What We Need: The City needs to continue to align our budget with the needs and desires of our residents as we work to create a strong current and future Ashland.

No matter the size of the organization, a budget helps allocate resources to reach goals. That being said, municipal budgets, with restrictions on how different funds can be used and major infrastructure projects that can stretch out over several years, can be particularly complex. It is important to note that the state legislature requires all municipalities to pass a balanced budget, so municipalities cannot have budgeted deficits.

To have an informed conversation about the City’s budget and financial management, we need to understand the larger trends within which the City is operating and some basic realities of Oregon tax law. Because Measure 5 passed years ago, the assessed value of property (which is what taxes are calculated based on) can only increase by 3% per year no matter what is happening to the actual market value of that property. For more information about how our property tax system works, see this League of Oregon Cities primer.

Most of the revenue that we use in our General Fund comes from property taxes. Our General Fund basically pays for fire, police, parks, streets, and planning. The problem is that some line items in the budget, like health insurance, jump higher than 3% per year. Increased regulatory requirements (new requirements for fire fighting equipment, for instance) can also make programs much more expensive to operate year over year. And sometimes, inflation skyrockets past 3% for external reasons. With some expenses jumping so much faster than our tax base is allowed to, revenue can’t always keep up with expenses.

And then there is PERS. This video is the best I’ve seen at explaining what happened with PERS in the legislature and the long-term situation we find ourselves in, but here is our reality:

1. While it is not our fault, it is our responsibility. We are legally required to pay these additional assessments for people who worked for us years ago under that poorly constructed contract at the state level.

2. New hires are not causing this same problem because the contract was fixed several years ago.

3. This will stay with us for many years until those former employers pass all the way through the system (but the risk of additional assessments will go down over time as fewer people are in this group of retirees)

4. We remain at risk of future additional assessments (above what we will be paying annually for many years) if PERS investments yield less than 8% at any time while people employed under the former contract are still in the system.

Progress

The city has made some important progress over the past several years, including:

• Building our reserve funds to over $1.5 million from just $30,000 several years ago

• Strengthening our ending fund balances in both our General Fund and our Enterprise Funds that support utilities (water, wastewater, electric, Ashland Fiber Network)

• creating a single role ambulance service as part of the Ashland Fire & Rescue operation that allows us to provide a higher level of service at less cost than the previous system

• leveraged the high interest rates over 2023 and 2024 to increase unrestricted revenues significantly

• simplified financial reporting to the Council to make it easier for the public to understand the general financial health of the city

Next Steps

We are in a good financial position. To stay there, we must continue to support City departments in identifying additional efficiency measures so that we can be sure that our investments are as effective as possible.

This also means continually investigating structural changes that can be made in our departments, like what was done with the single role model in the fire department, that will improve efficiency while maintaining service levels.

My goals for future budget processes are to make sure we have clear strategic priorities identified by Council ahead of time, a shared understanding of the role of the Budget Committee, and clarity around the assumptions that have gone into both the revenue and expense sides of the budget.

Our interactive financial reporting platform allows residents to see more details about the cities financial management. Our 2023-25 budget outlines our plan for revenues and expenditures for the two year period.