By Scott Unger • Of the News-Register • 

The reserves ‘are gone’: City staff explains budget predicament

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Comments

tagup

Sometimes difficult decisions are required to bring an organization back in line with revenues. Nobody likes to cut positions, but that, along with a hiring & wage freeze, appears to me what is required. That should include top management.
It’s certainly going to be hard to sell the addition of new facilities when the maintenance of existing infrastructure has been deferred for years to cover other operating costs. Deferred maintenance is code for budget overruns.
Bickering about who’s to blame seems like a waste of energy….. It’s time for leadership to make some hard choices!

Drew

Plain and simple. The responsibility of this lack of fiscal oversight lays at the feet of Council President Sal Peralta, Councilor Zack Geary, and City Manager Jeff Towery! Thank you as well to Remy and Kelli! You've all done this city a great disservice! Thank you to Councilor Tucholsky for asking obvious and necessary questions and for wanting accountability! Jeff Towery has got to go!

tagup

I’m more interested in solutions than looking for a scapegoat…. Judging from the condition of some city facilities, this issue is much older than the last administration.

CubFan

Thank you to the News-Register for reporting city council news for us... I appreciate it!

Easy Writer

What about revenue drivers like the transient lodging tax? I wonder how much of that accounts for the general fund.

CubFan

Tagup... you say you're not looking for a scapegoat. But isn't it wise to consider "who" in the city got us into this mess, and weed out the "problem children" by way of the power we have as voters? We need fiscally responsible people running our city.

CubFan

General question: as I understand it, most city employees are paid based on a grid. Do I understand correctly that each year they are employed, a city employee moves up a step? Essentially guaranteeing them a raise each year? If this is correct, where does "merit" come into play? What incentive is there for a government employee to "perform"? I'm not suggesting our city employees are lazy. Just thinking out loud. Are they protected by laws guaranteeing pay? Can salaries be reduced? I've seen the public record of salaries for each city employee, and am frankly astounded at the high level of pay. In the business world, in situations of reduction in sales (revenue), salary reductions, or salary holds come into play. Can the city government do this?

tagup

Sure Cub, Accountability is important.
Asking why the salary goal of 3% was exceeded is fair game. As is an overage in any departmental budget.
Unfortunately, fiscal responsibility is a moving target. The condition of the aquatic center & other city properties indicates to me a long term pattern of deferred maintenance that generally would not be considered fiscally responsible. The gradual creep in operating costs & wages over the years can’t be put at the feet of one or two people, if we’re being honest. I’m much more interested in constructive solutions rather than playing the blame game.

CubFan

In the video presentation of this meeting, Katie Henry mentioned extra costs (laptops and software licenses) because some employees work remotely. Dan Tucholsky asked why the city hasn't followed the lead of other governments (and businesses), and required employees to return to the office. Towery didn't answer the question. I'd love to hear the answer!

B

Hard to believe that council was not aware of this situation. That said ,seems like the city manager should have been trying a little harder to get council's attention. How much are we losing on the rubber plant?

Otis

Aging infrastructure budgets should have included upgrading PC's and software. Every gov't agency in the US has issues with this and it always ends up biting them in the butt. It causes every department to run slower and less efficiently...and then the $$$ gets shifted to other budget priorities....forcing employees to use crappy old computers and software for decades. Look at the state unemployment software for example. It's gotta be 30 years old. Probably still has green screen terminals too.

Chillout

Seems like this shouldn't be a great surprise. If we have been eating into the reserves for 15 years, expenditures clearly have been exceeding revenues. And it doesn't take fancy forecasting software to figure out when the reserves were going to run dry. A simple spreadsheet model would do the trick. As to who to blame -- the elected officials (city council) who repeatedly approved budgets that depended on the reserves to balance the books each year. With the reserves gone, this is no longer a "painless" solution. Three levers are available to deal with this 1)Cut the budget. Spend Less. Reduce Service levels. 2)Increase revenue growth (tax increase). 3)Improve operational efficiencies. Probably means headcount reductions, among other things. As a retired corporate executive, this is the type of issue private companies (large and small) have to deal with on a recurring basis. The problem is solvable, but requires tough decisions and unpleasant conversations. And you can't do it while making everybody happy. My recommendation is apply all three levers mentioned above, with an immediate focus on improving operational efficiencies. And pay close attention to what the numbers are telling you, rather than basing decisions on emotional biases.

tagup

Good post Chillout- well said.
this situation is more troubling when you consider the current Water & Light “service charge” was initiated to cover a budget overrun in 2021(?)
Had the service charge been removed ( as it should have been)after the original deficit amount had been collected, the current deficit would be $2million+ higher!
It’s time for our leaders to get serious about the financial condition of the city!

Moe

The appearance is that both the "$13" service fee and tricking the voters into the additional
$1.50/$k tax authority were done with malice aforethought. Worse yet, when called on these unconscionable taxes, the city neither corrected the situation nor addressed taxpayer objections.
Mere incompetence is not plausible.

Continuing to present us with expensive discretionary planning completed the illusion. Deliberate or not, that amounted to a sneaky compound lie. After all, why argue about expensive discretionary choices unless finances at least in principle could have supported such planning. Trusting voters therefore never questioned the underlying false premise, namely that finances were solid. That helped keep us somewhat quiet until now, when the crisis can no longer be overlooked.

tagup

Moe- you may want to check the definition “malice afore thought”. There was no conscious intent to cause death or bodily harm….

TTT

Does anyone else find it troubling we have only one of six City Councilors questioning how a City Manager was surprised and let McMinnville fall into this budget condition?

One City Councilor didn’t show up and the other four were either silent or defended city fees.

Bob

It seems to me that past city managers, mayors, and city councils did a great job of respecting citizen interests and financial limitations right up to the day Mayor Gormley and city manager Taylor retired. The councils of Mayor Hill and Drabkin have done a terrible job of financial management. Thank goodness we seem to have a new mayor and at least two city councilors who seem to have the ability to handle the current crisis while doing as little financial damage to citizens as possible. That said, Mr. Towery definitely needs to go. It was his job to keep councilors informed of the city’s financial situation during the entire problem period. Past city manager, Joe Dancer, was able to keep city councils abreast of the city’s financial situation (to the penny) before computer software existed! Our new mayor and council deserve a far more capable and involved city manager.

But the current situation is certainly a full blown crisis that will test even a capable city leadership group. I wish you good luck!

CubFan

In watching the video of this work session, Morris asked each council member for their top priorities... what is most important to their constituents. Not one person mentioned the financial load on citizens.

Let’s go back to what our taxes and fees looked like before any city “user fee” on the utility bills and before the new fire department levy. Assuming an average home value of $250,000, we paid $1.50 for the fire department. This part of our taxes was $375 per year. At that time, there were no “fees”.

Now, let’s presume the city claws back all $1.50 of the old fire department money (they’ve already started this), also presume they will start charging us for the storm water system. Our taxes and fees will now be: $375 (for old fire department bond , $1.50/M), $500 (new fire department bond $2/M- we are already paying this), $156 “user fee on utility bills ($13/mo), $180 (proposed stormwater fee $15/mo).

Add that all together: $375 + $500 + $156 + $180= $1211 per year.

To recap, a couple of years ago we were paying $375, and now we could be paying $1211. Over a 3X INCREASE!

Who can afford this? Yet no one is talking about the kind of money the city expects average citizens to pay.

Then consider other rising costs: housing, insurance, utilities, groceries… nothing has gone down. Credit card debt has skyrocketed. This is not sustainable. The only logical answer I can see is for the city to cut expenses. It might mean cutting jobs and services, which is a hard thing. But the reality is we can’t keep writing checks.

Lulu

Another fine mess.

Moe

Moe's prescription:

1. Go back to old fire district: $1.50 / $1k.
End new fire district.

Appearance is that new fire district was a trick to increase tax authority.

Provide tax credit of at least 3 x $0.50 / $1k until 150% of overpayment is paid. Overpayment defined as taxes collected on fraudulent
$1.50 / $1k tax authority after new fire district $ 2.00 / $1k was in effect.

2. End "$13" service fee.
Provide 3 x $13 = $39 credit until 150% of overpayment is paid. Overpayment defined as fees charged since original debt was repaid by service fee.

3. No stormwater fee.
City shall repair storm system as needed without imposing new permanent fee.

fiddler

IMO it's not about 'blame and shame'. Costs increase and salaries have to cover increased costs, such as food, electricity, etc.

The issue is, what are we going to do from here? Cutting staff is certainly one idea.

But how can we come up with solutions when we don't have the numbers? Someone here mentioned a spreadsheet. Print one in the N-R. Let the community help to come up with solutions. I'm sure there are some number-savvy accountants and the like in our community; let's tap 'em.

We don't live in a bubble -- it takes a village....
*

M. Isaac

While I agree that a "blame and shame" is not productive, a situation like this does require a "find and fix." Last year I had a leak in my waterline so, instead of just paying for more water I hired someone to find the problem and fix it. It should be the same here, find out what the problem is, and fix it. I am concerned that the city manager knew that for the past 15-years they were over-spending, yet kept budgeting for excessive spending. Was this budget issue common knowledge? I don't recall reports of overspending the budget during the past five years. Those folks that had the budget authority during that time need to fix it or be replaced by individuals that can.

CubFan

M. Isaac... Good analogy to a water leak. I'm not convinced the city manager is the person to "fix it".

Moe

"The reserves ‘are gone’: City staff explains budget predicament"

Who cares about city staff's moronic explanations!

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