Cities in Oregon are finalizing their budgets. They’re juggling shrinking funding streams and increasing costs – especially from inflation. Twylla Miller is the chief financial officer for the city of Eugene. Robby Hammond is the city manager for Hillsboro. They join us with more on how cities are managing priorities and navigating tough financial decisions.
Note: This transcript was computer generated and edited by a volunteer.
Jenn Chávez: From the Gert Boyle Studio at OPB, this is Think Out Loud. I’m Jenn Chávez. It’s budgeting season in Oregon with cities across the state now finalizing their budgets before July 1. For many, there’s some tough challenges this year, with shrinking funding streams and rising costs making for some difficult financial decisions. Two city leaders are with me now to talk more about how they’re managing budget priorities this year. Twylla Miller is the chief financial officer for Eugene, and Robby Hammond is the city manager for Hillsboro. Welcome to both of you to the show.
Robby Hammond: Thank you.
Twylla Miller: Thank you so much.
Chávez: Thank you both so much for being here. Robby, I wanna start with you. Can you lay out some of the biggest costs and stress points you found affecting your upcoming budget for Hillsboro?
Hammond: Sure. I think, as we have moved on from COVID, we’re really starting to realize the negative impacts on the revenues that we were expecting over the past few years. Things like our transient lodging taxes, where people come and stay in hotels or our parks and recreation revenues, where people use our facilities – all of those revenues we rely on to be able to provide services for our community. We’ve really seen this year the impact of those lost revenues over the past couple of years. Then combine that with rising health care costs, our PERS rates have gone up significantly, inflation. All of that’s kind of having an impact on us.
Chávez: And you know, we’re coming out of a time where COVID relief funding was available to cities, like American Rescue Plan Act funds, for example. How did Hillsboro use relief funding to its advantage?
Hammond: Yeah, that was a huge benefit for us. We were able to put that funding towards things like digital literacy programs in our community, homelessness. We tried hard to make sure we were using those funds in one-time projects, so that when that funding runs out, we don’t have to now backfill that funding. So that was our goal, and we were able to put those funds towards city council priorities that we already had in the community.
Chávez: Great. Twylla, I want to turn to you now for a minute. For Eugene’s upcoming budget, the city did face a significant shortfall. What did conversations look like around figuring out where to make needed cuts?
Miller: Yes, the city has been forecasting a gap, particularly in our general fund, for the past couple of years. In this budget cycle we knew we needed to make reductions of about $15 million moving forward, so we looked across all departments. We were switching to a biennial budget, so going from a one-year budget to a two-year budget as we enter the next budget cycle on July 1. Using a priority-based budget and looking at council goals and vision, really looking across departments. Every department made a contribution. As we look to reduce services and align our budget, we are also facing a revenue shortfall just like Hillsboro and many other communities in Oregon.
Chávez: Have community members in Eugene had opportunities to weigh in on city budget priorities? And, if so, what did you hear from people?
Miller: We have a budget committee process, and we held several meetings in May after the city manager presented her proposed budget. The areas of interest really from citizens, as we heard from the public in public comment hearings to that committee, were around reductions to our animal services, reductions to library services, so materials and services and programming. We had some FTE reductions in that service area as well. And then really around fire: We did have a proposal where we were reducing an engine and replacing it with a squad, which is a smaller vehicle that provides medical transport and also has limited firefighting capabilities. Those were the three areas that we heard the most from the community on.
Chávez: Got it. How did inflation factor into pressures on your city budget this cycle?
Miller: Inflation has absolutely been a pressure. With high inflation, our budget – like many other communities and people in the community – was negatively impacted. Inflation was high, so our costs are higher. Labor costs are higher. Then also just service costs for contracts and materials in general, not only with inflation but supply chain issues caused increased pressures on our expenditures.
Chávez: Robby, what about you? How did you find rising inflation affecting your city budget this cycle?
Hammond: It was really challenging. I’ll give you an example. We are in the process of building our first homeless shelter here in Hillsboro. Just a couple of years ago when we began that process, prices have increased 30 to 40 percent to build that same shelter that would have cost much less just a few years ago. So we’ve applied for grants to the federal and state government. Unfortunately, we found out this week that we were not granted the state funds. So we have a big gap now. The project is on hold until we can figure out how else we can fund it.
Chávez: So, Twylla, we were just talking a couple of minutes about some of the things you heard from your community. We actually asked our listeners what they want to see their cities spend money on, and we got a lot of responses. The main things people mentioned in their responses were housing, infrastructure and public safety. So, I’d like to ask both of you how you are prioritizing funding with these things in mind. Twylla, how about you first?
Miller: We have heard from our community as well. We did a community survey this last summer, and those were some of the top issues from our community. We really are prioritizing services in those areas. We also received ARPA funding from COVID, so some of those funding sources we’ve invested in affordable housing and on house services. Public safety is also a priority. So, while we have made reductions, we’ve also repurposed funding, where we’re taking some existing resources and redirecting them to further our public safety efforts including alternative response efforts in our community.
Chávez: How about you, Robby? How is Hillsboro prioritizing these three things: housing, infrastructure or public safety?
Hammond: Yeah. We consider those to be core services of the city. Public safety, for example: South Hillsboro, for those that are familiar with Hillsboro, is growing very rapidly, so we’re in the process of planning for a new fire station down there. And, as part of this year’s budget, we’re beginning to add 15 firefighters over the next three years to be able to address that. Infrastructure, we’re in the middle of our water supply project, which is a second water supply that will serve the needs of Hillsboro for the next 50 years. And then housing, similar to what Twylla said, we’re working hard to create more affordable housing projects. We have a couple of great projects going on right now. It’s never gonna be enough. It seems like right now there’s so much need, and so our council continues to prioritize what we can do to try to lower the cost of housing and increase the housing stock in our community.
Chávez: Another question for both of you. Twylla first. What do you see as the path forward for Eugene’s budget from here? I know right now that you are facing the shortfall. What’s your outlook for future years in this biennial or even past that?
Miller: That’s a great question. Currently our council is having conversations about long-term financial planning and thinking about the services we provide to the community. We’re having service prioritization conversations, and we will be convening a revenue committee. Council is currently discussing the scope and structure of that committee. So there’ll be multiple council conversations as we look to the long term, both with new revenue generation and then also, how do we prioritize services should we not be able to achieve that revenue? Understanding we have a short-term gap now, but we also have a structural gap as we think about property tax revenues and the needs of the community that are growing, with expenditures outpacing revenues currently. So that’s really a large body of work that we’ll be undertaking beginning this summer with the council and community.
Chávez: Robby, what about you? What is your outlook on things moving forward from this particular budget for Hillsboro?
Hammond: I’ll echo a lot of what Twylla said. I’ll add as well, in Hillsboro one of our real big focuses is economic development. We know that when we can bring in business into our community that bring high-paying jobs, that helps everybody, increases our tax base, and so we continue to try to attract and retain those businesses that’ll hopefully help us kind of bridge that gap over the next few years as well.
Chávez: I feel like this is a really unique space, where we have two people from different cities talking about your respective processes this year. I just want to close by asking both of you, either of you: Are there ways cities in Oregon, like yours, can support each other through tough budget processes?
Hammond: I’ll start. Yeah, absolutely. Some of my favorite meetings are when I get to meet with other city managers. In fact, I’m going down to Eugene just next week to meet with some of the city managers from other large cities in Oregon where we can kind of talk about each other’s challenges and discuss best practices and what we can do to support each other. So that’s a huge part of what we do.
Chávez: What about you, Twylla?
Miller: Yes, I was gonna say, I agree with that. Both at the city manager level and the chief financial officer level, there’s a lot of communication among cities in Oregon as we work through these problems and compare research and ideas and best practices. I would say also on the financial side, we have a great professional network that also supports this work and these conversations as we look to the future.
Chávez: Well, Twylla and Robby, thank you so much for taking the time to talk us through some of this today.
Miller: Thank you for the opportunity.
Hammond: Yeah, thank you.
Chávez: You’re welcome. Twylla Miller is the chief financial officer for Eugene, and Robby Hammond is the city manager for Hillsboro.
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