Sean C. Morgan
The City of Sweet Home finds itself at the threshold of deciding between possible service level reductions in other funds and departments to provide adequate funding levels for future service in Sweet Home Police Department.
City Manager Craig Martin told this to the budget committee during its first meeting of the year on Thursday night.
The Police Department already cut expenses this year to deal with an unanticipated decrease in property values this year (2003-04) and increase in Measure Five (1990) compression. Earlier this year, it chose not to hire an officer to replace one hired by Eugene and it did not purchase a new patrol car.
Compression and the property devaluation affected three funds this year. They included the Sweet Home Public Library, Police Department and general fund.
The department must purchase new patrol cars this year, Police Chief Bob Burford said. The city’s project and equipment reserve fund will provide the $50,000 to do so in 2004-05.
“We expect the budget pinching to grow tighter and ultimately spread to other departments as costs rise and revenues potentially continue to decline in future years,” Martin said. The city anticipated a loss of $175,160 to compression and an increase in property values based on information from Linn County.
Property values declined by $12 million overall throughout the city, including a reduction in values tied to sale of industrial property, lower residential property values and the statewide reduction of utility property.
“The reduction in property values compounded with the increased Linn County Law Enforcement Levy designed to capture a larger share of the $10 general government tax rate had a devastating effect on property tax revenues for Sweet Home’s two local option levies,” Martin said. “After the dust settled, and the county imposed taxes in October, we discovered a loss of $265,963 in revenues expected to be received for our Police Operating Levy and $26,044 from our Library Operating Levy.”
Historically, Measure Five compression had run about $40,000 per year for the police department, Martin said. “This shortfall required the police department to immediately stop all discretionary purchases, not purchase a new patrol vehicle as budgeted and not fill a position when one of its officers left the force ? All efforts to try to maintain a carryover that would fund operations during its first four months of services during 2004-05 (beginning July 1).”
As staff members developed next year’s budget, they expected to remain in compression and budgeted accordingly with the loss coming off of property tax revenues, Martin said. “Two years of lost property tax revenues with no major increases in property values in sight for the Sweet Home area will definitely have a detrimental effect on the police services budget.”
At the same time, the Police Department is seeing an increase in calls for service this year.
“Despite all of the efforts made by staff to maintain four months of operating revenues in the Police Operating Fund, the budget you have before you does not achieve this,” Martin said. To pay its bills before property tax revenue is received beginning in November, the department needs to carry over $425,000 as an unappropriated ending fund balance. It budgets only $199,000 for 2004-05, and he expects revenues to be even shorter in the final year of the levy, 2006-07.
To deal with this, Martin suggested the possibility of reductions in other funds and departments to help prop up law enforcement funding. Without cuts, the department will likely be forced to underspend its budget, possibly laying off employees, to ensure cash flow to operate in the first part of the new fiscal year.
In essence, the department’s budget as proposed uses up its unappropriated ending fund balance to cover the costs for doing business in 2004-05.
The department is proposing a decreasing budget from $2.2 million this year to $2 million next year, including unappropriated ending fund balances. The department ended 2002-03 with a budget of $2.1 million and 2001-02 at $2 million.
The budget committee will consider each fund in the proposed over four meetings, starting with the general fund Thursday night then on May 4, 6 and 10. Meeting times are 6:30 p.m. in the council chamber behind City Hall.
During those meetings, will discuss possible changes to the budget, including possible ways to increase funding to the police department through transfer from other funds. When it reaches the end of its budget review, it will consider proposed changes to the budget document then vote on the budget and associated taxes.
In other areas of the budget, “the closure of the library for the first three months of the 2003-04 fiscal year was a mixed blessing,” Martin said. “The savings from this closure helped soften the $26,044 reduction in property taxes the library expected to see during the 2003-04 year. Depending on Measure Five compression, anticipated revenues, and barring no major increases in expenses over the three years, we hope to avoid but cannot with certainty guarantee that a closure of this facility similar to what we saw at the end of 2002-03 will not occur.”
Personnel costs, 21 percent of the 2004-05 proposed budget, are expected to increase by 5.19 percent to $4 million. Materials and services will increase from 452.3 million to $3 million, and capital outlays will increase from $3 million to $7.5 million, reflecting utility projects to be completed through loans, grants or other revenue sources.
The proposed capital projects, including sewer and water improvements, drive an overall budget increase of 35.7 percent, $14.1 million to $19.1 million. In 2002-03, the city’s total budget was $12 million. The 2003-04 budget reflected a $2 million sewer project, paid through a loan.
“To help offset a 16-percent increase in insurance premiums between 2002-04, city employees increased their medical coverage deductibles from $100 to $300 and began paying 5 percent of the insurance premium during the 2003-04 budget year,” Martin said. These cost sharing changes made by city employees helped reduce what would have been an $82,576 annual increase in insurance costs.”
The move helped keep the total cost of insurance under $500,000, Martin said, and it reduced the cost to the city was $25,000.
Public Employees Retirement System reforms apparently will negatively impact Sweet Home, Martin said. The city had surpluses in PERS and had carried low rates. The PERS rates will increase from 6.75 percent to 9.39 percent. On July 1, 2005, the city anticipates a rate of 21.15 percent.
“While the term ‘living within our means’ looks good on paper, the reality of it is that we can’t stop people from moving into Sweet Home and the seemingly ever-increasing expectations of services provided by city government,” Martin said. “With Oregon voters defeating two income tax increases over the past two years, many are saying this is a clear message to government that it needs to live within its means. The paradox is that Sweet Home voters approved funding for desired service levels only to have the state constitution in the form of Measure Five reduce the approved revenues to a level that is not adequate to provide the services the community wants.
“Somehow we need to give control back to the communities that desire the level of services, either through our legislature or a grassroots effort. Either way, communities need to have the ability to fund the services they want.
“To be a healthy progressive community, we need to continue to support efforts to find secure, long-term funding that will allow our police and other departments to do their jobs and do them well. And equally important, especially to our citizens is to not have to worry each year or levy vote as to whether we will continue to have public safety, library and other services.?
“In spite of our circumstances, I am confident of a positive future and that overall as a community live up to our motto of ‘Sweet Home, Oregon at its best.”