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City of Columbia City 1840 Second Street, PO Box 189, Columbia City, OR 97018 (503) 397-4010 |
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May 3, 2010
The Honorable Cheryl A. Young, Mayor
Members of the City Council
Members of the Budget Committee
City of Columbia City
It is my privilege to present to you the proposed
budget for fiscal year 2010-11 for your review and approval. As required by law, the proposed budget is balanced,
and it provides for the basic needs and requirements of the City. It is our intent to submit and manage the
budget in the most open and straightforward manner possible which will allow
consistent and careful management of all resources.
BUDGET POLICY AND STRATEGY
The 2010-11 budget document has been prepared after
analyzing and evaluating requests from the various departments, and represents
the requested financial support for the operation of the City of Columbia City
for the upcoming fiscal year. It is
prepared on the modified accrual basis of accounting, and is summarized by
major expenditure categories within each organizational unit.
The budget will be adopted this year by major
categories so that legal appropriation control will be at the personal
services, materials and services, and capital outlay level in each
department. Thus the department has
some flexibility in the use of various line items within a major category while
the important appropriation control is still maintained.
Major
budget issues. The current economic downturn is
unprecedented in recent history for both Oregon and the Nation. The economic conditions have taken a toll on
governmental entities across the state, including Columbia City. In recent years revenues have fallen off
more than anticipated in many areas, especially in the areas of licenses,
permits and fees, fines, and interest earnings. There were no new housing starts within the City during the 2009
calendar year, and collection rates in recent years were at an all-time
low. An Oregon Supreme Court decision
in December 2009 led to the loss of 6% of
current year property tax
revenues for all taxing entities within Columbia County, along with several
other counties throughout the State.
At the same time,
expenses continued to increase. To name
just a few, in December 2009 wholesale water purchase prices increased by
38%. Sewer treatment rates also went up in December 2009 - by 32%, and sewer
treatment rates are expected to increase by another 32% in December 2010. The Oregon Public Employee Retirement System
(PERS) rates are projected to increase by 6% in both July 2011 and July
2013. Federal and State mandates require
the analysis of, modifications to, and monitoring and permitting associated
with, the City's storm water system, all at a significant cost that is
currently unfunded.
The City has implemented
several cost-cutting measures, including a recent 14% reduction in staffed
hours and a voluntary pay reduction for the City Administrator/Recorder. The July 2009 cost of living adjustment
(COLA) was reduced by 50%. No COLA is
provided for July 2010, and employees will pick up a portion of their insurance
benefit costs. The frequency of certain
routine maintenance tasks were reduced, some annual contributions to worthwhile
services and organizations within Columbia County have been withheld, all but
essential capital purchases have been placed on hold, and capital projects have
been delayed.
Revenue
estimates are conservative. The importance of a sound revenue picture
cannot be overstated. Revenues must be
estimated realistically. Revenue
estimates are based on four-year historical trends, expected population
increases, inflation and economic conditions.
Revenue estimates have been carefully analyzed, and in those areas where
varying estimates were received, the conservative approach has been used. This
budget is conditioned upon the following fee increase:
Sewer Rate Increase: A 10% rate
increase is proposed for sewer usage fees in March 2011. The additional revenues will be needed to
pay for anticipated increases in sewer treatment usage costs and continuing
sewer system repairs and upgrades, and to re-build fund balance.
City
service levels. The City of Columbia City provides a range
of services to the community, including police protection, street and park
maintenance, water distribution and sewer collection utility services, and
administrative, planning, building, library and municipal court services. Volunteers help the City provide many of
these services to the community. City employees strive to maintain the same
service levels, in spite of recent staffing reductions, that the community has
come to enjoy.
Major
policy changes. Financial projections show that the City
will need to reduce service levels by July 2011 unless additional resources are
secured. The City Council has
identified police protection and street/storm water maintenance as critical
services that are seriously under-funded.
Police
protection services: The amount of tax revenue
generated by the City's existing permanent tax rate falls short of funding a
Police Department staffed by two paid full-time equivalents (FTEs) and
volunteer police reserves. Expenses associated
with police protection services have exceeded tax revenues since fiscal year
2004-05.
In 1992 Columbia City
voter approved a tax base of $67,574.
With the passage of Ballot Measure 50 in 1997, the tax base transitioned
to a permanent tax rate of $1.1346 per thousand assessed value - the lowest
permanent tax rate of any City within Columbia County, with the exception of
Prescott (population - 60), as shown in the following graph:
Columbia City is
primarily a bedroom community. The
greatest majority of tax revenue comes from homeowners. There are few taxable commercial and
industrial developments within the City.
Street
system maintenance: Revenue from state highway tax
falls short of meeting the costs associated with basic street maintenance. Pavement preservation activities extend the
life expectancy of street surfaces. In
many areas, aging pavement is in need of crack sealing, seal coating, pavement
overlay, or other restoration work, and potholes and sinkholes are in need of
repair. These pavement preservation
measures help to protect the original investment that went into the development
of the street system.
Storm
water system maintenance: The City
has no identified revenue source for storm water system maintenance activities.
The City's storm water system consists
of drainage swales, dry wells, storm pipe and open bar ditches. The system requires routine maintenance. In addition, the City must pursue compliance
with Oregon Department of Environmental Quality (DEQ) rules and regulations for
dry wells. In order to comply, the dry
wells must be approved through DEQ rule authorization or a Water Pollution
Control Facility Permit.
Council
pursues support for funding: For years
Columbia City has provided services to the citizens of Columbia City at a tax
rate that is significantly lower than other cities within the County. The current financial conditions and
outlook, however, have compelled the City Council to consider securing
additional funding to support current service levels. The Council may place a measure on the ballot to request voter
approval of a three-year levy for police protection services, street system
maintenance, and storm water system maintenance. The tax levy currently under consideration is a three-year levy
of $1.10 per $1,000 assessed value. Of
the $1.10 tax rate, $0.67 would be used for police protection, $0.23 for street
maintenance, and $0.20 for storm water system maintenance. The Council plans to solicit public input
about the three-year levy proposal during the next few months through a series
of citizen surveys and town hall meetings.
Strong
reserve policies will protect the future of the City. In accordance with City Budget and Financial
Policy Number 2, adequate contingency appropriations provide the City with
protection to address unforeseen circumstances. This year contingency appropriations within the General, Street,
Water and Sewer Funds meet or exceed 10% of the operating expenditures in each
fund. Total contingency appropriations
of $201,847 are equal to 8% of the total budget. Transfers may be made to appropriate contingency funds by
resolution of the City Council, but Oregon Budget Law limits them to 15% of the
total appropriations budgeted within the fund.
Contingency transfers exceeding the 15% limitation may only be made with
the adoption of a supplemental budget.
In accordance with City Budget and Financial Policy
Number 1 and Number 3, the City reserves funds for future capital projects in
an effort to avoid incurring indebtedness whenever possible. The Street, Park, Storm Drain, Water and
Sewer Development Funds are used to reserve funds for future improvements to
their respective systems. The Equipment
Reserve Fund reserves funds for future equipment acquisitions. Equipment Reserves total $66,934 this year,
equal to 3% of the total budget. In
addition, unappropriated ending fund balances in the amount of $553,474
represent 23% of the 2010-11 budget.
Fund
balances. The 2010-11 beginning fund balances are estimated
at $865,701, equal to 36% of the total proposed budget.
A General Fund beginning fund balance of $138,531
is projected for the year 2010-11, equal to just over three months of General
Fund operating expenses. This fund
balance provides the City with the resources needed to operate until property
tax revenues begin to come in, enables the City to avoid short-term financing,
and is in compliance with City Budget and Financial Policy Number 9. The economic conditions previously discussed
have strained the fund balance within the General Fund, which continues to
decline.
The Street Fund's estimated beginning fund balance
of $14,843 falls short of meeting the policy, equal to nearly two months
operating expenses. Investments in
capital improvements in recent years, engineering costs associated with federal
and state requirements for storm water, and some unplanned events associated
with the economic downturn, led to the reduction. As previously mentioned, the City Council may seek voter approval
of tax revenue for street maintenance purposes. If the levy effort is not successful, the Council may investigate
the establishment of street and/or storm water utility fees.
The estimated beginning fund balance of $199,824
within the Water Fund is also in compliance with the fund balance policy, but
the Sewer Fund's estimated beginning fund balance of $36,169 falls shy, equal
to nearly two months operating expenses.
The decline in fund balance is mostly attributable to recent one-time
capital improvements that occurred, and partly due to increasing operating
expenses.
All efforts will be made to rebuild fund balances
to a minimum of three months operating expenses in the Street and Sewer Funds
as set forth by Council Goal.
Capital
construction projects: The 2010-11 budget provides appropriations
for the following capital construction project:
"I" Street
Pavement Restoration Project - $25,000.
This project will be completed if the City's grant application under the Special City Allotment Program is
successful.
Detailed information about this project, and other
planned capital projects, may be found in the Capital Improvement Program
section of this document.
Debt
management. The City makes every effort to fund planned
capital improvement projects through user fees, system development fees,
intergovernmental revenues, grant monies and miscellaneous revenues. The City has the following debt currently
outstanding:
General Obligation Refunding Bonds, Series 1998, in
the amount of $225,000, equal to $113 per capita. This advanced refunding plan covered the advance refunding and
redemption of a small remaining portion of the General Obligation Water Bonds,
Series 1987, and the majority of the General Obligation Sewer Bonds, Series
1991. Bond payments are made with
property tax revenues.
2002 Safe Drinking Water Revolving Fund Loan in the
amount of $2,729,999, equal to $1,372 per capita. Loan proceeds were used to complete the water storage reservoir
project and related transmission piping, and to complete the development of a
groundwater well and associated transmission piping. The loan will be amortized over a period of 30 years with a 1%
interest rate. Annual loan payments are
made in December with revenue from water sales. Because of the low interest rate, the City anticipates a savings
of nearly $2 million under this financing program during the term of the loan.
2008 Safe Drinking Water Revolving Fund Loan
amendment in the amount of $371,357, equal to $187 per capita. Loan proceeds were used to complete the
development of a groundwater well and associated transmission piping. The loan will be amortized over a period of
20 years with a 3.55% interest rate.
Payments are made with revenue from water sales.
State law provides a debt limit of 3% of the true
cash value of all taxable property within the City's boundaries. The 3% does not apply to bonds issued for
water or sanitary sewer system improvements.
The City has not issued any debt subject to the 3% limit. The amount
legally available for future indebtedness is $6,549,995.
Summary. In
summary, the most important budgetary objective is to provide the highest
possible level of service to our citizens without impairing the City's
financial condition.
FINANCIAL FRAMEWORK
The following shows a comparison of the proposed
2010-11 budget with the 2009-10 budget:
|
Fund
Type |
2009/10 |
2010/11 |
%
Change |
|
Governmental Funds: |
|
|
|
|
General
Fund |
$770,297 |
$661,325 |
-14.50% |
|
Special
Revenue Funds |
488,627 |
313,426 |
-35.86% |
|
Proprietary Funds: |
|
|
|
|
Enterprise
Funds |
1,551,084 |
1,436,441 |
-7.39% |
|
TOTAL |
$2,810,008 |
$2,411,192 |
-14.19% |
This represents a 14% decrease from the 2009-10 budget,
which is attributable to a decrease in staffing, capital outlay purchases,
capital construction projects, and interfund transfers. Departmental operating costs, consisting of
personal services and materials and services, are equal to $1,286,673, down 4%
from last year's $1,340,726.
The City intends to employ 5 regular full-time and
8 regular part-time employees during the 2010-11 budget year. The following chart shows the hours spent by
each employee within the various City departments, based upon full-time
employee equivalents.
|
FUND |
DEPARTMENT |
STAFFING
LEVEL |
|||
|
|
|
2007-08 |
2008-09 |
2009-10 |
2010-11 |
|
General |
Administration |
1.62 |
1.83 |
1.83 |
1.47 |
|
|
Police |
2.40 |
2.40 |
2.45 |
2.34 |
|
|
Building |
0.50 |
0.25 |
0.23 |
0.23 |
|
|
Parks Maintenance |
0.54 |
0.83 |
0.48 |
0.45 |
|
Street |
Maintenance and Repair |
0.52 |
0.37 |
0.38 |
0.47 |
|
Water |
Distribution Maintenance |
2.39 |
2.34 |
2.81 |
2.35 |
|
Sewer |
Collection Maintenance |
1.53 |
1.38 |
1.35 |
1.15 |
|
TOTAL |
|
9.50 |
9.40 |
9.53 |
8.46 |
The budget includes appropriations for a grant
funded by the Oregon Department of Transportation (ODOT) Motor Carrier Program,
which will be up for renewal in October 2010.
The grant pays for police staffing wages associated with 0.33 FTE, which
may be lost if the renewal is unsuccessful.
The City also has an application under the 2010 COPS Hiring
Program. If an award is received, a full-time
police officer may be added to the force in October 2010.
The first chart on the following page compares
2010-11 revenues and other sources with 2009-10 revenues and other
sources. The total of $2,411,192
estimated in this budget reflects a 14% decrease from the 2009-10 budget, down
$398,816. Fund balance decreased by
$236,050, due in part to investments in capital projects, and in part to a
continued decline in certain revenues in recent years. Revenues from licenses, permits and fees,
intergovernmental revenue, fines, and miscellaneous revenues are down by 16%
from the prior year. Utility charges
continue to be the largest continuous City revenue source, up 11% over the
prior year. Property taxes remain about
the same, with a 1% increase from the prior year.
The second chart on the following page compares
proposed 2010-11 expenditures with 2009-09 expenditures. Data is presented by
major categories. Overall total expenditures
of $2,411,192 estimated in this budget reflect a 14% decrease from the 2009-10
budget, down $398,816 from the previous year.
Capital construction, down $378,267 from the prior year, represents most
of the decrease. Personnel expenses
consume 27% of the total budget, and decreased by 9% from the prior year due
mostly to recent staffing level reductions.
Materials and services are up 1% from the prior year, and also represent
27% of the total budget.
This budget message encompasses many of the
highlights and policy issues in the 2010-11 budget. Details on departmental appropriations, revenues, property taxes,
staffing, and capital projects can be found in the attached schedules.
YEAR-END CONDITION
Columbia City is primarily a bedroom community, and
its economy is influenced by its proximity to the Portland-metropolitan
area. Columbia City has an ever-growing
number of residents who commute to the Portland metropolitan area or elsewhere
for employment. St. Helens, the county
seat, is located just two miles south of Columbia City. There continues to be a
noticeable trend toward residential growth within Columbia City.
Columbia County's seasonally adjusted unemployment
rate was 12.1% in March 2010, higher than the statewide rate of 10.6% and the
national rate of 9.7%. In 2008
unemployment rates in the county began to rise rapidly and substantially until
they finally peaked at 14.3% in March 2009.
Columbia County experienced a net loss of 180
nonfarm jobs between March 2009 and March 2010. Jobs were lost in manufacturing, mining and logging, trade,
transportation and utilities, but jobs in construction, financial activities,
professional and business services, education and health services, and government
saw increases.
The City's current population is 1,990. Its quaint small town rural atmosphere,
spectacular views of the Columbia River, and easy access to Highway 30 and the
Portland metropolitan area contributed to Columbia City having the fastest
growth rate of any city in the county for many years. In 2009, however, new home construction reached an all-time low
with no new housing starts.
Last year the real market value of property in the
City fell to $218,333,174, down 10% from the prior year. The assessed value of property in the City
increased to $152,046,110, up 5% from the prior year. Assessed values vary from true cash values due to the provisions
of Ballot Measure 50. Measure 50 was
approved by Oregon voters in 1997 and amended the Oregon Constitution. The measure placed a 3% limitation on annual
increases in the assessed valuations, with some exceptions.
Ballot Measure 5, approved by Oregon voters in
1990, limits the consolidated taxes for schools to $5.00 per $1,000.00 assessed
value, and limits the consolidated taxes for all other governments to $10.00
per $1,000.00 assessed value. These
limits do not apply to taxes collected for bonded debt. In the event the consolidated taxes exceed
the limitations, they are compressed to the limit and each taxing entity loses
a share of their taxes. The
consolidated tax rate for all other governments in Columbia City's tax area
subject to the $10.00 limits was $7.0373 during the current tax year. It is difficult to accurately predict when,
if ever, Columbia City will begin to experience tax compression as a result of
Measure 5.
CONCLUSION
The City can take extreme pride in the level of
service that's been delivered to the community over the years, especially
considering the limited amount of resources that have been available. This budget provides a "hold the
line" plan through the end of this budget year while the Council works on
securing a 3-year levy in order to sustain current service levels. If the levy efforts are not successful,
other financing options, such as utility fees, may be visited, as well as
service level reductions.
The real test of leadership comes from long-range
results. The goals set by the Mayor and
Council demonstrate their dedication and leadership and their desires to secure
the future of our City as a pleasant and safe place to live and work. I have thoroughly enjoyed working together
with the Mayor and City Council, City Committees, and all of the City's
employees in a team effort to deliver the highest possible level of service at
the lowest possible cost to the citizens of Columbia City. I especially want to thank the City staff
for their assistance in preparing this document.
Respectfully submitted,
Leahnette Rivers
City Administrator/Budget Officer