Judging from the budget projections for the city of Astoria, the future looks pretty bleak.
With a 23 percent increase in the Public Employee Retirement System alone, paired with a 10 percent increase to the city’s health insurance costs, the city of Astoria will have to do some major belt-tightening in order to make it through the next three years.
“There will be a need to make some serious course corrections along the way,” City Finance Director Mark Carlson said, as he gave a three-year budget projection presentation Monday to the Astoria City Council.
Carlson presented a graph that displayed where the city of Astoria is headed if no changes are made, which showed that by the fiscal year 2015-16, the city’s savings account – which is at more than $1 million – would be diminished to just $300,000.
He did not make any recommendations for the city, but gave the presentation so the council will be aware of the current situation before sitting down to outline their 2013 city goals. That meeting will take place at the Cannery Pier Hotel Jan. 25. The budget committee will meet in April.
Until then, the city will be working within departments to reduce expenditures, Carlson said, and avoid the diminishing of those savings.
“Everything we save this year is a multiplier that we save the year after and the year after,” he said. “I applaud that we are having this discussion because it is important that we don’t put our head in the sand and just hope that everything works out.”
City Manager Paul Benoit said the city will also be exploring options to increase city revenue.
Last year, the city updated a parking fee schedule that hadn’t been updated in more than 20 years.
“The city as a whole spends just a little under $38 million to run the entire city. We do that in four different funds,” Carlson explained. The special revenue fund supplies more than $17 million; the enterprise fund and the general fund provide nearly $9 million each; the fiduciary fund supplies $2.6 million.
“The special revenue funds account for about 45 percent of the city’s expenditures. This is everything from capital improvement, emergency communications, building inspection funds, CSO (sewer project) debt payments, and also this year, what is new is that we moved parks and recreation out of the general fund and moved it into this fund and matched it up with the Aquatic Center,” Carlson said, adding that for the projections, “we sat down and discussed and looked at influencing factors.
“What should we be looking at that we have coming down the road? And certainly at a federal and state level, it’s no mystery that there is a serious lack of funds. We are very fortunate that this city has been operating their general fund off of reoccurring revenue.
“We haven’t relied on one-time revenues to fund our general operations. That’s very very good. There are many cities that have relied too much on one-time revenues and they are in some very dire straits right now trying to make up those gaps.”
Revenue changes are expected in the 2013-2014 fiscal year. Property tax receipts are expected to increase by 2 percent, bringing in an additional $120,000 to the city. With less grant funding expected, however, the city’s projected additional revenue in 2013-2014 is $98,000.
With the increase in PERS – $130,000 – and health insurance increases, among others, the city’s additional expenditure changes are calculated at $225,000.
The bottom line: cuts will have to be made, if the city doesn’t want to drain the savings account that will be needed to cover the additional spending. There is a $69,000 deficit carrying over from this fiscal year. The PERS increase is only good for two years, Carlson added, meaning in two years, the city could take another hit.
“If we didn’t do anything,” Carlson said, “if we did just did sit back and allow things to continue, the impacts as they come in to us, didn’t do anything different, you would see a fund balance for the next three years go from $1.3 million to a little over $300,000. A healthy fund balance for a city of this size is $1.1 to $1.3 million. How low could we go?
“That’s always the question that people want to ask. ... At some point between that and $300,000, we don’t have sufficient cash in the city to run month to month and we end up doing tax revenue loans and of course you pay interest on that and that’s just not a place we want to be.”
This story originally appeared in Daily Astorian.