Support for Our Local Business Community

In recent weeks, there have been calls for direct assistance for local businesses similar to what has been done in Seaside and Grants Pass. This post is designed to share what has been done for local businesses by the City of Ashland and what is under consideration.

First, a bit of background on how local government funding works. (Note - if you read my earlier post about what the City has done so far, these next few paragraphs will be redundant so skip to “Action to Assist Local Businesses”)

Constraints of Local Government Funding

Local government finances are much more complex than what most businesses and individuals have to deal with in times of emergency. For most businesses, and most individuals too, a dollar is a dollar. There are not generally restrictions that say businesses and individuals can spend this dollar on this expense, but not that one. Not so with local government. Different departments have different funding sources and much of it is restricted, which means that funding can only be used for that program, project, or department. It is not one big pot of money that the City can spend any way it deems necessary, so determining where the financial shortfall will hit, when it will hit, how big it will be, and what is available to close the gap is complex, especially when the disaster causing the shortfall is still unfolding in real time.

Where Revenue Shortfalls are Likely to Hit the City of Ashland

Our early assessment indicates that the shortfall is likely to hit the General Fund, Public Works, and possibly Utilities. The General Fund houses Ashland Fire & Rescue, the Police Department, the Community Development (planning) Department, Ashland Parks and Recreation, and some other smaller functions.

70% of the money collected through the Transient Occupancy Tax goes to our General Fund, which will be down with hotel and other lodging facilities running at far lower capacity. The remaining 30% is restricted by the Oregon Legislature to expenses that encourage tourism.

Revenue from the Food and Beverage Tax goes to fund the debt payments for our wastewater treatment facility, to Parks and Recreation (also services some debt there), and for street repair in the Public Works Department. This is because it is a voter approved tax for specific purposes. Food and Beverage Tax revenue will also be down as so many restaurants are closed or only offering take out and delivery.

Finally, we do not know what impact the stay at home order will have in terms of net electricity and water use, although with fewer people in hotels and eating in restaurants and the region facing drought, we need to expect utility usage will go down. Some amount of decrease can be handled within the budgets for the Electric and Water Funds without impacting rates.

Actions the City has Taken So Far to Reduce the Impact of Revenue Shortfalls:

·         Halted all street repair projects that were slated to be paid for by Food and Beverage Tax money

·         Froze hiring of temporary/seasonal workers

·         Halted Cost of Living Allowances for all non-represented staff (roughly 1/3 of staff)

·         Stopped hiring processes for unfilled positions

·         Began tracking direct costs associated with COVID-19 as this is necessary to receive federal reimbursements later

·         Opened conversations with unions to see if elements of existing contracts could be re-negotiated

·         Continued to advocate for federal funding opportunities, expansion of TOT uses, and debt restructuring

Other actions are under consideration and will be taken up at future Council meetings.

Action to Assist Local Businesses

The impacts of the stay at home order on the business community and local employees were immediate and significant. Without funding necessary to provide direct support to local businesses, the City focused on what it could do to help individuals and businesses struggling to pay their bills. Opportunities came primarily through utility billing and payment of local Transient Occupancy Tax (TOT) and Food and Beverage Tax (FBT). The City quickly announced that there would be no late fees and no utility shutoffs through the end of April for individuals and businesses. In addition, businesses that collect TOT and FBT on behalf of the City could delay paying the City for those collections until June 1. Council has since extended both of those deadlines for 2 months (June 30 for utilities and August 1 for TOT and FBT payments).

Partnering with the Chamber of Commerce

The City has worked closely since the emergency began with the Ashland Chamber of Commerce, the entity that is taking the lead (and rightfully so) on economic recovery in the community. Economic development and recovery issues are the Chamber’s specialty, so the City’s appropriate role is to support the efforts the Chamber is putting in place by spreading the word about the resources the Chamber is offering and encouraging local residents to shop local when possible, order takeout, etc. As more specific plans come forward, the City will consider possible ways to support those plans.

Possibility of Direct Support to Local Businesses

Some residents have suggested that the City of Ashland should provide direct support to businesses as has been done in Seaside and Grants Pass. In these programs, many businesses each receive small checks so the investment is spread thinly across the business community. It is worth noting that the funding sources used in each of these examples are not available in Ashland.

The Council discussed in depth how best to support local businesses at its last meeting. Coming into this meeting, I requested a list of all flexible funding within the City that could be used in some fashion to support the business community. While the entire General Fund is flexible, the General Fund is how we pay for police, fire, planning, and parks and we are already going to have to deal with revenue shortfalls in that fund. Allocating any of the money in the General Fund to individual local businesses (or even general economic development support) means we would have to make even more cuts to the essential services in the General Fund. So, using General Fund money isn’t a viable option.

What is available outside of the General Fund:

Marijuana Tax (Local) – First $100k to Housing Trust Fund

Economic Development grants – $80k from Transient Occupancy Taxes (TOT) is awarded in the annual grants competition, but must be restricted to tourism-related uses

Restricted TOT Funds- Carry forward - $475k from future parking supply and “Other City Tourism Capital”

The Council discussed these options and came to the following:

Marijuana Tax funding: No councilors suggested that we re-allocate this funding. The Housing Trust Fund is what we use to develop affordable housing and it can also be used for support for our unhoused population. Given the need in that area right now, it doesn’t make sense to re-allocate funding from the Housing Trust Fund to individual business owners.

Economic Development Grants: Council directed staff to focus these grants (which come from restricted TOT money and must be used for tourism-related purposes) on efforts that will help the visitor economy in the short-term.

Restricted TOT Funds: These funds are restricted by the legislature to support tourism. In addition, Council had previously added local restrictions to these funds so that they would be used for future parking supply and other tourism capital projects. That second restriction is local and is not required by the legislature, so Council directed staff to return with the process of releasing the local restriction so that the funding could be used more generally to support tourism (rather than focused on parking and capital projects). Once those local (created by City Council) restrictions are lifted, the Council can invest some of that money on collective efforts to increase tourism this year while staying within the governor’s physical distancing guidelines. However, the state level restrictions still hold, which means these funds cannot be used for direct support to businesses. They can only be used to coordinate tourism related efforts and to advertise to attract visitors. Also, with an expected shortfall in TOT revenues this year, we need to protect some of this carryover to keep our standard tourism-support programs in place.

Some have suggested that we take ending fund balance money from funds like Water, Electric, etc. Those funds are called “enterprise” funds and are heavily regulated in terms of what the money in those funds can be used to support. The only way to access any of that funding is to formally borrow money from those funds and pay it back later. In addition, we need to remember that ending fund balance is operating capital so we need to maintain a certain amount of money in each of those funds for healthy operations.

The Job to be Done

As we move through this difficult time, it is important that individuals and organizations focus on their core missions first. SOU and the school district need to focus on educating students - and they are. OSF needs to focus on making it through to their opening next season and bringing forth a dynamic program - and it is. Business owners need to focus on safely bringing in as much revenue as possible between now and next spring - and they are. Direct service organizations need to focus on serving our most vulnerable people in this time of greater need - and they are.

It is the same for the City of Ashland. The City’s core mission is to provide for the public safety and essential services of our community. This means fire and police services, utilities (electric, water, wastewater, AFN), and community planning and parks maintenance (both of which are critical for a functioning community).

Alongside their core missions, individuals and organizations need to be helping out where they can. And they are. The school district is helping to feed children. Business owners are doing their best to take care of their workers. The City is helping meet the needs of our unhoused and vulnerable residents and looking for ways to support collective economic development strategies.

We must continue to build on these efforts to meet our core missions while also helping other efforts where we can. Doing this successfully will allow our community to emerge from this crisis stronger. As a city councilor, I stand ready to help develop and consider proposals from the business community that will support the whole visitor economy in ways that align with public safety and can be done without jeopardizing the City’s ability to provide essential services.

If you have thoughts or questions about this post, feel free to reach out to me via email at: tonya@council.ashland.or.us