeting sessions will provide dedicated space to focus on the general fund, so the City Council can reach November with a clear plan and approach ballot filing deadlines next year with structure and confidence.
At the Tuesday business meeting, APRC Chair Mike Gardiner said the commission is “eager to participate” in the joint meeting discussion.
Hanks said when developing a timeline for decision-making ahead of the May 2022 ballot, councilors must consider the requisite time to build public support behind whatever options they put forward.
Councilor Shaun Moran was absent from the study session Monday.
Contact Ashland Tidings reporter Allayana Darrow at email@example.com or 541-776-4497.