FISCAL CHALLENGES TO THE SUSTAINABILITY OF OREGON'S CITIES Providing Basic Services in “Your City”

FISCAL CHALLENGES TO THE SUSTAINABILITY

OF OREGON'S CITIESProviding Basic Services

in “Your City”

Services Provided Cost of Basic Services

Funding Sources

Financial Outlook Community Distress Signals

Challenges

Trends

"Your City" – Month 2008 2

We Are Not Alone – Statewide Trends

Where are "Your City" Revenues and Expenses Headed?

What Has "Your City" Done So Far?

What Does the Future Hold for "Your City"?



Services Not Receiving Property Tax Support Economic

Development

Streets

Code Enforcement

Municipal Court

Water

Sewer

Property Tax Supported Services Police

Fire

Parks

Library

Planning

Cemeteries

Airport


Police Total Police Budget $_______

## Sworn Officers

## Clerks & Support Staff

## Patrol Cars

## Dispatchers (or dispatch services)

Facilities

Dare, Neighborhood Watch, Community Policing

Etc.


Parks Total Parks Budget $_______

## Personnel

## Parks (# Acres)

Facilities

Equipment

Utilities

Capital Improvements & Maintenance

Etc.


List Other Funds/Examples Here

Fire

Library

Court

Etc.


Economic DevelopmentStreetsCode EnforcementMunicipal CourtWaterSewerEtc.



Funding for Basic Services does not include Utility Fees. Most utility funds are enterprise funds, meaning they operate like a business and must be self-supporting. Utility rates are not eligible to be used for purposes other than supporting the utility system.

How Does "Your City" Pay for Services?


How Does "Your City" Use Property Taxes?



1. City heavily dependent on one economic sector

2. City has experienced disruption of a major employer

3. Partner organizations in community having economic trouble (county, school districts, etc.)

4. A number of city’s businesses and industries having economic difficulty

5. City has limited economic development options


Check indicates "Your City" has experienced distress signal

6. City has a fast-growing population without off-setting revenue growth

7. City is heavily dependent on property taxes (more than 50%)

8. More than 1% of property taxes lost due to Measure 5 tax limits (compression)

9. Limited growth in assessed value (less than 3%)

10. Expenses exceed current revenues in one or more funds

"Your City" – Month 2008

Check indicates "Your City" has experienced distress signal15

11. Declining unrestricted fund balance

12. City has developed alternative revenue sources (little or nothing left in the “bag of tricks”)

13. Discretionary revenues aren’t keeping pace with general government expenses

14. Limited capital investment in new city facilities, equipment & deferred maintenance

15. City is providing or considering provision of traditional city services via special districts


Check indicates "Your City" has experienced distress signal

1-3 Signals Checked

Provides a good opportunity to attach specific problems, seek targeted resources

4-7 Signals Checked

Growing distress; calls for long-range financial planning, identification of service impacts if no change is forthcoming, identification of new internal and external resources to help the city, communication with citizens


8-12 Signals Checked

Significant distress; requires multi-faceted approach on variety of fronts and strong communication with citizens about the potential effects on services

12-15 Signals Checked

Serious distress; requires significant external resources, community leadership and citizen involvement to resolve


Measure 5 Tax Limitations "Your City" lost $_______ due to Measure 5

compression during FY 2006-2007

Measures 47/50 Tax Limitations "Your City" has averaged a(n) __% annual

increase in assessed value during the last 10 years

Tax limitations compounded by lack of regulatory compliance costs



Providing services to keep up with growth (this bullet to be removed if no growth)

State budget cutsOverall costs for “Your City” have

increased by __% during the last 10 years Health, Property, Liability, Workers Comp.

Insurance

PERS

Utility costs

Fuel


Difference between current revenues and expenses balanced by using reserves.

Rising Costs and Unstable Resources

"Your City" Now Providing Services Cut by Others School Security

Swim Team

Elementary and Middle School Sports Programs

Etc.



Health Insurance Increases Exceed Inflation

Drawdown of Reserves –

Nothing Left for a Rainy Day


"Your City" Has Reduced Capital Spending – Deferring Maintenance Leads to

Higher Costs Down the Road


"Your City" Population as Compared to Statewide Population Change from 1997 to 2007


Highway Fund Revenues are Declining


Revenue Losses Due to

Ballot Measure 5 Compression


"Your City" Revenue Growth Lags Behind

Statewide Average



Since 1995, property tax revenues per capita have remained flat or have decreased in most communities (inflation adjusted)

152 cities are in compression today

Up from 147 previously

In 2006-2007, over $16 million was lost due to compression


General fund/property tax revenues are decreasing as a share of all city revenues

Capital funding has generally decreased as a percent of total expenditures

Ending general fund balances declined in many cities since the 1990’s

Payroll costs for insurance and retirement have increased faster than inflation throughout the state


89% of 2007 survey respondents said they have felt, or will soon feel, the effects of Measure 5 & Measure 50 (77% in 2001 survey)

60% of respondents said property tax limits have already negatively affected city revenues and core services

54% of respondents said they expect to experience deteriorating financial conditions

Only 38% of cities said they were better off financially in 2007 than a year earlier



* Compares Oregon with results of a survey conducted in April-June 2007 by the National League of Cities of 359 cities.


Cities Increase Was Less Than 3%

Cities Assessed Value Declined


Cities Losing Less Than 1% of Property Taxes

Cities Losing Less Than 1-5% of Property Taxes

Cities Losing More Than 5% of Property Taxes


Public expectations for services continues to grow: faster, better, more

Pension/health care costs continue to increase

State/Federal mandates, especially environmental, will impact the cost of regulatory compliance


Other uncontrollable costs will impact city finances: Energy, including fuel

Property/liability insurance

Litigation

Natural disasters

Binding arbitration for public safety and other employee bargaining units

Unquantifiable expenses related to homeland security and terrorism response


Impacts of Measures 5, 47 and 50 will continue to limit property tax revenues

Inflation and population will outpace gas taxes

End of COPS grant funding for some cities

Economic recovery will be slow"Your City" – Month 2008 40

Other revenue sources such as State Shared Revenues, Timber Receipts, Franchise Authority, Investment Income, etc. will decrease or remain stagnant

SDC’s will be inadequate to cover the cost of growth



Switched Health Insurance Providers

Annual Savings: $ ____

Energy Conservation Measures


Joined Local Purchasing Pool



Reduced frequency of parks maintenance Annual Savings: $ ____

Contracted economic development activities out Savings: $ ____

Etc.



Service Cuts Closure of fire station - 5 fire fighters

Elimination of after school sports programs

No improvements to Main St. intersection

Deferred maintenance to community center

Local option levy for ______


Street Utility Fee

Business License Tax

Special Service District

Community prioritization of city services (Corvallis model)



Contact City Hall

"Your City"

#1 Main Street

"Your City", Oregon 97000

Telephone: (###)###-####

Fax: (###)###-####

E-mail: [email protected]

Website: [email protected]


Documents

FISCAL CHALLENGES TO THE SUSTAINABILITY OF OREGON'S CITIES Providing Basic Services in “Your City”