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Director says APRC ‘is on borrowed time’

ASHLAND — The Ashland Parks and Recreation Commission survived this fiscal year owing to a padded ending fund balance, but uncertainty about the department’s budget persists without action from Ashland City Council to formalize a reallocation of food and beverage tax revenue, or otherwise resolve a $2 million shortfall.

APRC and Ashland City Council convened Monday in a joint study session to discuss the feasibility and potential methods of maintaining parks infrastructure and recreation services while facing rising costs and revenue constraints impacting municipal services.

APRC unanimously approved a funding plan July 28, dedicating 98% of food and beverage tax revenue to APRC by 2022, as outlined in the city budget adopted June 1.

The 2022-23 budget for APRC includes $4.5 million from the general fund and just over $2 million from the food and beverage tax, totaling about $7 million with miscellaneous revenues and operating transfers.

APRC currently receives 25% of food and beverage tax revenue for major maintenance projects; the additional 73% allocation would cover operations at the commission’s discretion.

The commission accepted an increase in volatility accompanying the funding source shift, APRC Chair Mike Gardiner said, as food and beverage tax revenue dropped by more than one-third in the initial phase of the pandemic, and is projected to regrow by 10% annually through 2023, depending on the tourism market.

As scheduled meetings about general fund vulnerability progress, Ashland City Council must consider “whether this is a permanent formula going forward to fund parks, or if this is a short-term formula to get us through the next fiscal year,” interim City Manager Gary Milliman said.

The 98% food and beverage tax allocation to APRC was proposed in phase one recommendations from the Citizens Budget Committee to “better align funding sources,” pairing APRC with the more turbulent food and beverage tax rather than property taxes, Councilor Tonya Graham said.

“It made sense to have [food and beverage taxes] attached to a part of the city’s general fund operations that could be more flexible in the event of disruption in the future,” Graham said. “It’s very difficult to make adjustments in fire and police, in particular, in relation to lower revenues, but parks has more ability to flex.”

Councilor Shaun Moran said he did not believe handing over near-total spending control of food and beverage tax revenue to APRC would be in the best interest of good fiscal stewardship with taxpayer dollars.

APRC Director Michael Black said when vulnerabilities were revealed in the city’s general fund three years ago prompting a 20-cent reduction to APRC in the funding rate from assessed property value down to $1.89 per $1,000, the $680,000 annual reduction led to staffing changes and impacted water access for parks. Most recently, budget cuts included the elimination of 4.5 full-time employee positions.

Staff no longer have the capacity to pull all weeds in Lithia Park, plant and maintain perennial plants, or generally keep pace with the historically high level of detailed park maintenance in the new reduced funding and staff model, Black said.

“When Talent Irrigation District goes off early, like this year, and we can’t afford to use city water, we have to turn those areas off,” he said, noting residents’ disappointment when ballparks go dry.

Last year, the department lacked sufficient funds to keep the pool open five days per week. Impacts on the recreation side of operations have been more swift and severe, Black said, with certain programs terminated altogether rather than declining over time.

“With reduced staff, there are several of our divisions that are just doing things different in the coming years and not offering as much as they used to, specifically the Nature Center and senior services program,” Black said.

Central service fees have increased by about $800,000, Black said, which APRC temporarily covered with ending fund balances. In two years, without action or a reduction in fees, the department will experience a “drop off” in services, he said.

Milliman said he and the interim finance director are investigating the root cause of the central service fee increase and will report back to council.

“Even if the funding were to stay $1.89, Ashland Parks and Recreation is on borrowed time,” Black said. “The only reason we’re able to function in this biennium is because we were able to scrimp and save, and we have been extremely conservative with our budget over the last seven years that I’ve been here in order to build up our ending fund balance.”

Per the approved budget, APRC will transfer $1.3 million from the department’s ending fund balance to supplement the current biennium budget and keep the department “afloat” for now, Black said, but the backup funding source will run out.

Councilors will continue to consider APRC’s funding source future in the context of structural imbalance across the general fund, and a commitment to identify at least $1 million in reductions or new revenue over the next two years.

Reach reporter Allayana Darrow at adarrow@rosebudmedia.com or 541-776-4497.