Dec 16, 2007

Troutdale Budget Thoughts

The city is in decent financial shape at the moment. During this year's budget committee meetings back in April, folks were thinking up ways to spend some of the extra money. For example, the budget committee decided to fund some backlogged parks maintenance and replaced some worn out police cars a few years ahead of schedule. Thanks to a giant decrease in the city's PERS rate, we were able to fund three new city positions with the savings.

City revenues have exceeded projections in the short term of the past year or two, and city staff continues to do its usual excellent job of controlling costs. However, this rosy financial picture may not continue. The economy both locally and nationally seems to be in flux, largely due to a downturn in the housing market My guess is that new home starts in Troutdale will drop sharply in 2008. These changes in the housing market will reduce our building permit and inspection fees- a big part of our general fund budget.

It's my opinion that the Multnomah County Commission is still looking at ways to cut our share (as well as that of Gresham, Fairview, and Wood Village) of the county's business income tax (BIT). Admittedly, they voted to keep giving the east county cities their share of the BIT earlier this year, but that could change with next years elections. Let's face it, the county is facing a large deficit each year, and they're naturally going to do what all political entities do- look out for #1 first. We'll need to remain vigilant in protecting our share of this tax.

On the expense side, the construction estimate for our new Parks & Rec. facilities building went up from $700k to $1.2 Million. This was an unpleasant surprise, and the mutual finger pointing between city staff and the construction consultant is still fresh in my mind. We haven't decided if we're going to pay for this new building with cash reserves or short term financing.. City staff is suggesting short term financing.

Our new urban renewal district is still pretty much worthless and will only generate $20-30k in tax increment revenue this year. In the meantime, city staff is suggesting a $500k loan from the city to the urban renewal agency to cover urban renewal costs in the short term. This puts the members of the city council in a difficult position, because we serve as both the city council and the urban renewal agency. They're two completely separate legal entities. What's good for the urban renewal agency in this case isn't necessarily good for the city's general fund. Some hard decisions will need to be made, and I haven't sorted out the legal, financial and ethical questions in my own mind yet concerning this conflict.

During this month's budget committee session, city staff gave us a sobering look at the city's road maintenance situation. Like every city, county, and state in the nation, Troutdale is looking at a growing gap in road maintenance funding. City staff advised we're probably about $400k short annually in funding adequate road maintenance. This got my attention.

The "priority lens" I look through to determine priorities for the city's "needs" versus "wants" shakes out as follows:

1) Public Safety-Police/Fire
2) Water Service/Sewer
3) Public roads, other city infrastructure
4) Parks and Recreation
5) Economic Development
6) Everything Else

I've only discussed a few of my concerns about Troutdale's budget picture. I don't have the recent financial data in front of me, so this blog post is missing any real numbers. The city council, the budget committee, and city staff should continue to take a very careful view of the city's needs versus wants. Troutdale has a history of thoughtful and prudent budgeting. I have every confidence that as a city we'll continue to make good use of our taxpayer's money.

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