2023-2025 Biennium Budget
DATE: April 24, 2023
TO: Mayor & City Council
Citizens’ Budget Committee
FROM: Joseph L. Lessard, City Council
RE: Proposed Budget for the 2023-2025 Biennium
I am pleased to present the City Manager’s proposed 2023-2025 Biennium Budget. This balanced budget reflects City staff’s effort to match available funding and personnel resources with anticipated workload demands. It also attempts to meet the City Council’s adopted Vision, Values and Priorities for the City of Ashland. Overall, the recommended biennial budget expenditures are $383,731,807 million which includes $199,173,621 in operating expenses and $129, 329,148 in Capital expenses. The budget reflects not only maintaining service delivery but improving service delivery, addressing deferred maintenance and hirings, investing in our infrastructure and appropriately budgeting for personnel. As we look back on serving our community over the current biennium, we have together faced numerous challenges with a commitment to doing whatever it takes to continue to provide essential services to the citizens of Ashland. I sincerely appreciate your continued support of City staff and hope this budget will meet community expectations for continued success.
Budget Process & Priority Concentrations
The above diagram lays out the general approach to budget preparations we have been following since June 21st of last year when the City Council adopted Vision and Value statements for the City. It also corresponds to the Council’s adoption of the following budget priorities on March 21st of this year, after the January 30th City Council Town Hall Meeting:
- Risk Reduction, including Wildfire risk reduction and CEAP (Climate Energy Action Plan) execution;
- Economic Development, including development of eco-tourism related accomplishments like trails, and ensuring City processes such as planning are supportive of attracting new business and supporting those already here;
- Affordability, including attainable housing, and review of City rate structures for progressiveness in their livability; and
- Supporting Principles for each of the priorities, include equity of access, and assuring a strong supportive City organization with a customer service focus.
These priorities provide staff direction to assure resources are directed to meeting community expectations over the coming years, and also communicates an alternative lens through which the budget can be seen giving it more clarity and transparency.
Following Council’s priorities direction, City staff have established the below Budget Priority Concentrations as a visioning tool to help show how the City’s budgeted work program aligns with Council’s priority direction. To the Council’s priorities, we’ve added the two concentrations that emerged as City staff developed the proposed 2023-2025 BN Budget: 1) Livable Community to provide a concentration for programs or departments that do not fall under another concentration; and 2) Invest in the Future to address past deferred investments in need of consideration.
While the City must budget for each of its separate operational and capital funds, a concentration oriented view of the City budget can give an alternative way of seeing what the City provides in the way of services. The proposed 2023-2025 BN Budget will begin showing how all City expenditures roll up into one or more of the Budget Priority Concentrations so that, over time, the community can better understand what the City is funding toward meeting its Council adopted Vision, Values and Priorities.
The Concentrations will also support City staff’s effort in the next biennium to develop a dashboard report of metrics that can inform the Council and community on progress in accomplishing budgeted service objectives.
Developing the proposed budget begins internally with each department estimating their corresponding department’s specific revenues and preparing proposed expenditure budgets. This information, along with past historical trend data and a projection of general revenues and expenditures, is used to prepare the complete proposed budget. The Department Directors, Deputy City Manager, and City Manager/Budget Officer met several times over the last few months to review each department’s projected workload and goals, and corresponding staff and funding needs for the upcoming 2023-20025 biennium.
Next step for the proposed budget’s review and approval process is for it to be presented to the Citizen’s Budget Committee (Mayor, City Council and seven appointed citizens). The Citizen’s Budget Committee will meet publicly to review and discuss the proposed budget, vote to approve revisions as appropriate, and forward the 2023-2025 Biennium Budget with accompanying property tax rate to the City Council for adoption. Prior to June 30, the City Council will hold a public hearing to receive public input on the programs and services funded in the budget as approved by the Citizen’s Budget Committee. The City Council then acts to adopt the final budget’s resolutions, makes appropriations, and formally declare the tax rate and bond levies. The adopted budget goes into effect July 1 ,2023. Throughout the biennium the adopted budget is monitored, and appropriations are adjusted as necessary.
Staffing - Like so many other organizations, the City today faces challenges when it comes to maintaining our workforce and sustaining the high quality of services our residents have come to expect. We have worked diligently to fill vacant positions this last year and will continue to do so to ensure we have the staff expertise we need to deliver City services. For that reason, the core feature of our FY 2023-2025 Biennium Budget is a renewed emphasis on ensuring Ashland is viewed as a preferred employer for qualified individuals seeking a desirable workplace in the Rogue Valley and Southern Oregon. The City must be able to attract and retain the people needed to do the work our community expects of us. Retaining a team of talented and dedicated individuals not only assures quality service, it saves the City from the costs of recruiting, hiring and training new staff members and, prevents the lost productivity that results from excessive turnover.
Economy - Preparation of this biennium budget has been inherently more complex as the U.S. economy contends with factors such as labor shortages and wage pressure, cost of living increases, supply chain issues, rising inflation, fluctuating interest rates and fears of recession. We have been mindful of this pressure during the City’s labor negotiations this year with four of its five labor associations. We have worked to achieve a balance between offering valued, cost appropriate pay and benefits for current City workers that are also competitive in attracting talented and skilled new employees. On the materials and services side of the City budget, we face Inflation that is driving higher costs at a pace not seen in decades, in some cases materials costs (operations or capital) have seen 15%-20% cost increases over the current biennium with additional increases for the next biennium have expected to rise an additional 10%-15%. Just for a point of reference, the U.S. Bureau of Labor Statistics CPI-U inflation calculator shows inflation in FY 2021-2022 reached/exceeded eight and a half percent (8.5%) and approximately two percent (2%) for July-March in FY 2022-2023. Compounding these inflation rate gives an approximate CPI-U inflation rate for the current biennium period of over 8.6%. The proposed 2023-2025 budget’s overall cost for departmental operational expenditures is increased by approximately 6.6%. We will need to carefully manage City resources going forward to assure the planned work program stays to
within budgeted expenditure levels.
Deferred Maintenance - In addition to the financial pressures related to ongoing service delivery, the City is facing significant and pressing needs to address City deferred maintenance investments, including in facilities, Ashland Fiber Network, information technology and maintenance staffing. These deficiencies must be addressed to mitigate existing facility and operational issues, including for improved and safe workspaces, creating convenient and welcoming customer service spaces, increase operational efficiency and minimize long-term costs to the City and its citizens. We will continue to develop a funding strategy for deferred investments for the upcoming biennium. Implementation will address decades of under-investment and deferral. Addressing these issues will better position the City to effectively and efficiently deliver services to Ashland residents into the future.
Despite the challenges mentioned above and constraints of the budget, City staff accomplished a wide range of impactful initiatives and continue to provide much needed services to the community, including the following:
- Adopted the City’s new Vision, Values and Priorities statements.
- Held business and economic roundtables with local businesses and key institutional leaders.
- Community Development supported the development of 60 new low-income housing units by the Housing Authority of Jackson County and 29 new permanent supportive housing units for low-income households by Columbia Care. The creation of these 89 new affordable units were supported with City of Ashland Affordable Housing Funds and the waiver of System Development Charges.
- Community Development was awarded and distributed $750,000 in local Community Development Block Grants, Social Service Funds, and Affordable Housing Funds to local non-profit organizations assisting extremely low-income and low-income households obtain housing, food, and emergency shelter, most notably, the OHRA Project Turnkey shelter project.
- Human Resources has done important work filling vacant staff positions after unprecedented resignations and retirements during the pandemic.
- Established the Department of Innovation & Technology (DoIT), consolidating three divisions (Information Systems, Ashland Fiber Network, and GIS/Asset Management
- Ashland Police Department handled over 64,000 calls for service and investigated 5,400 criminal cases.
- Ashland Fire Department responded to over 10,000 calls for service in 2021-2022 and provided public education and outreach to 5,734 residents.
- The Ashland CERT program maintains an active roster of 125 volunteers. Ten new CERT members were added from the first basic training since COVID began.
- Fire Adapted Ashland (FAA) developed the volunteer-led Wildfire Risk Assessment Program in partnership with the Wildfire Safety Commission in 2021. Training and certification of the first cohort of volunteers was completed in Sept. 2021. Six volunteers have performed over 300 individual property risk assessments as of January 2023.
- Established an intergovernmental agreement between Southern Oregon University (SOU), Ashland School District and the City to establish a joint Emergency Operations Center.
- The renovated Japanese Garden opened in October of 2022, with over 2,000 people attending the grand opening despite pouring rain. This project was made possible with grants from the Ashland Parks Foundation and the generous donation of Jeffery Mangin.
- Ashland Senior Center reopened in January, with full offerings back by March and many new activities by the end of the year. A total of 12,521 visits to services/classes were provided in 2022, increasing support and connection for seniors.
- Daniel Meyer Pool and Ashland Rotary Centennial Ice Rink also fully reopened, nearing pre-pandemic numbers served 17,004, and 21,021 respectively.
- Addressed an anticipated budget deficit and preserved $2.39 million in capital funds for Parks and Recreation while also creating an emergency reserve of $1.7 million.
- Established an emergency shelter agreement with Options for Helping Residents of Ashland (OHRA).
- Developed and presented business plans for the Ashland Fiber Network and for single role EMS in Ashland Fire and Rescue.
- Developed the City Paid Leave Equivalent Plan.
Budget Summary and Looking Forward
- State shared revenues recovering
- Gas tax, liquor tax, cigarette tax, highway tax, have recovered to pre-pandemic levels
- Lodging tax revenue recovering to pre-pandemic levels
- Consistent and stable revenues from monthly city service charges
- Inflationary pressure (materials and services contracts)
- Rising interest rates
- Personnel costs have increased due to union contracts and COLAs
- Debt service for facilities potentially on the horizon
- Health and benefits fund has been dissolved with healthcare costs being charged directly to departments moving forward. The ending fund balance has been redistributed to the contributing fund based on the percentage of contribution.
- The General Fund now includes the Parks and Recreation operations and Parks Equipment Fund.
- Streets, Parks, Stormwater, Water, and Wastewater System Development Charges (SDC) funds were created for this BN.
- Two (2) additional police officers
- Four (4) EMT-Basic positions for phase 1 implementation of single role EMS
- $1 million for an Ashland Fiber Network “full fiber” pilot
- City Communications position fully funded
- Childcare initiative funding
- Risk Analyst position (HR)
- Half-time support position transferred to the City Recorder’s Office
- Economic revitalization funding
- Electric Utility business plan and rate study, and USDA On-Bill Finance Consultant
- Emergency weather shelter funding
- Long-term funding and financial health study
- Compensation and classification study
- Economic Opportunities Analysis Study
- Community Development records scanning
- City Organization Diversity, Equity & Inclusion Training
- Employee appreciation funds
- Convert four (4) temporary street employees to two (2) full-time positions
- AARP Livability Survey funds
Staff have worked diligently and established a proven track record of strategic responses and adept management in uncertain times like these. Efforts to implement efficiencies, contain costs, and explore revenue options will continue to be necessary to maintain the levels of services we currently provide in years to come.
The following graphics provide point of reference views of the proposed 2023-2025 BN balanced budget ($383,731,807 million total sources/uses; $199,173,621 in operations expenses and $129,329,148 in capital expenses).
This chart includes the proposed total City budgeted new revenues and other sources for the 2023-2025 BN.
This chart includes only the proposed budget’s operating expenditures for the 2023-2025 BN.
This chart includes only the proposed budget’s operating expenditures for the 2023-2025 BN formatted by City departments.
This chart includes only the proposed budget’s capital expenditures for the 2023-2025 BN formatted by City departments.
We are fortunate to call Ashland home. Rogue Valley is a great place to live, work, and play. The community continues to be well-served by its City organization. That success is the direct result of the dedicated work of the City Council, community volunteers and City employees. City staff have continually risen to the challenges in order to provide a full spectrum of services to the community through historic and uncertain times. I would also like to express my appreciation for the commitment of the Citizen’s Budget Committee members. The work they are undertaking for their community is to be commended.
The proposed 2023-2025 Biennium Budget represents months of diligent and creative work on the part of City staff. Difficult decisions were made to develop the balanced budget presented here. The City is currently hitting all targets per the current City financial policies and is in a strong financial position moving into the next biennium. Per the Governmental Financial Officers Association recommended best practice, the proposed budget has been built with a General Fund ending fund balance policy level transitioning from 20% to 16.667%. This will bring us in line with the industry recommendations while allowing more funds to be appropriated to provide services. The City Will continue to work towards ensuring a strong financial future by exploring revenue options and affordability in the next biennium.
The Budget Committee and Ashland community can be confident in, and proud of, the hard work of dedicated City staff in developing a balanced budget that works to maintain existing service levels. City staff remain committed to continually exploring ways to better serve our community and find efficiencies to create synergies with the resources entrusted to them.