Marching towards next year’s final spending plan of more than $126 million, the Budget Commission met for a public hearing and comment session in the downtown fire station last week. Concern was raised among both commissioners and the public regarding the acquisition of large quantities of duct tape, with disagreements centering on how to use its binding properties for a workable 2016-’17 budget.
In a room of maybe 30 people, commissioners included, about one hour was spent deliberating the finer points of the 230-page proposed budget. For the record, this was pretty much the public’s last chance to endorse, challenge, or otherwise express some interest in how our tax money will be spent and the services we will be provided for the next year and a half. There will be one more meeting for internal commission deliberations before finalizing the budget for July 1.
There was a grand total of only three speakers from the public. FYI, Corvallis has a population of just over 55,000. One way to look at it is that each speaker represented 18,333 people, or 5.45e-5% of the population showed up to contribute.
The good news is that the Parks and Recreation department is doing well. Apparently they have been quite successful in securing grants for both long- and short-term projects. Also plans to develop an access road through a wetland to the Corvallis Municipal Airport are moving forward with work planned for this summer.
The bad news is that there is no funding for city Human Resources services, road maintenance is being neglected again, and the cost of the Public Employee Retirement System (PERS) keeps climbing. The fire department may also be getting burned as a last-minute change of heart leaves them without additional funding.
Community member David Brooks gave an impassioned and well-studied argument on behalf of the NW Skyline neighborhood for better infrastructure maintenance. After dissecting the publicly available proposed budget, Brooks and community determined that the budget was candid about the issue.
In fact, Brooks drew our attention to this line in the proposed budget: “Deferred maintenance continues to remain largely unfunded, which, if left as is, will lead to failure of critical systems.” Among these systems are roads, sidewalks, and storm water collection, which are included in taxes. However, this line is found within a list of concerns driving changes in the budget process. This stimulating discussion led Citizen Budget Commissioner Karyle Butcher to comment that infrastructure issues have been talked about every year yet little has changed as a result.
Butcher, who has served the commission for many years, explained that infrastructure is more than hard surfaces. Butcher related the crisis of the city’s Human Resources funding to the infrastructure of effective city management. In short, Corvallis has a large city staff with a tiny training budget. This budget is derived from internal service funds, rather than the General Fund.
What that means is that almost all of the HR funding is received in the form of a payment from other city funds that used the service. This kind of makes sense, but how does the HR department, say, charge itself for training its own employees? We still don’t know.
Fire Chief Roy Emery also took the stand asking the budget commission to reconsider their move to cut fire department funding. In fact, originally the fire department was to receive additional funding for two more full-timers and the ability to over-hire during the busy summer months. Emery worries that the rural fire district will suffer as a result of diminished man-power. The budget commission did agree to consider his argument, but they didn’t seem convinced.
Then there is the PERS issue. Thanks to recent legislative rulings and amendments by the PERS Board, the assumed rate of return has been decreased from 7.75% to 7.5%. While this tends to sound like a good thing at first, and I am sure it is for the retirees, it is bad for city budgets. This is because it will increase the amount an employer must contribute for their employees.
PERS employers include all state agencies, universities, community colleges, all school districts, and almost all cities, counties, and other local government entities. This is reflected in Corvallis as an estimated cost increase of $1 million annually beginning in July 2017.
Worse still, costs are predicted to increase again in 2019 to $1.5 million annually. While there was no discussion of this issue at the public hearing, it is not an issue City Budget Manager Mark Shepard shied away from in the proposed budget.
This along with other long-term issues identified in the proposed budget have been key elements in the transition from a fixed expenditure limit model to the action-based approach we are currently taking. In other words, instead of funding all departments and services based on data from previous years, we are beginning to set priorities for development and shaving off costs where possible. This has allowed the budget commission to create a new $1.6 million PERS Reserve fund to help lessen the blow in the future.
Despite the cost-cutting and increases in efficiency, it is hard to imagine keeping pace with such a steep annual increase, even with a $1.6 million smoothing agent. However, in the proposed budget Shepard remained confident that the Sustainable Budget Task Force and Imagine Corvallis 2040 initiative will help inform budget priority and lead to a more balanced budget in the long run. For now, all we can do is patch the biggest holes and do more with less.
By Anthony Vitale