“Don't tell me what you value. Show me your budget, and I'll tell you what you value.”

Joe Biden

What We Need: The City needs to get clear about what Ashlanders want from their municipal government and what they are willing to invest in it so that we can align our budget with those priorities.

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.

The budget has been a hot topic of conversation in Ashland for several years, and rightfully so. Some claim local government is bloated, some are confused about priorities, and some residents are concerned about Ashland’s financial resilience - and that was before COVID-19 arrived. At the same time, Engage Ashland surveys have shown that the majority of residents are pleased with the services offered by the City.

To have an informed conversation about the budget, 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 the State of Oregon’s property tax page.

Most of the revenue that we use in our General Fund comes from property taxes. Our General Fund basically pays for fire, police, parks, 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. With some expenses jumping so much faster than our tax base is allowed to, revenue can’t 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 mess we find ourselves in, but here is the reality of our situation:

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 destructive contract.

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.

With this reality, and with hindsight being 20-20, it’s easy to say that the City should have made cuts years ago. I can see that point and it’s probably true. But we should remember that the Oregon Legislature has been working to fix this problem for several sessions, so there was hope in local governments (and school districts, counties, universities, etc.) that there would be a legislative fix that would make these extra assessments go away - or at least not be as bad as they were. However, after the first fix was determined to be unconstitutional, it started to become clear that this was going to be an ongoing problem that couldn’t necessary get better, but could get significantly worse.

It is also important to remember that cuts to public safety programs reduce service levels to our most vulnerable residents. That matters. So the efforts made by staff and past councilors to maintain public safety service levels through the budgeting process can be understood.

Progress

The 2019 budget process was managed much better than the 2017 process. I have detailed the 2019 budget process and what came of it in this blog post, but basically it was a hard process that involved eliminating 6 staff positions, making other cuts, and creating revenue enhancements. But it has certainly helped us get on a better path.

The 2021 budget process happened in the middle of the pandemic. Fortunately, the federal government came through with assistance for local governments just as we began the budget process, which prevented drastic cuts to the budget and city services.

As we were moving into the second year of the biennial budget in June of 2022, the Council had a series of extra budget meetings to make some adjustments for that second year. I wrote this blog post chronicling the actions taken by Council in that process.

Going forward, we have to do three things:

1. Continue to support City departments in identifying additional efficiency measures so that we can be sure that our investments are getting us the biggest bang for the buck.

2. Analyze how we do what we do to see if there are structural changes that can be made that will improve efficiency while maintaining service levels.

3. Make hard decisions about what we will and will not invest in as a community so that we can have a budget that in lean times has a reserve to fall back on and in times of plenty can tuck money away for a rainy day. This will be HARD and painful. There are no areas, especially in the General Fund, where we can find easy wins with obvious cuts. Those gains were realized years ago with cuts made at the beginning of the PERS crisis. To balance our budget and strengthen our reserve, the City will need to stop doing some of the things it has done for a long time or we need to find new revenue sources.

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.

We must do our best to ensure that we are making financial decisions that are responsible in both the near and long term. Budgeting conservatively in terms of both revenue and expenses so that we can strengthen our reserves over time is a good place to start.

Finally, we need to be smart about how we handle these changes. We need to approach our budget with a scalpel, not a chainsaw. Broad solutions (across the board cuts, etc.) while appealing in their simplicity, are often not the most effective.

One last note. We need to get real about the simplistic comparisons that are tossed out on social media about the size of the City of Ashland’s staff in relation to our population. If we are going to make comparisons, we should compare apples to apples. Ashland handles many services (fire, water, wastewater, electricity, AFN, etc.) that in many communities are handled by special districts or service districts. We also have a century old love affair with our parks so we have more pocket neighborhood parks than many communities - and they cost money to maintain. While we have 20,000 residents (plus probably more given the problems with census counts of college students), we have many more people than that during our tourist season, which means our public safety departments have to serve a significantly larger number of people than just those who reside here.

Back of the napkin, simplistic comparisons about the size of municipal staff are done to beat the drum that the City of Ashland has too many employees - and therefore, should start cutting willy nilly. Manipulating data and making inappropriate comparisons harms our political discourse, drives wedges where they need not be, and distracts us from the important work at hand. Let’s instead have an honest conversation about what we want in Ashland, what matters to us, and what we want to invest in, rather than tossing out comparisons that tell a simple, but misleading, story.

If you have questions about the City’s finances, visit https://ashlandor.opengov.com. This dashboard program put in place by the City helps Ashland residents stay abreast of a variety of efforts and issues within city government.