Lessard says cuts necessary to close $3 million deficit
By Holly Dillemuth, Ashland.news
Ashland City Manager Joe Lessard laid out hard choices facing the city of Ashland on Monday and Tuesday, spending more than eight total hours over two days with Ashland City Council and city staff, sharing budget data, including a proposal to cut more than $1.5 million within its departments.
Council and staff met Monday and Tuesday afternoons in person to learn about the economic state of the city as it approaches the midpoint in its current biennial budget. Lessard shared a list of cuts to departments aimed at helping address the city’s $3 million structural budget deficit, as the city prepares to move into the second second year of its current biennial budget on July 1.
“We have to have a balanced budget and so our consideration of the deficit is to make sure that we balance our expenditures against what we anticipate our actual revenues,” Lessard said Tuesday, prior to the second meeting.
The list of cuts proposed include $350,000 from Ashland Parks & Recreation, $156,200 from the finance department and $62,200 from Public Works. The cuts would be despite the city receiving $1,350,000 in greater than anticipated revenue from transient lodging tax and property tax revenue.
The city’s overall biennial budget for the biennium (July 1, 2021, to June 30, 2023) is $264 million, or $132 million a year, but the council’s discretionary budgeting is concentrated in the General Fund, including overall administration, police, fire, planning departments, which has a total budget of $75 million for the two years, or about $38 million a year.
Ashland Parks & Recreation has an annual budget of a little more than $7 million a year in the current budget.
As the four-hour Tuesday meeting extended past 8 p.m., the City Council postponed voting on Lessard’s proposed cuts until at least its next council business meeting on June 7.
In the list of cuts presented to council, police and fire departments were untouched by direct cuts but are slated to save a total $420,000 in positions left vacant by a hiring freeze.
Lessard proposed the City Council’s own budget be cut by $24,000 by asking councilor’s to pay 10 percent of their health insurance costs.
Municipal Court ($59,000) and the city administration ($28,600) are also slated for cuts, in addition to Community Development ($20,000) and Human Resources ($27,000).
The city does not plan to cut full-time employees, however.
“One of the things we tried to accomplish here is that there would be no layoffs,” Lessard said.
Lessard shared a vision for the next year for some of his goals for the city, which include further developing a marketing/communication position currently utilized by Ashland Parks & Recreation Commission into someone would also serve in the capacity of an emergency response officer. Lessard’s also hoping to foster partnerships with area entities and work together where possible on emergency response.
“What I’m trying to do is as best I can preserve the service delivery that you adopted in the original budget,” Lessard told councilors. “The cuts are my best estimate right now of how to … balance your budget versus the deficit and come up with an answer that will get us through the next 12 months.”
Alison Chan, interim director of Finance and Revenue, explained some of the cost savings come from cuts in personnel budgets by accounting from naturally occurring staffing gaps.
City’s budget every position, she noted, because in a perfect world, all positions are filled all the time.
“But you reach a point where that never happens that you have every position filled every day of the biennium, so you in a sense are over-budgeting,” Chan said. “It’s a balancing act … But we’re at a point as an entity where our revenues and expenditures are becoming more challenging, so we have to look at the expenditures and how we budget them and be more aggressive.”
Other proposed cuts include, $350,000 from Ashland Parks & Recreation (APRC), $156,200 from Finance, and $62,200 from Public Works.
APRC Chair Rick Landt shared a public statement following the presentation on the list of proposed cuts.
“We’re going to be moving forward with trying to work towards a stable funding source,” Landt said. “I think we have good reason to do it because it looks to me that if we just sit back and just let things happen, we’re going to be killed by a thousand cuts.”
On Monday, Landt also shared concerns with council and city staff that there might need to be layoffs in parks due to the proposed cuts. He commented on the physical condition of parks now versus in previous years, when more consistent maintenance was possible.
“Unfortunately, you can see it in our parks,” Landt said Monday. “Over the last few years, there has been a deterioration … because there isn’t the same level of maintenance that’s going into the parks and that’s a problem.”
On Tuesday, Landt also said he believes the decision to broaden the scope of a communication role within parks to across the city would need to be made by APRC.
Part of Lessard’s proposed cuts include the recommendation to reallocate the Food and Beverage tax out of the General Fund and into the Parks Capital Improvement Plan (CIP) because he describes it as a “restricted revenue source.”
City Attorney Katrina Brown and Lessard disagree on the interpretation of the use of $2 million within the $3 million shortfall. Lessard’s interpretation is that the $2 million should go into the Parks CIP fund, not toward ongoing maintenance. Brown disagrees and said Lessard’s view is a “very narrow” interpretation.
Landt said parks has already had to lay off employees.
“There are two interpretations, obviously,” Landt said. “One interpretation is that of the city attorney, but it’s also the interpretation of this council, because you voted for this reallocation of food and beverage (tax).”
Landt said that following the city manager’s interpretation creates a “problem that doesn’t exist” and creates another hole in the budget.
Landt said APRC has a budget that the City Council approved, which includes the food and beverage tax, that is at least partially funding the commission.
“A $2 million deficit creates a huge hole that then is going to have to be filled in a way that just means way more cuts than otherwise would be anticipated,” Landt said. “I would urge you to stay consistent with the city attorney and stay consistent with your past vote.”
Parks were among city departments asked to come up with possibilities for anywhere between 5 and 10% cuts. It’s the latter that has Landt concerned.
“Those 10% cuts mean program cuts,” Landt said, noting concerns about continuing operations of the North Mountain Nature Center in the long term.
“We are at the point of not being able to fund our programs with even 10% cuts being proposed,” Landt said Monday.
Lessard said he asked departments to come forward with plans on how they would recommend cuts of between 5 and 10% of their budgets, if he adjusted them.
“I asked for 5 and 10% plans, but I never expected that I would take across the board 5 and 10% cuts,” Lessard said.
Lessard said he wanted to look at individual departments and understand what the workload was, what their cuts had been in the past, what was coming over the next year, and to try to be more “surgical” than making sweeping cuts of 5 and 10% across the board.
On Monday, Lessard also shared the economic picture of the city, which shows an aging population, small households with one to three people in most homes, as well as declining enrollment at Southern Oregon University.
With a workforce that largely lives outside the city and a lack of affordable housing within city limits, Lessard said pay day is a day when money leaves the city.
“Middle income, young professionals, and recent college graduates are moving somewhere else, even if they’re working here,” Lessard said.
The average house in Ashland costs $550,000, while the median income of approximately $73,000 in Ashland only allows an individual the ability to afford a $320,000 house.
Lessard said one-fifth of households have children at home and half of households are low income, with individuals spending more than 30% of their income on housing.
“We need to take advantage of our strengths,” Lessard said. “We also need to be mindful of our demographics.
“The tourism is what brings the new cash here, so that’s why tourism’s so important to us.”
“Every decision you make about land use and investment are key investment decisions that are going to affect the next 40 years of the city,” Lessard added later in the meeting, referring to possible housing projects.
Looking to the future and the risk of wildfire in Ashland, Lessard said, “It isn’t a question of ‘if,’ it’s a question of ‘when.’”
“While I’m optimistic about the city, when it comes to risk, I have to be hyper vigilant in making sure that we have planning for the worst case possible and preparing for it so that if it ever does happen, it’s not a second guess, it’s not chaos. It’s what we do to protect the city.”
Lessard stressed that the city doesn’t have a standing Emergency Operations Center and needs to consider how it can work towards having one, in order to plan for and respond following a natural disaster such as wildfire.
“By the time we could assemble these tables into an emergency operation center, the event may be over, and we don’t have time to move our forces to assemble the EOC,” he said. “They need to be in the field, fighting the event.”
Lessard acknowledged that the city also has organizational issues, including high turnover that impacts productivity and costs the city in training, recruiting, and retaining employees.
“We need stability and to make sure we don’t lose our resources because we’re having turnover,” Lessard said.
In other Council business on Tuesday, Council members voted 4-1 to approve the 2021-23 supplemental budget authorizing the appropriation of an extra $1 million for the wastewater treatment plant. Councilor Shaun Moran voted no.
On Monday, council members voted 4-2 to send out a city budget questionnaire formulated with the help of Southern Oregon University consultants, following a vote to pull it back for further review last week. Councilors Paula Hyatt, Tonya Graham, Stefani Seffinger, and Stephen Jensen voted to move forward with the survey. Councilors Shaun Moran and Gina DuQuenne opposed the survey as-is.
“Hopefully within another week or so, it will be distributed to the community,” Lessard said of the questionnaire. “I think it’ll be good information going forward for the council currently as well as going into the next biennium year.”
Videos of Ashland City Council meetings are available online at bit.ly/coavideos.
Email Ashland.news reporter Holly Dillemuth at firstname.lastname@example.org. Ashland.news Executive Editor Bert Etling contributed to this report. Email him at email@example.com, or call or text him at 541-631-1313.
May 28 update: Story corrected to say city budget questionnaire was formulated with the help of Southern Oregon University consultants, not students.