Distinguished Budget Committee Members:
Thank you for serving our community by dedicating your time and considerable knowledge to the Budget Committee. The City of Roseburg Management Team is pleased to present the FY 2021-22 budget for your consideration. For the second year in a row, the budgeting process is occurring during a pandemic. While we hope the end is near, the short and long-term effects remain unclear.
The proposed budget strives to maintain existing service levels and to advance work on the City Council’s six adopted goals:
1. Develop and implement policies to enhance housing opportunities
2. Implement transportation funding policies to meet identified community needs
3. Enhance community livability and public safety
4. Take a proactive role in community economic development and revitalization
5. Update and implement the City’s Emergency Preparedness Plan
6. Explore strategies to address issues related to unhoused individuals within the community
The General Fund supports most of the City’s services. Major revenue sources within the General Fund include property taxes, franchise fees, and state shared revenues.
Budgeted operating revenues are essentially flat from the current adjusted budget. Primary reasons for this include:
- Property taxes were over-estimated in the 2020-21 fiscal year by 2%. Consequently, a conservative resetting of property tax revenues for the 2021-22 fiscal year results in a smaller projected increase year-over-year.
- Court fines and fees collections are down due to COVID restrictions. A growing backlog of cases will require significant time to work through, resulting in delayed collection of court revenues.
- Pending legislation and diversion of revenues by the State will result in a significant reduction of state shared liquor revenues.
- Passage of Measure 110 reduces state shared marijuana revenues by approximately 72%.
- Federal grant funds from the American Rescue Plan Act of 2021 are not included at this time as program guidelines are not available yet. Once more is known about the resources and potential uses, budget adjustments will be required to recognize the revenue and authorize any spending authority.
Budgeted General Fund expenditures are up 4.5% year-over-year. The increase is driven largely by personnel expenses, which are budgeted to increase by 5.1%. The City of Roseburg is a service-oriented organization and personnel required to deliver that service is the largest programmed expenditure. With the exception of the Water Division, all City employees are budgeted in the General Fund. Personnel costs account for 79% of the programmed General Fund expenditures. The projected increase in personnel costs can be attributed to increases in the PERS employer rates (reset every other year), health insurance, and contractual cost of living adjustments and step increases.
Materials and services are budgeted to increase by 1.5%. Capital Outlay, Transfers and Other Requirements are budgeted to increase 3.5%. The 2020 annual Western CPI was 1.7%.
Roseburg works with three bargaining units representing Police, Fire and General Services employees. Combined, these bargaining units represent 73.5% of budgeted positions. The City has current contracts with the Police and General Service unions. The City is in negotiations with the Fire bargaining unit. Their current contract is set to expire June 30, 2021. Outcomes of the negotiations with the Fire unit are unknown and may require a budget revision during the course of the 2021-22 fiscal year.
Ending Fund Balance
The Proposed Budget projects an ending fund balance of $6,725,656, which constitutes a 23.8% reserve of budgeted current expenditures. The City has a General Fund Balance Policy, which establishes a 20% minimum target for reserves. The proposed budget exceeds this target by 3.8%. However, the City’s historical budgetary performance indicates that expenditures will likely be between 91% and 94% of budget. Applying the budgetary experience factors, it is more likely that the ending fund balance will be somewhere between $8.4 million to $9.2 million or a reserve of 31% to 35% of expenditures.
Special Revenue Funds
Special Revenue Funds tend to vary annually based on the number of grants received or projects planned in a given fund. The Grant Revenue Fund request is significantly higher this year due to anticipated receipt of $1.5 million in State funding for the construction of a low-barrier Navigation Center for the unhoused. The Hotel/Motel Tax Fund is the primary funding source for both the Economic Development Fund and the Sidewalk/Streetlight Fund. While the long-term impacts of the COVID-19 pandemic on Hotel/Motel Tax Fund continue to be unclear at this time, it has been budgeted at a steady rate to ensure any revenue generated can be transferred to the other two funds at the set percentages. Spending in these three funds will be monitored closely to ensure resources are available to cover expenditures.
Capital Projects Funds
Capital Projects Funds vary each year depending on the number and cost of projects programmed. Transportation Fund revenues are expected to continue to be lower than pre-pandemic levels, however, gas tax revenues may begin to return as we (hopefully) transition out of the pandemic restrictions in the coming months. The Equipment Replacement Fund is primarily funded through General Fund transfers and allows long term planning for replacement of equipment large and small. This year does not include the replacement of any large ticket items, which significantly decreases expenditures over the previous fiscal year.
Enterprise Funds include Storm Drainage, Off Street Parking, Airport and Water Service Fund.
The Off Street Parking Fund is in a state of transition. The City recently completed a downtown parking study and is working to outsource parking enforcement to a third party vendor. As it is too early to know what the contractual arrangement will ultimately be, the proposed budget essentially presents a status quo budget until such time adjustments are made to reflect a new enforcement arrangement. COVID-19 impacts have not significantly affected the utility and airport funds; revenues are projected to exceed expenditures in the Airport and Storm Drainage Funds. The Water Fund has a number of large capital projects programmed resulting in a 33.9% increase in capital outlay, pushing total expenditures up 20% year-over-year.
It takes a group effort to put together this proposed budget. Thank you to Department Heads and Finance staff for your hard work in putting together a comprehensive well thought out plan and for continuing to demonstrate outstanding fiscal management of our community’s assets.
We look forward to “meeting” with the Budget Committee virtually again this year. I appreciate your patience and dedication to this process. Stay safe and stay healthy!
Nikki Messenger, P.E.