City budget tightening

Sean C. Morgan

The recession is being felt more acutely by the city of Sweet Home as it faces challenges in maintaining existing service levels despite shrinking revenues and increasing costs in its proposed 2011-12 budget, according to City Manager Craig Martin.

“The city has consistently met these challenges with ongoing efforts to plan for the future and invest in our ability to continue providing quality public services to our citizens,” Martin said in his budget message Thursday night as he presented a proposed budget to the city’s Budget Committee.

Examples include infrastructure improvements, such as the new water treatment plant and wastewater system improvements, he said. City departments have consistently saved funds in reserve accounts to facilitate anticipated future capital expenses, such as buildings, equipment and technology.

The total budget for 2011-12, beginning July 1, is $25.6 million, down about $4 million, 14 percent, from 2010-11, a reflection of reduced revenues.

Excluding transfers, contingencies and reserves, the budget includes $20.2 million in expenditures, a 13-percent decrease from 2010-11.

The budget shows a $3,781 increase in personnel, with decreases in materials and services, capital outlays, debt service, contingencies and ending fund balances.

The contingencies and ending fund balances are decreasing by $446,000, about 10 percent.

The budget anticipates decreases in property tax revenue due to compression and decreasing property values, Martin said, with franchise fees increasing by 3 percent, or $20,000. It also includes no increases in water and sewer rates.

Increases in personnel costs were held to less than $4,000 by reductions in the general and police operating funds, Martin said, while reductions in capital funds caused an overall reduction in materials and services and capital outlays of 15 percent, $2.4 million.

The budget includes about $10.4 million in capital improvement projects, including $275,000 for transportation, $685,000 in water improvements, $9.3 million wastewater improvements and $108,000 in storm water improvements.

Property tax compression is increasing based on property tax increases, including the library levy, the OSU Extension Service District, Linn County Law Levy and the countywide local option levy for the veteran’s facility in Lebanon.

Compression is levied tax revenue that is not collected in order to meet a limit of $10 per $1,000 for general government, a limit set by 1990’s Measure Five.

As of 2011-12, the city will have some $14.9 million either loaned or offered to the city to help reduce inflow and infiltration, water that leaks into the city’s sewer system during heavy rains through cross connections with storm drains or through cracked, deteriorated pipes.

The city is in its ninth year of repairs to reduce I&I under an agreement with the Department of Environmental Quality, Martin said.

About 75 percent of the city’s budget is spent on personnel services, including salaries and benefits, Martin said. The city has settled a contract with the general employees, including no cost-of-living increases during 2010-11 but giving a two-step shift in the salary schedule, exchanging two 3-percent steps at the top of the schedule for two 5-percent steps at the bottom of the schedule.

A similar offer was made to police employees, Martin said. No agreement has been reached. Now the city and police union are moving to arbitration.

Martin said he expects increases to insurance premiums to be in single digits this year, with an estimate of a 5.15 percent in medical insurance coverage.

Public Employee Retirement System rates for police officers will increase from 11.92 percent to 12.08 percent this year, he said, while decreasing from 9.22 percent to 6.5 percent for police officers hired after August 2003.

“Continued increases in personnel costs, operating costs and infrastructure challenges, coupled with low revenue growth and the poor economy, are clearly challenging the city of Sweet Home and our ability to provide sustainable quality public service to our citizens.

“This is not new, as for years we have been pushed both individually and as an organization to do more with less. Once again, we believe we will be able to overcome the challenge.

“We find ourselves in a somewhat enviable position of being able to avoid drastic expenditure and service reductions as many other cities have experienced. However, we are increasingly concerned and ever vigilant regarding the continued reduction of revenues, reserves and ending fund balances.”

The proposed budget continues the city’s policy of fiscal conservatism, Martin said. “As such, it helps establish city priorities, projects and activities as well as reasonable service levels for the coming fiscal year.”

Over the next three weeks, the Budget Committee will meet at 6:30 p.m. on Wednesdays to discuss components of the budget. This week, the committee will review the General Fund proposal. Next week, it will look at the police and library levies. In two weeks it will consider Public Works budgets.

The Budget Committee includes city councilors Marybeth Angulo, Jim Gourley, Scott McKee Jr., Greg Mahler, Laurie Osborne and Ron Rodgers; Mayor Craig Fentiman; and citizens Chuck Begley, Stephanie Boccardo, Al Culver, Dave Holley, Greg Korn, Rich Rowley and Dave Trask.

The committee elected Rowley chairman and Begley vice chairman.

A copy of the proposed budget is available at City Hall, 1140 12th Ave.